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Alphabet Inc. (GOOGL.O) has announced its intention to seek external investment for GFiber, its subsidiary dedicated to providing Wi-Fi and internet connectivity across parts of the United States. The move signals Alphabet’s ambition to accelerate the expansion of GFiber services into more cities.
GFiber, a business under Google’s parent company, competes directly with major internet service providers such as Comcast (CMCSA.O), Verizon Communications (VZ.N), and AT&T (T.N). Initially promising a 100-fold increase in internet speeds through fiber-optic cables 14 years ago, GFiber has gradually expanded its reach, operating in 15 states since its launch in Kansas in 2012.
Despite tripling its customer base over the past six years and securing deals in 2023 to extend its services to over 25 additional cities, GFiber still faces stiff competition from established players. Notably, it has yet to provide internet services in several populous areas, including six of the top 10 most populous cities in the U.S., such as New York.
Ruth Porat, Alphabet’s president and chief investment officer, expressed optimism about GFiber’s future, stating that seeking external capital would facilitate the company’s technical leadership, expand its coverage, and enhance internet access in more communities.
While Alphabet did not disclose specific fundraising targets or valuation figures for GFiber, sources close to the company revealed that GFiber had enlisted an investment bank to initiate the process of selling equity. The ultimate aim, according to an anonymous source familiar with Alphabet’s efforts, is for GFiber to operate independently from Alphabet.
Dinni Jain, CEO of GFiber, expressed readiness to accelerate the company’s growth, stating, “We are now ready to scale this much faster.”
GFiber is among Alphabet’s “Other Bets,” a category encompassing businesses beyond Google that are still in early stages of research or commercialization. These include ventures like health company Verily and self-driving car business Waymo. In 2023, the Other Bets collectively reported a loss of $4.1 billion on revenue of $1.5 billion.
Alphabet’s CFO, Ruth Porat, emphasized the company’s strategy to sharpen its investment focus while leveraging emerging technology breakthroughs across its portfolio. She also mentioned that Alphabet’s moonshot division, X, was exploring opportunities for external capital to advance its projects.
Despite recent job cuts and efforts to enhance cost efficiency across the company, Alphabet has not disclosed any direct relation between GFiber’s fundraising initiative and its broader cost-efficiency program.