T-Mobile’s $4.9 billion bet: How the Metronet deal could reshape America’s broadband landscape

T-Mobile (NASDAQ: TMUS), recognised as America’s leading 5G provider and fastest-growing fixed wireless broadband operator, has announced a landmark joint venture (JV) with global investment firm KKR (NYSE: KKR). This definitive agreement will see the acquisition of Metronet, including its extensive broadband infrastructure, rapidly expanding residential fiber operations, and existing customer base. As part of the deal, the JV will also acquire Oak Hill Capital’s stake, with Oak Hill Capital reinvesting to maintain a minority interest and founder John Cinelli keeping a minority stake once the transaction is finalised.

T-Mobile’s strategic expansion through Metronet acquisition

The transaction is a major step in T-Mobile’s strategy to broaden its broadband footprint. The deal will transition Metronet, which is recognised as the fastest-growing fibre-only operator in the U.S., into a wholesale services provider for its retail customers. T-Mobile will take over 100% of Metronet’s residential fiber retail operations, leveraging its advanced retail, marketing, and service capabilities to boost customer acquisition and support. The integration is expected to enhance T-Mobile’s fibre broadband services, allowing the company to extend its reach to more households.

Metronet’s role and future outlook

Following the closure of the transaction, Metronet will focus on network build-out, engineering, design, deployment, and customer installation, with an expected reach of 6.5 million homes by the end of 2030. The company is anticipated to become self-sustaining financially, with no additional capital contributions required from T-Mobile. The JV’s formation represents a strategic partnership designed to leverage Metronet’s fibre infrastructure expertise while expanding T-Mobile’s broadband offerings.

Expert insights and industry impact

Mike Sievert, CEO of T-Mobile, described the deal as a unique and capital-efficient opportunity to enhance broadband services and provide reliable connectivity nationwide. Sievert highlighted Metronet’s rapid growth and exceptional management team as key factors in the partnership, noting that the collaboration will significantly boost T-Mobile’s fibre footprint.

Waldemar Szlezak, Partner and Global Head of Digital Infrastructure at KKR, emphasised the strategic importance of the JV in transforming Metronet’s business. Szlezak praised T-Mobile’s customer experience as a crucial element in supporting Metronet’s growth and maximising its potential.

Metronet CEO Dave Heimbach expressed pride in expanding partnerships with KKR and T-Mobile, highlighting the synergies between Metronet’s fibre network and T-Mobile’s 5G offerings. Heimbach noted that the collaboration will accelerate Metronet’s network expansion, reaching millions more households by the decade’s end.

KKR’s investment and global infrastructure strategy

KKR’s investment in Metronet aligns with its global infrastructure strategy, which has been active since 2008. With over $61 billion in infrastructure assets under management, KKR has a notable track record of investing in fibre broadband providers worldwide. The firm’s portfolio includes fibre optic networks in various countries, with recent acquisitions such as Telecom Italia Netco highlighting its commitment to expanding global fibre infrastructure.

Transaction details and advisory teams

The transaction, expected to close in 2025 pending regulatory approvals, will involve T-Mobile investing approximately $4.9 billion for a 50% equity stake in the JV and full control of Metronet’s residential fibre operations. Citigroup Global Markets Inc. is serving as T-Mobile’s financial advisor, with Wachtell, Lipton, Rosen & Katz and Davis Wright Tremaine providing legal counsel. Cleary Gottlieb Steen & Hamilton LLP, DLA Piper LLP, and Milbank LLP are advising on regulatory matters.

KKR’s financial advisory team includes Barclays and Morgan Stanley, with Goldman Sachs, Mizuho, and MUFG also involved. Simpson Thacher is KKR’s legal advisor. Metronet’s financial and legal advisors include Bank Street Group LLC, TD Securities, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Polsinelli, and Lazard.