Alphabet GFiber Seeks External Investment to Accelerate Expansion
Alphabet has revealed plans to secure external investment for GFiber, its Wi-Fi and internet connectivity business operating in parts of the United States. The company is poised to intensify its expansion into additional cities, competing with major players such as Comcast, Verizon Communications, and AT&T.
Since its inception in 2012 in Kansas, GFiber has expanded its reach to 15 states, committing 14 years ago to enhancing internet speeds through fiber-optic cables. Over the last six years, the company has tripled its customer base, though specific user numbers remain undisclosed. In 2023, GFiber inked deals to extend its services to over 25 additional cities, addressing the challenge of reaching significant parts of the U.S., including six of the most populous cities such as New York.
Strategic Move: External Capital for Growth
In a strategic move to foster further growth, GFiber aims to raise external capital. The objective is to scale its technical leadership, expand its geographical reach, and enhance internet access in more communities. Alphabet’s President and Chief Investment Officer, Ruth Porat, emphasized the importance of this step for advancement.
Alphabet, however, has not disclosed the specific amount of funds GFiber aims to raise or the valuation it is seeking. The company has already engaged an investment bank to initiate the equity selling process, with the ultimate goal of achieving independence for GFiber from Alphabet, according to an anonymous source familiar with the matter.
CEO Dinni Jain, conveyed the company’s preparedness to expedite the scaling process, underscoring its aspiration for faster growth. GFiber falls under Alphabet’s category of “Other Bets,” housing businesses beyond Google in earlier stages of research or commercialization. Notable entities in this category include health company Verily and self-driving car business Waymo, both having received investments from external sources.
In 2023, Alphabet’s Other Bets collectively incurred a loss of $4.1 billion on revenue of $1.5 billion, primarily fueled by internet and healthcare-related services, according to the company’s annual report. Ruth Porat, also serving as Chief Financial Officer, highlighted Alphabet’s goal of focusing investments while capitalizing on technological breakthroughs across the portfolio of Other Bets.
Alphabet’s moonshot division, X, is also seeking external capital to facilitate the spin-out of more projects. The company, in line with other players in the tech sector, is undergoing cost-cutting measures, including recent job cuts. Alphabet, however, has not officially confirmed whether GFiber’s fundraising is directly linked to its broader cost-efficiency program.
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