- AT&T’s CFO said the carrier doesn’t feel ‘compelled’ to pursue fiber M&A, despite moves from T-Mobile and Verizon
- But of course, never say never
- An acquisition could hinder AT&T’s copper retirement strategy, said Recon Analytics’ Roger Entner
Fiber M&A has been all the rage, particularly with the major wireless carriers. First T-Mobile last year launched joint ventures to acquire regional fiber providers Lumos and Metronet. Verizon then followed with its whopping $20 billion purchase of Frontier.
And then you have AT&T, the carrier that constantly stresses how it wants to be the top dog in fiber. Could it tread the same path as its competitors and scoop up an ISP to beef up its footprint? Not likely, according to AT&T Chief Financial Officer Pascal Desroches.
“Unlike our peers, we’re not compelled to do anything,” he said at the Barclays Communications and Content Symposium on Tuesday.
But Desroches didn’t entirely rule out the M&A route, adding AT&T has “plenty of room to run.” Notably, the operator is already expanding outside its traditional footprint via Gigapower – a wholesale fiber network in partnership with private equity firm BlackRock (Though AT&T thus far is the only Gigapower tenant).
“If an opportunity became available where we thought we can acquire certain assets that could deliver really attractive returns to our shareholders…of course we would look at it,” Desroches said.
AT&T isn’t fretting about fiber acquisitions from its competition either. Even once Verizon closes its Frontier deal next year, Desroches believes AT&T’s scale “will continue to surpass [Verizon’s] ambitions.”
And speaking about T-Mobile stepping up its fiber foray, Desroches stated, “If you want to compete, you have to have your own network.”
It comes back to copper
Fiber talk aside, keep in mind AT&T is also on a quest to shut off most of its legacy copper network by the end of 2029. The company most recently introduced a landline phone replacement for copper customers and sold off some of its central office space.
The fuss about copper is all the more reason for AT&T not to pursue an acquisition, Recon Analytics Principal Roger Entner told Fierce.
AT&T is “almost complete” with regulatory approvals to start switching off copper, and indeed it’s already notified the Federal Communications Commission (FCC) of plans to grandfather Plain Old Telephone Service (POTS) and Voice over Internet Protocol (VoIP) in certain markets.
Given AT&T wants to give old copper the boot, acquiring a provider that might also have leftover copper “would open that can of worms again,” Entner said.
“Pure play fiber players are not very common and small,” he explained. “It’s much easier to build where they want to build rather than buy something that comes with all kinds of things that they don’t like.”
“Good decisions are very often about saying no to proposals rather than yes,” Entner added.
Looking at the overall fiber M&A landscape, we can expect to see larger fiber companies continue to snatch up smaller providers. More than 400 fiber providers are ripe for M&A, according to consulting firm Alix Partners.
