Verizon is shoring up its resources and is strategically placing itself to launch 5G services in the next year.
Verizon Communications Inc has agreed to buy optic fibre from Corning Inc for at least $1.05 billion over the next three years. The purchase is aimed at improving its network infrastructure, said the No. 1 wireless carrier in the U.S.
Starting from 2018, Corning will sell up to 12.4 million miles of optical fiber to Verizon year on year upto 2020 with a minimum purchase commitment of $1.05 billion, reads the agreement.
With the news reaching the market the shares of both companies closed nearly 1% higher.
Verizon has stated the deal will help it meet its rollout commitments for a fibre-optic network in Boston.
The company view fibre optic connections as critical for its 5th generation network.
Verizon is already testing a 5G fixed wireless service with Ericsson, an equipment manufacturer, in eleven U.S. markets.
It expects to commercially launch 5G services in the U.S. in early 2018.
Ajit Pai, the U.S. Federal Communications Commission Chairman said in a statement that he supported the deal and that the agency would “continue to focus on creating a regulatory climate that favors greater investment and competition.”
Like Verizon, AT&T has also been buying assets in preparation for launch of 5G services in 2018.
As per multiples sources knowledgeable with the matter at hand, Verizon is considering making a takeover offer for Straight Path Communications Inc, a wireless spectrum license holder, which would top AT&T’s $1.25 billion bid.
The company has disclosed it would evaluate opportunities to build out or buy fibre on a market-by-market basis.
Earlier this year in February, Verizon had said it had closed on its acquisition of XO Communications’ fiber-optic network business for about $1.8 billion. It has also hinted it is eyeballing Charter Communications Inc, a cable provider, through which it could tap a fibre and cable network that servrs 49 million homes.
In December 2016, Lowell McAdam, Verizon’s Chief Executive had told investors that a deal with Charter would make “industrial sense,” which flamed takeover speculations.