T-Mobile and EQT Announce Joint Venture to Acquire Lumos and Build Out the Un-carrier’s First Fiber Footprint

Rhea-AI Summary

T-Mobile and EQT announced a joint venture to acquire Lumos, a fiber-to-the-home platform, to expand T-Mobile's broadband services across the U.S. Lumos will transition to a wholesale model with T-Mobile as the anchor tenant, aiming to provide high-speed fiber internet connectivity to underserved areas. The deal is valued at approximately $950 million with T-Mobile investing in a 50% equity stake. The transaction is expected to close in late 2024 or early 2025.

Insights

Telecommunications Analyst

The joint venture between T-Mobile and EQT to acquire Lumos and the strategic focus on fiber optic infrastructure marks a significant move in the telecommunications industry. This maneuver indicates T-Mobile's intention to enhance its network capabilities, potentially improving service quality and competitiveness in the broadband market.

Fiber optic technology offers a superior alternative to traditional broadband due to its high-speed data transfer and lower latency, which is increasingly important for burgeoning fields like remote work and telehealth. T-Mobile's investment of approximately $950 million for a 50% equity stake in the joint venture demonstrates a commitment to this expansion and could lead to long-term gains in market share.

The planned additional investment of around $500 million signals a sustained commitment through 2027 to 2028, aligning with a broader industry trend towards enhancing digital infrastructure. The long-term outlook for T-Mobile appears positive as it aims to leverage its existing customer base and marketing strength to grow its fiber customer base to an estimated 3.5 million homes by the end of 2028.

Financial Analyst

From a financial perspective, T-Mobile's strategy to invest in fiber through a joint venture with EQT could be value accretive. This move allows T-Mobile to share the capital expenditure risk while also tapping into EQT's infrastructure expertise. The transaction includes a significant capital contribution spanned over several years, highlighting the progressive nature of the investment and its impact on future earnings.

Considering T-Mobile's plans to complete its share repurchase program and dividends in 2024, the investor should monitor the impact of these investments on the company's cash flow and capital allocation strategy. The expected investment levels suggest confidence in the venture's return potential, but stakeholders should assess whether this aligns with their own risk tolerance and investment horizon.

The announcement reveals that EQT Infrastructure VI fund is expected to be 35-40% invested upon completion, which could have implications for fund liquidity and future investment opportunities within the fund's portfolio.

Market Research Analyst

Market trends have shown an increasing demand for reliable and high-speed internet connectivity, particularly as consumer and business activities continue to shift online. T-Mobile's entry into the fiber market through the acquisition of Lumos could prove to be a strategic endeavor to capitalize on underserved markets.

Furthermore, the transition of Lumos to a wholesale model with T-Mobile as the anchor tenant underlines the importance of brand strength and customer relationship management in attracting new subscribers. The joint venture's focus on network engineering and deployment will likely intensify competition in the broadband industry, potentially benefiting consumers with more choices and improved service quality.

However, investors should be aware of the challenges associated with large-scale network deployments, including regulatory hurdles and the execution risks inherent to ambitious infrastructure projects. Keeping a close eye on the venture's ability to meet its targeted coverage goals will be important for evaluating its success and potential market impact.

T-Mobile’s scalable broadband and wireless growth engine combined with EQT’s infrastructure expertise will leverage Lumos' fiber platform to deliver broadband services to more Americans

BELLEVUE, Wash. & NEW YORK--(BUSINESS WIRE)-- T-Mobile (NASDAQ: TMUS), America's 5G leader and fastest growing broadband provider, and EQT, a purpose-driven global investment organization, today announced they have entered into a joint venture (JV) with EQT’s Infrastructure VI fund (EQT) that will acquire fiber-to-the-home platform Lumos from EQT’s predecessor fund EQT Infrastructure III.

T-Mobile and EQT Announce Joint Venture to Acquire Lumos and Build Out the Un-carrier’s First Fiber Footprint (Graphic: Business Wire)

The JV will bring T-Mobile’s retail, marketing, brand and customer experience strengths together with EQT’s fiber infrastructure investment expertise. Together they will acquire Lumos’ scalable fiber network build capabilities to deliver best-in-class high-speed fiber internet connectivity to customers across the U.S. without access to fiber today. After the transaction closes, Lumos, which currently reaches 320,000 households over 7,500 route miles with fiber optic internet and home wi-fi service in the Mid-Atlantic, will transition to a wholesale model with T-Mobile as the anchor tenant owning customer relationships and leveraging its brand to attract new subscribers. The JV will focus on market identification and selection, network engineering and design, network deployment, and customer installation.

“As the demand for reliable, low-latency connectivity rapidly increases, this deal is a scalable strategy for T-Mobile to take a significant step forward in expanding on our broadband success and continue shaking up competition in this space to bring even more value and choice to consumers,” said Mike Sievert, CEO of T-Mobile. “Together with EQT and Lumos, T-Mobile is building on our position as the fastest growing broadband provider in the country in a value-accretive way that complements our sustained growth leadership in wireless. Customers – homes and businesses – who get the fast, affordable, and reliable internet they need will be the real winners.”

T-Mobile provides a unique value proposition and much-needed reliable connectivity to homes and businesses across the country through its 5G Internet, a fixed wireless internet service on its 5G network that is available to more than 50 million households and businesses nationwide and serves over 5 million customers, as well as T-Mobile Fiber, which has launched in parts of 16 U.S. markets. Those launches have shown consumer demand for broadband that T-Mobile cannot meet through its fallow capacity fixed wireless product alone, and many customers want the speed and reliability that only fiber can provide.

Jan Vesely, Partner within EQT’s Infrastructure Advisory Team said, “We are proud to have partnered with Lumos over the past six years to rapidly scale the company and roll out fiber to underserved markets, and we look forward to continuing to leverage EQT’s considerable digital infrastructure and fiber expertise to support the significant fiber buildout ambitions of T-Mobile and the JV. This new effort will build critical fiber broadband infrastructure that will enable remote work, education, and healthcare use cases across the country. We have worked with T-Mobile as a customer across many of our existing digital infrastructure investments and are delighted to build on that relationship and partner with T-Mobile on this opportunity to roll out fiber to underserved Americans.”

“Lumos takes great pride in our achievements, as we have successfully delivered fiber to hundreds of thousands of homes and businesses, marking a significant acceleration in our growth. Our commitment to enhancing customers’ lives through the development of a network prepared for the demands of tomorrow remains steadfast,” Brian Stading, CEO of Lumos. “With the support of our private equity partner, EQT, and leveraging the strength of the T-Mobile brand and unrivaled customer experience, Lumos is set to expedite our network expansion. This joint venture will amplify our ability to change lives through the transformative power of fiber optic internet.”

The transaction is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals. At closing, T-Mobile is expected to invest approximately $950 million in the JV to acquire a 50% equity stake and all existing fiber customers, with the funds invested by T-Mobile being used by Lumos for future fiber builds. The next capital contribution by T-Mobile out of an additional commitment of approximately $500 million is anticipated between 2027 and 2028. These combined investments are expected to allow Lumos to reach 3.5 million homes passed by the end of 2028. T-Mobile continues to expect to complete its remaining authorization for share repurchases and dividends in 2024.

With this transaction, EQT Infrastructure VI is expected to be 35-40% percent invested (including closed and/or signed investments, announced public offers, if applicable, and less any expected syndication) based on target fund size and subject to customary regulatory approvals.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains certain forward-looking statements concerning T-Mobile and the proposed transaction with EQT to acquire regional fiber company Lumos. All statements other than statements of fact, including information concerning future results, are forward-looking statements. These forward-looking statements are generally identified by the words “plan,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transaction, including anticipated future financial and operating results, T-Mobile’s and the joint venture’s objectives, expectations and intentions, the accounting treatment of the proposed transaction, and the expected timing of completion of the proposed transaction. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, the failure to satisfy any of the conditions to the proposed transaction on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of the parties to terminate the definitive agreements; adverse effects on the market price of T-Mobile’s common stock and on T-Mobile’s operating results because of a failure to complete the proposed transaction in the anticipated timeframe or at all; negative effects of the pendency or consummation of the proposed transaction on the market price of T-Mobile’s common stock and on T-Mobile’s operating results; the risk of litigation or regulatory actions; and other risks and uncertainties detailed in T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, including in the sections thereof captioned “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” as well as in its subsequent reports on Form 8-K and Form 10-Q, all of which are filed with the SEC and available at www.sec.gov and www.t-mobile.com. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Given these risks and uncertainties, persons reading this communication are cautioned not to place undue reliance on such forward-looking statements. T-Mobile assumes no obligation to update or revise the information contained in this communication (whether as a result of new information, future events or otherwise), except as required by applicable law. References to our and the SEC’s website are inactive textual references only. Information contained on our and the SEC’s website is not incorporated by reference in this communication and should not be considered to be a part of this communication.

Legal Disclaimer

The information contained herein does not constitute an offer to sell, nor a solicitation of an offer to buy, any security, and may not be used or relied upon in connection with any offer or solicitation. Any offer or solicitation in respect of EQT Infrastructure VI will be made only through a confidential private placement memorandum and related documents which will be furnished to qualified investors on a confidential basis in accordance with applicable laws and regulations. The information contained herein is not for publication or distribution to persons in the United States of America. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold without registration thereunder or pursuant to an available exemption therefrom. Any offering of securities to be made in the United States would have to be made by means of an offering document that would be obtainable from the issuer or its agents and would contain detailed information about the issuer of the securities and its management, as well as financial information. The securities may not be offered or sold in the United States absent registration or an exemption from registration.

Advisors

Citigroup Global Markets Inc. is serving as T-Mobile’s exclusive financial adviser for the transaction.
The Bank Street Group and Simpson Thacher & Bartlett LLP were exclusive advisors to Lumos and EQT Infrastructure III for the transaction.
Kirkland & Ellis LLP, JPMorgan, and Goldman Sachs & Co. LLC advised EQT Infrastructure VI for the transaction.

About T-Mobile

T-Mobile US, Inc. (NASDAQ: TMUS) is America’s supercharged Un-carrier, delivering an advanced 4G LTE and transformative nationwide 5G network that will offer reliable connectivity for all. T-Mobile’s customers benefit from its unmatched combination of value and quality, unwavering obsession with offering them the best possible service experience and undisputable drive for disruption that creates competition and innovation in wireless and beyond. Based in Bellevue, Wash., T-Mobile provides services through its subsidiaries and operates its flagship brands, T-Mobile, Metro by T-Mobile and Sprint. For more information please visit: https://www.t-mobile.com

About EQT

EQT is a purpose-driven global investment organization with EUR 242 billion in total assets under management (EUR 132 billion in fee-generating assets under management), within two business segments – Private Capital and Real Assets. EQT owns portfolio companies and assets in Europe, Asia-Pacific and the Americas and supports them in achieving sustainable growth, operational excellence and market leadership. More info: www.eqtgroup.com. Follow EQT on LinkedIn, X, YouTube and Instagram.

About Lumos

Lumos provides 100% Fiber Optic Internet, whole-Home Wi-Fi, voice and streaming services, to more than 300,000 homes and businesses across Virginia, North Carolina, and South Carolina. We believe that the possibilities of tomorrow cannot be built on the infrastructure of yesterday. That’s why we’re building a 100% Fiber Optic network from the ground up for families, businesses, and communities, backed by local, expert customer service. An Internet built for that most hopeful of all things – the future. Because whatever the future holds, we make it faster. Learn more at www.LumosFiber.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240425723924/en/

T-Mobile US, Inc. Media Relations

MediaRelations@t-mobile.com

T-Mobile Investor Relations Contact

investor.relations@t-mobile.com

https://investor.t-mobile.com

EQT Press Office

press@eqtpartners.com

Source: T-Mobile US, Inc.

FAQ

What joint venture was announced by T-Mobile and EQT in the press release?

T-Mobile and EQT announced a joint venture to acquire Lumos, a fiber-to-the-home platform, to expand T-Mobile's broadband services.

What is the purpose of the joint venture between T-Mobile and EQT?

The purpose of the joint venture is to leverage Lumos' fiber platform to deliver high-speed fiber internet connectivity to customers across the U.S. without access to fiber today.

How much is T-Mobile expected to invest in the joint venture with Lumos?

T-Mobile is expected to invest approximately $950 million in the JV to acquire a 50% equity stake and all existing fiber customers.

When is the transaction expected to close?

The transaction is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals.

What is the goal of the JV between T-Mobile and Lumos?

The goal of the JV is to build critical fiber broadband infrastructure that will enable remote work, education, and healthcare use cases across the country.