T-Mobile US is setting modest growth numbers for its recently launched fiber broadband product but remains open to boosting its fiber position should the right deal come along.

T-Mobile US CEO Mike Sievert told investors during the carrier’s second-quarter earnings call that it expects to add at least 100,000 net new fiber connections by the end of this year. Those will come from its recently closed Lumos joint venture and the close of its MetroNet JV that happened this week.

Those two deals will provide T-Mobile US with a fiber network passing up to 15 million locations. While a big leap for the carrier, that reach is far smaller than what larger rivals Verizon and AT&T have on their books.

T-Mobile US management continued to express interest in further fiber acquisitions, something that its rivals are also interested in pursuing.

“As we've said before, we're very open to looking at investments in fiber,” COO Srini Gopalan said. “They need to be the right investments, and we are – and I think we’ve showed our hand in this – we like pure-play fiber assets. So as a whole, we really like this whole space of broadband and we think there's a huge opportunity to drive equity value space.”

Sievert furthered that fiber notion later in the call when he downplayed any interest in acquiring cable-based broadband assets.

“We're interested in ongoing transactions, but probably, if the premise of your question is something like, ‘are we interested in cable?’ I become decreasingly interested in that over time,” Sievert said. “I just feel like the growth is in fixed-wireless, where there's value and flexibility, and the growth is in fiber, because it's a superior product, and that seems to be where the customer sentiment is going. We want to be where the puck is going to be.”

The cable industry has been working through a rash of acquisition activity, bolstered by a growing push by all communication providers to offer enhanced converged services.

While not wanting to actually own cable assets, Sievert did provided a bit more color on T-Mobile US’ deal to support enterprise-focused wireless services from cable providers Comcast and Charter Communications through a mobile virtual network operator (MVNO) model.

The exec explained that the deals are specifically focused on those cable providers hitting the small- and mid-sized (SMB) enterprise market segment that T-Mobile US has “little exposure today.” This includes enterprises with less than 1,000 wireless lines.

“The deal focuses our partners in the exact areas that would drive incremental revenue, because our strongest T-Mobile-branded growth comes, on the one hand from the very smallest businesses transacting at retail, where we already compete with cable, and on the other hand from large enterprises above 1,000 lines, which are not included in the deal,” Sievert said. “So while it's going to take some time for this to grow into something meaningful, I'm super excited about their capabilities to generate growth in the SMB sector in a way that will be truly incremental for T-Mobile.”

Sievert also flatly stated that this deal is enterprise only. “People are asking us, ‘well, does this mean you're stepping into consumer or something like that?’ And, no, we're not interested in that because the dynamics are different in terms of the incrementality in our math,” Sievert said.

Comcast and Charter both currently have MVNO arrangements with Verizon that have gained considerable consumer traction.

Mobile network moves

Sievert also said that T-Mobile US is set to officially close on its $4.4 billion UScellular acquisition on August 1. That deal garnered guarded regulatory approval from the Department of Justice (DOJ) and enthusiastic approval from the Federal Communications Commission.

Sievert said that once closed, T-Mobile US will have at least a 50% increase in capacity in the newly combined footprint and 3,000 more cell sites in those areas.

That additional capacity could come in handy as T-Mobile US continues to see surging use of its 5G-based fixed-wireless access (FWA) service. Sievert noted that its current FWA customers are using an average of 560 gigabytes per month of data, which is a 25% increase over the past two years.

Despite that growth, Sievert said the carrier continues to operate its FWA service using its “fallow-capacity model.” That model is currently set to support up to 12 million FWA users by 2028, though T-Mobile US is integrating new technology tweaks that could boost that capacity ahead of any need for actual capacity-increasing investment.

Some of that support could come from cash and spectrum T-Mobile US is set to gain as part of a deal with private-equity firm Grain Management that was announced earlier this year.

T-Mobile US CFO Peter Osvaldik explained that the deal will see the carrier exchange its entire 800 MHz license portfolio for $2.9 billion in cash, all of Grain’s 600 MHz spectrum licenses, and “additional potential upside via participation in future proceeds Grain receives for monetizing the licenses after a minimum return to Grain.”

T-Mobile US uses its own 600 MHz spectrum licenses to power the extensive reach of its 5G network.

Grain plans to use the nationwide 800 MHz licenses in a deal with energy and infrastructure company Black & Veatch power wireless networks for utilities, other critical infrastructure industry operators, rural and regional operators, and other enterprises.

T-Mobile US originally gained control of those 800 MHz licenses when it acquired Sprint in 2020. As part of gaining regulatory approval for the deal, T-Mobile US was required to sell the 14-megahertz of nationwide 800 MHz spectrum to Dish Network for $3.6 billion in the government’s attempt to bolster Dish Network’s ability to become a viable nationwide competitor.

However, Dish Network, which was subsequently subsumed by parent company EchoStar, was eventually unable to afford that price. This allowed T-Mobile US to auction the spectrum to the highest bidder.