Alphabet is seeking outside investment for its GFiber internet business
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[February 06, 2024] By
Jeffrey Dastin
SAN FRANCISCO (Reuters) - Alphabet plans to seek external investment for
GFiber, its business selling Wi-Fi and internet connectivity in parts of
the United States, the company told Reuters on Monday, as it looks to
ramp up its expansion to more cities.
GFiber, owned by Google's parent company, competes with larger internet
service providers including Comcast, Verizon Communications and AT&T.
Since vowing 14 years ago that it would boost internet speeds 100-fold
through fiber-optic cables, GFiber has expanded to 15 states starting
with its 2012 launch in Kansas.
In the past six years, it has tripled its customer base, GFiber told
Reuters, without specifying total users. It signed deals in 2023 that
would bring its services to more than 25 additional cities.
Still, the company faces competition from big incumbents and has yet to
provide internet in large swaths of the U.S., including six of the 10
most populous cities including New York.
"This next step of raising external capital will enable them (GFiber) to
scale their technical leadership, expand their reach, and provide better
internet access to more communities," Ruth Porat, Alphabet's president
and chief investment officer, told Reuters in a statement.
Alphabet declined to comment on the amount of funds GFiber was looking
to raise or the valuation it was seeking.
GFiber has already hired an investment bank to start the process of
selling equity in the company, according to a source close to Alphabet's
efforts. The future goal is for GFiber to be independent from Alphabet,
the source said on condition of anonymity.
GFiber CEO Dinni Jain said in a statement: "We are now ready to scale
this much faster."
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Alphabet logo is seen near computer motherboard in this illustration
taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
OTHER BETS
GFiber is one of Alphabet's so-called Other Bets, its collection of
businesses other than Google that are at an earlier stage of
research or commercialization. They include health company Verily
and self-driving car business Waymo, which have both raised money
from outside investors.
In 2023, the Other Bets collectively lost $4.1 billion on revenue of
$1.5 billion, primarily generated by internet and healthcare-related
services, according to Alphabet's annual report.
Porat, who also serves as chief financial officer, told analysts
last week that Alphabet aimed to "sharpen our investment focus,
while capturing the upside given compelling technology breakthroughs
across the portfolio" of Other Bets.
One such business, Alphabet's moonshot division known as X, was also
looking for external capital to spin out more projects, she said at
the time. Alphabet generally is working to revamp its cost base,
Porat said.
The company, like others in the technology sector, has recently
announced job cuts. It declined to comment on whether GFiber's
fundraising effort had any relation to Alphabet's overall
cost-efficiency program.
(Reporting by Jeffrey Dastin in San Francisco; Editing by Jamie
Freed)
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