Private equity firms discuss the business model of fiber deployments

WIA Connect(X) show panelists were asked if there is a magic number that developers should target for the cost per home passed with fiber. Beth Hoffman, managing director with Berkshire Partners, said that a lot of it depends on the density of the market. The cost per home passed in a dense city like San Francisco (CA) could be as low as $700. But in many of the rural areas that Broadband Equity, Access, and Deployment (BEAD) is targeting, the cost will be in excess of $3,000 per home passed. But there are numerous variables that can throw off business models. Paul Pishal, business development director for Connectivity, Commercial & Industrial with Black & Veatch, said, “If there’s a river crossing, you’ll never get your return on investment.” Patrick Fear, managing director with AB - Private Credit Investors, noted that the current macroeconomic environment with high-interest rates also plays a big factor. “With rates where they are, what’s the actual cash flow? Any business that’s using a meaningful amount of debt today is more at risk.” In February 2023, AT&T’s CFO Pascal Desroches said of the company’s fiber build: “I think it’s fair to say that it’s probably costing us more than we thought when we started.”