This article first appeared on GuruFocus.
Alphabet (GOOGL, Financials) is reshaping its broadband strategy by merging its fiber internet business, GFiber, with Astound Broadband to create a new independent internet provider.
As part of the arrangement, Google will keep a small share in the company, and Stonepeak, an investment firm, will become the primary owner of the new company. The deal is likely to finalize in the fourth quarter.
Google states that the existing GFiber leadership team will run the new provider. They will be in charge of the enlarged network and continue building high-speed fiber infrastructure. The firms want to reach more people and compete better in the U.S. broadband market by integrating their operations.
For a long time, GFiber has been one of Google’s most experimental initiatives. The service started in 2010 with the goal of bringing super-fast fiber internet to communities in the United States. In 2012, it started its first big deployment in Kansas City. At the time, it offered gigabit-speed internet that was far quicker than regular broadband.
Alphabet’s Other Bets category is where GFiber fits in. This group comprises new and experimental firms like the self-driving vehicle startup Waymo (WAYMO) and the biotech company Isomorphic Labs.
The transaction shows that Alphabet is moving toward outside investment and partnerships as it strives to simplify and grow its non-core businesses.
