- Brightspeed secured $3.7 billion of new financing
- It plans to pass 4 million locations with fiber
- The company also appointed Michel Combes as chairman of the board
Brightspeed, the company that bought Lumen Technologies’ copper assets in 20 markets, has won $3.7 billion in new financing to spend toward its fiber buildouts. The financing comes from a syndicate of bankers and other investors led by Brightspeed’s parent company Apollo Global Management. Apollo paid $7.5 billion for Brightspeed in 2022.
Brightspeed CEO Tom Maguire told Fierce, “The same people who funded the original go-around are back again. I take that as a good sign. They still believe in what we’re doing.”
In addition, Brightspeed had debt of $1.1 billion, which it says today has been eliminated by its investors.
The company also previously received a $500 million investment from the Abu Dhabi firm Mubadala. And it's received government grants of $213 million across its footprint, which is over and above its billions in private funding.
Of the new Brightspeed funding, Jonathan Spalter, CEO of USTelecom Association, told Fierce, "I think the underlying theme is it’s a real affirmation not only for Brightspeed and its build plan but also the overall positive climate for broadband as a lot of folks in the financial community really see a pathway for growth and success."
In addition to the funding news today, Brightspeed announced that Michel Combes has been appointed as chairman of the board, taking over from Bob Mudge. Combes brings an impressive resume, including CEO of Vodafone Europe for four years, CEO of Altice for one year and CEO of Sprint for a short stint before it was purchased by T-Mobile in 2020. Currently, Combes is president of SoftBank Group International.
Fiber builds are ramping in the U.S.
The fiber industry has been energized by the prospect of $42.5 billion in government funds flowing to states from BEAD. Texas received the highest BEAD allocation at more than $3.3 billion, followed by California at $1.9 billion. Nineteen states were awarded more than $1 billion. (Check out Fierce’s interactive map to see all the state allocations.)
The $3.7 billion in private funding for one company begets even more money because Maguire said the funding will be helpful in pursuing Broadband Equity, Access and Deployment (BEAD) grants. He explained that even though BEAD is providing grants, there’s a matching-funds requirement, and a lot of smaller companies are operating on razor-thin margins and may not have the capital to afford the matching requirements.
Spalter said that since companies must match at least 25% of their BEAD grants, it's important that states select companies "that have the financial wherewithal to participate."
Brightspeed's goals
For its part, Brightspeed acquired Lumen Technologies’ footprint in 20 states. Its network currently passes 6.5 million homes and businesses, and 1.4 million of those passings are now overbuilt with fiber. Although Maguire said, “Even the stuff where we’ve overbuilt with fiber still has customers with legacy copper.”
It's currently overbuilding its copper network with fiber in 17 states with plans to ultimately build in all 20 states. It aims to pass 1.75 million locations with fiber by the end of 2024 and 4 million locations over its multi-year plan.
“Right now, we’ve peaked at about 90,000 prems per month,” said Maguire. “We’re looking to maintain that.”
The company is working with 11 different contractors and 470 work crews. It isn’t having any problems finding enough workers, largely because Maguire and other top executives have a lot of experience building networks, and they’ve anticipated the supply and labor that are necessary.
For instance, they worked with IQGEO, a GIS-based engineering platform to create a system to design their networks, keep track of inventory and pay vendors. And they worked with Corning to develop plug-and-play fiber components that minimize and even eliminate the need for splicing out in the field.
“Our whole design was dreamed up to mitigate the issues with supply chain and labor,” said Maguire
Verizon retirees
Maguire was with Verizon for the majority of his career and ended as senior vice president of National Operations Support. Other top executives hail from the Verizon as well.
“When we built FiOS, that was a $26 billion effort,” Maguire said.
He joked about the checkered history of FiOS, which was not well received by Wall Street for many years. “We started talking about putting fiber into the network and went to the Street and got slammed,” he said. “Everybody thought we were idiots.” He recently spoke at an investor event and reminded them how they beat up on Verizon back in the day.
Of course, fiber is all the rage now, and Wall Street investors are embracing it.