Alphabet is selling the majority of GFiber — formerly known as Google Fiber — to private equity firm Stonepeak, which will merge the internet service provider with cable-and-fiber operator Astound Broadband to form a combined network reaching roughly 7.1 million locations across 26 states.
The deal, announced Wednesday, will leave Alphabet holding only a minority stake in the fiber ISP it launched in 2012 with expansive ambitions before pulling back in 2016. The sale price was not disclosed. Closing is expected in Q4 of this year, subject to regulatory approvals.
According to the announcement, the transaction gives GFiber the “external capital and strategic focus needed to accelerate its next phase of growth” — language that signals the unit never quite achieved financial independence under its corporate parent.
What the Combined Company Looks Like
GFiber currently serves 2.8 million locations in 15 states. Astound — itself a product of prior private equity consolidation that folded together Wave Broadband, RCN, and Grande Communications — covers 4.45 million locations in 12 states and the District of Columbia. Most of Astound‘s network runs on cable, with 892,014 fiber locations and 44,548 copper locations, according to a research note from analyst firm New Street.
The two networks overlap in only three counties in Texas, covering 109,000 locations. Texas and Illinois will carry the largest footprint for the merged entity. Cable and fiber will cover roughly equal shares of total locations.
The existing GFiber executive team will lead the combined business, the announcement says. Whether the merged company retains the GFiber name, the Astound name, or adopts a new one has not been determined.
Competition Ahead
The merged provider will not have much open field. New Street‘s analysis shows the combined company will face competition from at least one cable or fiber operator across most of its territory — AT&T at 53 percent of locations, Comcast at 46 percent, Charter at 43 percent, Verizon at 22 percent, and Lumen (CenturyLink) at 11 percent.
New Street flagged unanswered strategic questions: whether the combined company will push into territories already served by cable and fiber rivals, and whether it will upgrade Astound‘s cable infrastructure to fiber.
Alphabet President and Chief Investment Officer Ruth Porat said the deal will allow GFiber to reach more of the country “while continuing to provide their award winning customer experience.” Stonepeak Senior Managing Director Andrew Thomas said his firm looks forward to supporting the company “with Alphabet as a co-investor.”
Texas, North Carolina, Missouri, Utah, and Kansas account for about 78 percent of GFiber’s current locations. Illinois, Texas, New York, California, and Washington represent roughly 72 percent of Astound’s footprint.
Photo by Jandira Sonnendeck on Unsplash
This article is a curated summary based on third-party sources. Source: Read the original article
