Moorgate sees fiber demand driving M&A among large, midsize operators into 2026

➤ Interest rates impact M&A, but yields show potential for outsized returns in fiber projects.

➤ Fixed wireless growth intensifies competition, yet both fiber and fixed wireless markets expand.

➤ Midsize operators pursue M&A for scale, operating efficiencies, and access to capital markets.

Demand for fiber is surging among consumers and investors. Roughly 80 million fiber-to-the-home (FTTH) connections exist, a figure expected to grow by more than 50% over the next five years. This expansion is driven by plans from Tier 1 and Tier 2 telecommunications companies, alongside new FTTH platforms.

The increased demand and investment have led to a rise in M&A. In the 18 months ended July 1, about $45.50 billion was spent on major fiber deals, according to S&P Global Market Intelligence Kagan estimates. This amount is about double the spending on major fiber M&A in the three prior years, which ended December 2023.

To learn more about past and expected future deals, S&P Global Market Intelligence spoke to Michael Alexander, co-founder of Moorgate Capital Partners LLC, an independent investment banking firm focused on the technology, media and telecom sectors. Alexander described the factors driving fiber M&A, the impact of interest rates and fixed wireless, and gave his latest take on how the billions of dollars in the government's Broadband Equity, Access, and Deployment (BEAD) Program are likely to be allocated.

S&P Global Market Intelligence: Michael, could you get us started with a bit of Moorgate's history and the kinds of deals that you guys are tackling?

Michael Alexander: Sure, absolutely. I've been a TMT-focused investment banker now for over 30 years, since the last century. And so I have been advising broadband companies, wireless companies and media companies on M&A and capital formation, capital raising for the vast majority of that time. Before I started Moorgate 17 years ago, I spent the majority of my career with JPMorgan Chase & Co. I've witnessed quite a lot of transformational events within the communications sector, whether it's liberalization of the European telecommunications markets or helping raise billions of dollars of capital for the construction of European cable, GSM and PCS wireless networks. Most recently, we've been participating in this generational shift away from legacy last-mile residential broadband networks in the US to fiber-to-the-home.

In terms of transactions that we spend our time on, we do a lot in broadband residential last mile with cable broadband operators. Cable operators are transitioning their networks and upgrading their networks to pure-play fiber-to-the-home. We also do a lot of buy-side work in capital advisory. A few notable transactions where we were an exclusive financial adviser include the sale of Adams CATV Inc. to Blue Ridge Communications. We sold Morris Broadband LLC in a $310 million transaction to Altice USA Inc.. That one was notable because we believe it's the highest ever cable broadband sale multiple, with a purchase price multiple of 28x. We sold the Leaf Group Ltd. to Graham Holdings Co. for $323 million. So that's just a flavor of some of the deals that we do.

We spent a long time in essentially a zero-interest-rate period, but the last couple of years have seen significantly higher rates. How has that impacted fiber M&A more recently?

Interest rates are always a factor in both M&A and capital raising. I think the good news is that yields, while not back to what you refer to as a zero-rate environment, are starting to move back in the right direction. When we talk about broadband and what I referred to earlier as a generational shift, the projects that our clients are working on have significant potential for yields dramatically in excess of the cost of capital. So with the potential for outsized returns, particularly for greenfield fiber-to-the-home operators, we're still seeing a significant appetite amongst private equity, amongst infrastructure funds, amongst strategics, amongst private credit and traditional commercial lenders for the types of projects that we're advising our clients on.

Has the success of fixed wireless in the US dampened demand for FTTH at all?

When we talk about broadband and particularly residential connectivity, we've seen a sector that has historically been dominated by cable broadband. Until the 2021/2022 time frame, cable enjoyed the vast majority of market share and almost 100% of net adds in the market. What we've seen since that time is a really rapid and probably unprecedented intensification of the competitive environment. And that has been driven by fixed wireless and by growth in investment in fiber-to-the-home. What's really driven by is telco competition because when we think of the 13 million fixed wireless subscribers — up from practically zero four years ago — the vast majority of those are T-Mobile US Inc., Verizon Communications Inc. and now more recently, AT&T Inc. Those same companies are also the large majority of fiber-to-the-home additions over a similar period. So the answer is there's been dramatic growth in both. We still have 70 million broadband subscribers or thereabouts, which are cable broadband, versus 15 million fixed wireless, and less than 30 million fiber. So there's still a lot of growth for both. And when you see the targets, all driven by telco convergence between fixed and wireless, the expectation is for considerably more investment in both fixed wireless and fiber-to-the-home.

When you talk about greenfield fiber projects, are those primarily overbuilds? Or is that in areas unserved by cable broadband?

Both. Maybe a better term is independent fiber platform. So when we look at where the fiber build is coming from, AT&T, Verizon and now T-Mobile, particularly post closing of the MetroNet and Lumos transactions — that's going to be the vast majority of the roughly 40 million additional fiber homes that are going to be built over the next 5 years. Then you have the second-tier telcos, the Brightspeeds and Ziplys of the world. And then you also have the independent fiber-to-the-home platforms, which have around 9 million passings and are growing rapidly.

How are the ongoing changes to the BEAD program impacting capital raising decisions?

The federal BEAD program, we're right in the throes of it right now. It's clearly reinforcing the momentum in terms of new fiber-to-the-home builds fiber investment. We have 52 states and territories that have now submitted BEAD proposals, $18.4 billion of awards and approximately 3.7 million underserved and underserved locations. Roughly two-thirds of the awards are going to fiber locations. So we're talking 2 million or 2.5 million locations. While those locations are critical relative to serving the underserved, they are relatively small compared to the 40 million additional fiber homes that we'll see outside of the program. So yes, it reinforces the overall shift in focus and investment to fiber, but it's a small piece of it.

In terms of M&A, you do a lot of work with middle-market clients. Is there a need for mid-size operators to get bigger, either in terms of synergies or critical mass? Is it buy or be bought

So we've seen a surge in M&A activity in broadband over the last couple of quarters, right? We've seen the large-cap transactions: BCE Inc. and Ziply; obviously, Charter Communications Inc.'s acquisition of Cox Enterprises Inc.; and AT&T's acquisition of Lumen Technologies Inc.'s assets. But what we're also seeing is that amongst the independent fiber platforms, there is a lot of activity. Whether it's tuck-in acquisitions — like Ezee Fiber Texas LLC's acquisition of Tachus Infrastructure LLC or Greenlight Networks LLC's acquisition of Loop Internet Holdco LLC — we're seeing mergers of affiliated independent groups and certainly a lot of dialogue and activity. And we expect transaction announcements around mergers of unaffiliated independent platforms. There are clearly benefits of scale — operating efficiencies, leveraging best practices and accessing deeper, more liquid capital markets. We've seen over $14 billion of issuance in fiber-to-the-home in the [asset-backed securities] market. There are many that perceive greater strategic value if you have a critical mass of fiber passings, critical mass being north of 500,000 passings. There are a number of reasons to look to M&A to scale, and we expect a continuation of this trend into 2026.