Brightspeed secures cash to accelerate fiber build, pursue BEAD

Brightspeed has cut some debt and raised a gob of financing to help fuel the operator's fiber network builds and to pursue multiple government subsidy initiatives, including the $42.45 billion Broadband Equity Access and Deployment (BEAD) program.

Specifically, the company said it has secured $3.7 billion in new financing while eliminating $1.1 billion of total debt.

Tied in, the company has launched a more aggressive plan to bring fiber to more than 4 million homes and businesses, with an initial target of passing 1.75 million locations by the end of the year. Brightspeed said the transaction includes all of its financial stakeholders, including all of its secured lenders and funds managed by Apollo Global Management, to support the build.

The company also announced that Michel Combes, a former Softbank, Sprint and Alcatel-Lucent exec, has been tapped to serve as Brightspeed's chairman of the board as the company pursues this new growth phase. Bob Mudge, Brightspeed's former chairman, will continue to serve on the board.

"We have successfully brought fiber connectivity to 1.4 million homes and businesses and have upsized our build plan with an expanded goal of reaching more than four million locations with our state-of-the-art fiber network," Brightspeed CEO Tom Maguire said in a statement.

Brightspeed's current network covers parts of 20 states in the Midwest and eastern US.

Brightspeed has deployed fiber to roughly 500,000 locations at year-end 2023, up from 200,000 in June 2023, and the new pace is set to double in 2024 – from 1,600 locations to 3,800 locations per day, according to an initial analysis from New Street Research.

New target could be reached by late 2026

"At this pace, the Company should easily reach its target of 1.75MM locations with fiber by year-end 2024," New Street analyst Jonathan Chaplin explained in this research note. "If the Company continues deploying at the current pace, they will hit the 4MM target in late 2026 or early 2027."

Based on $3,300 per fiber location and $250 per copper location, Chaplin believes Brightspeed is worth about $5.9 billion today, and will climb to $7 billion at year-end and $13.8 billion in 2026 as the company expands its fiber footprint.

"It is worth noting that other ILECs with fiber, like Frontier and Lumen, are not receiving this value for their fiber assets today. We believe they will in due course," he noted.

Sizable BEAD opportunity

Chaplin estimates that Brightspeed has about 1.1 million BEAD-eligible locations in its 20-state footprint. Those locations could receive BEAD funding of up to $3.7 billion – or $3,293 per location on average – he estimated.

Brightspeed's more aggressive fiber activity could put more pressure on cable competitors, at least outside of potential BEAD locations. Chaplin says Charter Communications has the greatest overlap with Brightspeed, at 40%, followed by Comcast (16%) and Altice USA (8%).

Editor's note: This story was corrected to note that Brightspeed secured $3.7 billion in new funding (not $3.7 million) for its fiber buildout plans.