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The US telco operators like AT&T feel an awful lot like schoolchildren these days, hustling to hand in their homework before the final school bell of the year ushers in the summer, and the capstone project for this scholastic year is consolidation.
The recent announcement of its agreement to purchase Lumen’s Mass Markets fibre business for $5.75bn was AT&T’s turn in front of the class.
Consolidation is all the rage as US consumer services space converges
AT&T’s release on its Lumen consumer fibre M&A action hit the newswires on the heels of Charter and Cox’s announced $34.5bn mega-cable player tie-up the previous week.
Moreover, that Charter-Cox deal that was itself announced on the very same day that Verizon got signoff from the Federal Communications Commission on its planned $20bn acquisition of Frontier.
Meanwhile, T-Mobile has already knocked out its Lumos deal, regulatory approval for its acquisition of the UScellular operation is imminent, and the company will bring its Metronet joint venture (JV) action into the station shortly after that.
The fervor of consolidation activity is an offshoot of the increasing competitive crosswinds incumbent US operators are feeling.
For cable operators, that would be the two-fold pressure caused by the steady creep of fibre overbuilders and the rapid incursion from 5G fixed wireless access.
On the flipside of that coin, the MVNO outfits at Charter and Comcast continue to lock down large chunks of the growth share in the US wireless space quarter after quarter. Consequently, as each camp’s go-to-market strategies adjusted to increased convergence positioning, both cable companies and telcos alike recognised the need grow the spaces where they can enjoy local market access tech superiority, insulating themselves somewhat as those crosswinds pick up gale-force speed.
The AT&T Lumen deal has a good price and interesting open-access wrinkles
The announced AT&T-Lumen deal, which comes with a price tag below the $6bn-to-$9bn asset valuation for Lumen’s consumer fibre business, will see AT&T pick up the operation currently selling under Lumen’s ‘Quantum Fiber’ brand.
That would entail around one million customers as well as more than four million total fibre passings across 11 US states, with Denver, Colorado; Las Vegas, Nevada; Minneapolis-St. Paul, Minnesota; Orlando, Florida; Phoenix, Arizona; Portland, Oregon; Salt Lake City, Utah; and Seattle, Washington among the most significant markets in the acquired fibre footprint. The operators have very little fibre overlap, and the transaction expands AT&T’s fibre coverage from 21 states to 30.