The wireless carrier is ramping up its fibre optic network ahead of the launch of its fixed 5G wireless technology.
As per sources familiar with the matter at hand, Verizon Communications Inc is said to be in talks to acquire WideOpenWest Inc’s fiber optic network in the Chicago area and has offered more than $200 million for it.
With growing demand from data from U.S. business houses, there has been a flurry of deals for fiber optic assets. The heightened demand is also pushing large telecommunication companies to bulk up their fiber assets.
Case in point: earlier this month Crown Castle International Corp disclosed it would acquire Lightower Fiber Networks for $7.1 billion in order to bulk up its data traffic capabilities.
WideOpenWest has a market capitalization of nearly $1.4 billion and went public in May. Sources reveal that the company is working with a financial adviser to explore the potential sale of its unit.
While Verizon declined to comment, WideOpenWest did not respond to a request for comment.
According to a corporate filing, since 2014 WideOpenWest has being building a 1,200 miles fiber network in the Chicago market for a “leading wireless carrier”.
Sources identified the carrier as Verizon. They went on to add, the company has been using WideOpenWest’s fiber network in Chicago for backhaul, i.e., the transfer of data from mobile towers through wired lines.
While Verizon’s contract with WideOpenWest is long term, the latter has disclosed it would find more businesses to use its fiber optic network.
Verizon has identical fiber optic as a key component for its next generation 5G wireless technology and it has been testing a 5G fixed wireless service with Ericsson before a commercial launch slated for early 2018.
Verizon has said it would evaluate its options of building or buying fibre on a market-to-market basis.
Earlier this year in February, it acquired XO Communications’ fiber-optic network business for about $1.8 billion. In April it struck a deal to buy optical fiber from Corning Inc for around $1.05 billion over the next three years.
Clearly the wireless carrier is ramping up for a data hungry future. Its quarterly revenues have topped analyst expectations. It has added 614,000 subscribers who pay a monthly bill.