T-Mobile US Inc. (NASDAQ: NASDAQ:TMUS) has announced a joint venture with investment firm KKR & Co. Inc. (NYSE:KKR) to acquire fiber internet company Metronet in a deal featuring purchasing Metronet's broadband infrastructure and residential fiber business operations, as well as Oak Hill Capital's stake in Metronet.
Following the transaction's close, T-Mobile will take over Metronet's residential fiber retail operations and customer relations.
Metronet, recognized as the fastest-growing pure-play fiber company in the United States, currently serves over 2 million homes and businesses in 17 states. The company plans to expand its reach to 6.5 million homes by the end of 2030, with T-Mobile responsible for residential customer acquisition and support.
Metronet will continue to focus on network deployment and customer installations. The joint venture is expected to be self-funded going forward, with T-Mobile not anticipating additional capital contributions.
The move allows T-Mobile to build on its broadband success and offer improved connectivity options nationwide. The venture complemented T-Mobile's existing 5G Home Internet service, which is used in over 5 million households and businesses.
With this partnership, Metronet aims to accelerate its network expansion, benefiting from T-Mobile's customer experience and KKR's expertise in global fiber networks.
KKR, a seasoned investor in fiber broadband, manages over $61 billion in infrastructure assets and has a track record of supporting fiber network growth worldwide. The investment in Metronet aligns with KKR's strategy of fostering digital infrastructure development.
The transaction, expected to close in 2025, is subject to customary conditions and regulatory approvals. Upon completion, T-Mobile is set to invest approximately $4.9 billion for a 50% equity stake in the joint venture and full ownership of Metronet's residential fiber operations and customer base.
InvestingPro Insights
As T-Mobile US Inc. and KKR & Co. Inc. move forward with their joint venture to acquire fiber internet company Metronet, investors are closely watching KKR's financial health and market performance. KKR, with a market capitalization of $104.68 billion, stands as a prominent player in the Capital Markets industry. Its forward-looking Price/Earnings (P/E) ratio is 25.91, reflecting expectations of future earnings. Notably, the company's Price/Book ratio, at 4.89 for the last twelve months as of Q1 2024, suggests a premium valuation compared to book value.
InvestingPro data highlights KKR's significant revenue growth, with a stunning 323.59% increase over the last twelve months as of Q1 2024. This growth trajectory is further underscored by the company's gross profit margin of 53.43%, indicating strong profitability from its operations. Moreover, KKR has demonstrated a robust return on assets of 1.99% during the same period, showcasing efficient asset utilization.
Among the key InvestingPro Tips, KKR has been recognized for raising its dividend for the past 4 consecutive years, a testament to its commitment to shareholder returns. Additionally, the company has maintained dividend payments for 15 consecutive years, which may be a point of interest for income-focused investors. With these financial metrics and strategic moves, KKR aims to bolster its position in the digital infrastructure space, complementing T-Mobile's expansion into broadband services.
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