KKR has formed a partnership with telecommunications company T-Mobile to acquire US fibre optic network specialist Metronet.
T-Mobile said it expects to invest around $4.9bn (€4.5bn) to acquire a 50% equity stake in the joint venture with KKR and 100% of Metronet’s residential fibre retail operations and customers, as well as funding of the partnership.
KKR declined a request to comment on how much it was investing in the venture.
Metronet said that together with its majority shareholders, Oak Hill Capital and the Cinelli family, it has agreed to sell itself to the T-Mobile and KKR joint venture, in a deal involving Metronet’s residential fibre retail operations and customers being taken over by T-Mobile.
As part of the agreement, an affiliate of Oak Hill will make a minority investment in the joint venture, and the Cinelli family will also remain minority investors in the venture alongside KKR and T-Mobile.
Metronet said it will become a wholesale services provider for its retail customers once the deal is completed.
KKR, which is investing through its digital infrastructure business, has been a minority investor in Metronet since 2021. Back then, Metronet disclosed it had received an undisclosed amount of capital injection, from its partner Oak Hill Capital and from funds managed by KKR, to help accelerate fibre rollout across the US.
Metronet currently reaches more than 2m homes and businesses in 17 states.
Upon completion of the transaction, Metronet is expected to be self-funding and plans to expand its fibre network to reach 6.5m homes by 2030.
T-Mobile said it does not foresee further financial investment in the joint venture to support Metronet’s expansion plan.
Mike Sievert, CEO of T-Mobile, said: “This is a unique opportunity and a smart, capital-efficient deal that enables T-Mobile to profitably build on our success in broadband and provide fast, affordable and reliable connectivity options to millions more customers nationwide as a complement to our wireless growth strategy.”
Sievert said that together with KKR the firms “will further expand the Un-carrier’s fibre footprint and deliver real value and choice to customers while addressing a growing demand for fast and reliable broadband”.
Waldemar Szlezak, partner and global head of digital infrastructure at KKR, said: “We are proud of all that Metronet has achieved since we first invested in the company in 2021, and are thrilled to continue to work with the management team and their associates to build upon the company’s 20-year legacy.
“We look forward to embarking on this new chapter with T-Mobile and supporting the company in its future growth.”
John Cinelli, co-founder and current chairman of Metronet, said: “We started Metronet to bring Main Street USA two things their internet providers weren’t delivering – hyper-fast speeds and warm customer service. Today we have found a strong partner in T-Mobile, a digital infrastructure leader equally focused on cutting-edge technology and the customer experience.
“We could not have grown so far, so quickly, to reach this moment without the decade-long support of Oak Hill Capital and, for the last three years, KKR. Their visionary support, together with our hardworking associates, have provided the capital and energy to build the best fibre-to-the-home company in the US.”
In a joint statement, Benjy Diesbach, senior operating adviser, and Scott Baker, managing partner of Oak Hill, said: “Over the past 10 years, Metronet has expanded its network from 10 small towns in Indiana to over 300 communities across a 17-state footprint, and from 80,000 locations passed to more than 2m, all while maintaining an unwavering commitment to providing an outstanding experience for its loyal customers and dedicated associates.
“We are extremely grateful for the contributions of each of the talented executives with whom we have worked so closely over the years, and we remain excited about Metronet’s future potential with T-Mobile and KKR.”
To read the latest IPE Real Assets magazine click here.
