FX.co ★ T-Mobile, EQT Form JV To Acquire Fiber-to-the-home Platform Lumos

T-Mobile, in partnership with investment firm EQT, recently announced that they will be entering into a joint venture. The venture, backed by EQT's Infrastructure VI fund, aims to acquire the fiber-to-the-home platform, Lumos, from EQT's prior fund, EQT Infrastructure III.

This partnership promises to combine T-Mobile's capabilities in retail, marketing, and customer services with EQT's expertise in fiber infrastructure investment. Lumos' ability to build scalable fiber networks will be a key feature of this venture, aiming to provide customers across the U.S. with superior high-speed fiber internet connectivity.

Once the acquisition is finalized, Lumos will shift to a wholesale model, with T-Mobile serving as the primary tenant. T-Mobile will own customer relationships and leverage its brand to attract new subscribers. Lumos currently offers fiber optic internet and home wi-fi service to 320,000 homes over a distance of 7,500 route miles in the Mid-Atlantic region.

The joint venture will concentrate on identifying and selecting markets, network engineering and design, network deployment, and customer installation. Subject to standard closing conditions and regulatory approvals, the transaction is projected to close between late 2024 and early 2025.

Upon closing, T-Mobile plans to invest around $950 million in the venture to acquire a 50% equity stake and all existing fiber customers. Lumos will use these funds for future fiber builds. T-Mobile's next capital contribution—estimated at around $500 million—is expected to happen between 2027 and 2028.

With these investments, Lumos is projected to reach 3.5 million homes by the end of 2028. T-Mobile also plans to complete its remaining authorization for share repurchases and dividends in 2024.

Through this transaction, EQT Infrastructure VI anticipates being invested at 35-40% of its targeted fund size, assuming it receives customary regulatory approvals.