Alphabet Seeks External Investment for GFiber Expansion

Alphabet, the parent company of Google, has disclosed its intention to seek external investment for GFiber, its business segment dedicated to offering Wi-Fi and internet connectivity services across various parts of the United States. The move, announced to Reuters on Monday, is aimed at accelerating the expansion of GFiber’s services to additional cities.

Competing with established giants in the internet service provision sector such as Comcast, Verizon Communications, and AT&T, GFiber has been on a mission since its inception 14 years ago to revolutionise internet speeds through fibre-optic cables. Beginning with its launch in Kansas in 2012, the company has gradually expanded its operations to encompass 15 states. Over the past six years alone, GFiber has tripled its customer base, with recent deals signed in 2023 poised to extend its services to over 25 additional cities.

Despite its notable growth, GFiber continues to face stiff competition from incumbent players and has yet to penetrate significant portions of the U.S. market, including six of the country’s ten most populous cities, notably New York.

Ruth Porat, President and Chief Investment Officer of Alphabet, expressed optimism about the move, stating that raising external capital will enable GFiber to bolster its technical prowess, widen its reach, and provide enhanced internet access to more communities across the nation.

While Alphabet declined to disclose specifics regarding the amount of funds GFiber aims to raise or the valuation it seeks, reports suggest that the company has already engaged an investment bank to facilitate the sale of equity in GFiber. The ultimate objective is for GFiber to attain independence from Alphabet, according to a source familiar with the matter.

GFiber’s CEO, Dinni Jain, affirmed the company’s readiness to expedite its expansion plans, expressing confidence in its ability to scale rapidly with external investment support.

GFiber falls under Alphabet’s “Other Bets” category, comprising businesses beyond Google that are in earlier stages of research or commercialisation. These ventures, including health company Verily and self-driving car business Waymo, collectively incurred a loss of $4.1 billion in 2023, according to Alphabet’s annual report.

Ruth Porat emphasised Alphabet’s commitment to refining its investment focus while capitalising on technological advancements across its portfolio of Other Bets. This strategic realignment comes amidst Alphabet’s broader efforts to streamline its cost structure, with recent job cuts announced in line with industry trends.

Alphabet’s pursuit of external investment for GFiber underscores its dedication to fostering innovation and driving growth across diverse sectors, signalling a pivotal phase in the expansion of high-speed internet access and connectivity solutions in the United States.