BELLEVUE, Wash. & NEW YORK - T-Mobile (NASDAQ: TMUS), a leader in 5G technology, and global investment organization EQT (ST:EQTAB) have announced a joint venture to acquire Lumos, a fiber-to-the-home platform. This move aims to enhance broadband services across the United States, particularly in areas currently lacking fiber access.
The partnership combines T-Mobile's expertise in retail, marketing, and customer experience with EQT's proficiency in fiber infrastructure investments. The acquisition of Lumos, which presently provides fiber optic internet and home wi-fi service to 320,000 households across 7,500 route miles in the Mid-Atlantic, is set to transition Lumos to a wholesale model. T-Mobile will serve as the anchor tenant, managing customer relationships and utilizing its brand to attract new subscribers.
Mike Sievert, CEO of T-Mobile, highlighted the joint venture's potential to build on the company's broadband success and offer more value and choice to consumers. He emphasized the importance of reliable internet for homes and businesses, which will be the ultimate beneficiaries of this expansion.
The transaction, expected to close between late 2024 and early 2025, is subject to standard closing conditions and regulatory approvals. T-Mobile plans to invest approximately $950 million for a 50% equity stake in the joint venture, with the investment directed towards future fiber builds by Lumos. An additional $500 million is expected to be contributed by T-Mobile between 2027 and 2028, aiming to extend Lumos' reach to 3.5 million homes by the end of 2028.
Jan Vesely, a partner within EQT's Infrastructure Advisory Team, expressed pride in the growth achieved with Lumos and enthusiasm for the upcoming collaboration with T-Mobile to further expand fiber access in the U.S. Brian Stading, CEO of Lumos, echoed these sentiments, noting the transformative impact of fiber optic internet on communities.
This strategic move aligns with T-Mobile's current offerings, including its 5G Internet service and T-Mobile Fiber, which have demonstrated strong consumer demand. The joint venture is expected to play a significant role in meeting the increasing need for high-speed, reliable connectivity.
The information for this article is based on a press release statement.
InvestingPro Insights
As T-Mobile (NASDAQ: TMUS) ventures into a significant expansion of its broadband services through the acquisition of Lumos, the company's financial and market metrics provide valuable context for investors. T-Mobile's market capitalization currently stands at a robust $194.86 billion, underscoring its significant presence in the telecommunications sector.
The company's Price to Earnings (P/E) ratio, a key indicator of market expectations about future earnings growth, is at 23.39, with an adjusted P/E for the last twelve months as of Q4 2023 being slightly lower at 20.52. This suggests that investors have a positive outlook on the company's earnings capacity relative to its current share price. Additionally, T-Mobile's Price to Book (P/B) value is 3.01, indicating that the market values the company at three times its book value, which is typical for well-established players in the industry.
InvestingPro Tips reveal that T-Mobile's management has been actively buying back shares, reflecting confidence in the company's future performance. Also, the stock generally trades with low price volatility, providing a more stable investment option. It's important to note that while five analysts have revised their earnings downwards for the upcoming period, T-Mobile is still predicted to be profitable this year and has been profitable over the last twelve months. Moreover, T-Mobile is a prominent player in the Wireless Telecommunication Services industry and has experienced strong returns over the last five and ten years.
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