Alphabet, Google’s parent company, has announced plans to seek external investment for its GFiber internet service business. GFiber provides high-speed internet and Wi-Fi connectivity in select markets across the United States.
Securing outside funding will enable GFiber to significantly accelerate its expansion efforts to additional cities.
Steady Customer Growth, But Big Metro Areas Untapped
Despite Alphabet’s goal in 2008 to boost internet speeds 100-fold through advanced fiber-optic technology, GFiber has faced an uphill battle in gaining market share. It has operated in only 15 states since launching in Kansas City in 2012.
GFiber competes against telecommunications giants like Comcast, Verizon, and AT&T, which have long-established national networks. Over the past six years, GFiber has achieved an impressive milestone by tripling its customer base, indicating steady growth.
However, Alphabet declined to disclose the total number of subscribers. In 2023 alone, GFiber secured agreements to bring services to over 25 additional cities nationwide.
Despite its progress, GFiber has yet to penetrate some of the largest metropolitan areas in the country.
It does not currently provide internet access in six of the ten most populous U.S. cities, including New York. Expanding into these densely populated regions represents a massive opportunity for GFiber to significantly increase its market share and customer base.
In a report by Reuters, alphabet’s president and chief financial officer, Ruth Porat, emphasized the company’s strategic vision. He stated that this next step of raising external capital will enable GFiber to scale its technical leadership, expand its reach, and provide better internet access to more communities.
However, Alphabet has not disclosed the specific amount of funding it seeks to raise for GFiber or its target valuation.
Part of Alphabet’s Broader “Other Bets” Growth Strategy
GFiber is part of Alphabet’s “Other Bets” portfolio, encompassing its businesses outside of Google. These ventures are typically in earlier research, development, and commercialization stages.
Other Bets include companies like Verily (healthcare technology) and Waymo (self-driving cars), which have successfully secured investments from external partners.
According to Alphabet’s 2023 annual report, its Other Bets division collectively generated $1.5 billion in revenue, primarily from internet and healthcare services, but incurred a net loss of $4.1 billion as it invests heavily in growth and innovation.
Ruth Porat recently stated that Alphabet aims to “sharpen its investment focus” and capitalize on compelling technological breakthroughs across its Other Bets portfolio.
The company’s “moonshot factory” division, X, also seeks external capital to spin off more projects.
Alphabet has recently joined other major tech firms in implementing job cuts to streamline operations and reduce costs. However, the company has not confirmed whether GFiber’s capital raise is directly linked to its broader restructuring and cost optimization efforts.
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