Verizon has confirmed that it will purchase WideOpenWest’s Chicago fiber network for $225 million, a move that will bolster the service provider’s wireless backhaul capabilities for current 4G and upcoming 5G wireless deployments.
The two service providers expect to close the deal early in the first quarter of 2018.
As part of the agreement, Verizon will pay WOW an additional $50 million to complete Chicago network build in second-half 2018, making the deal $275 million when it is completed.
RELATED: Report: Verizon in discussions to acquire WideOpenWest’s Chicago fiber network
Confirmation of Verizon’s acquisition of WOW! Chicago fiber assets follow a report in Reuters report citing people close to the companies that the two companies were working out a sale of the fiber assets.
Through this purchase, Verizon will secure fiber to more than 500 macro-cell wireless sites and more than 500 small-cell wireless sites.
WOW!’s Chicago fiber network is designed to support multiple services, including not only wireless backhaul, but also business services. The network already connects Verizon Wireless macro towers and small cells, and will reduce Verizon's fiber leasing costs.
Similar to its acquisition of XO, the WOW! purchase falls in line with Verizon’s mentality to get fiber from various sources—building its own, leasing or purchasing other available assets.
Earlier this year, Verizon signed a $1.1 billion, three-year fiber and hardware purchase agreement with Corning. The telco will purchase up to 20 million km (12.4 million miles) of optical fiber each year from 2018 through 2020.
The telco also signed a $300 million agreement with Prysmian as a secondary fiber supplier. Prysmian will supply Verizon with over 17 million kilometers (10.6 million miles) of ribbon and loose tube cables.
Matt Ellis, CFO of Verizon, reiterated this thesis during its second quarter earnings call.
“The way that we're going to add that capacity will be probably through a combination of buying fiber that already exists if it's the right type of fiber,” Ellis said during the earnings call, according to a Seeking Alpha transcript. “We can build fiber, and we can certainly lease.”
Verizon’s purchase follows a recent flurry of fiber deals taking place from a host of incumbent, regional and even tower providers like Crown Castle to satisfy current 4G and upcoming 5G small cell deployments.
Crown Castle, a tower real estate investment trust (REIT), is in the process of purchasing Lightower Fiber Networks for $7.1 billion. While the Lightower purchase is about fulfilling Crown Castle’s ability to address small cell backhaul, the acquisition doubles its fiber network to serve a host of other market segments, including education, government and health care.