Alphabet seeks external investments for GFiber expansion

Alphabet’s GFiber: Alphabet, the parent company of Google, has disclosed plans to seek external investment for its GFiber business, which provides Wi-Fi and internet connectivity in select areas of the United States. This move aims to accelerate the expansion of GFiber into more cities across the country.

Initially launched in Kansas in 2012 with the ambitious goal of significantly increasing internet speeds through fibre-optic cables, GFiber has since expanded its presence to 15 states. Over the past six years, the company has tripled its customer base, although specific user figures were not disclosed. Additionally, GFiber has recently secured agreements to extend its services to over 25 additional cities in 2023.

Despite its growth, GFiber faces stiff competition from established internet service providers like Comcast, Verizon, and AT&T and has yet to establish coverage in major metropolitan areas, including New York City.

Ruth Porat, President and Chief Investment Officer of Alphabet, stated that seeking external capital will enable GFiber to further enhance its technical capabilities, broaden its reach, and provide improved internet access to more communities.

While the exact amount of funding GFiber seeks and its targeted valuation remain undisclosed, the company has engaged an investment bank to facilitate the equity sale process. Ultimately, GFiber aims for independence from Alphabet.

CEO Dinni Jain expressed readiness to accelerate GFiber's expansion, signalling the company's commitment to growth.

GFiber falls under Alphabet's "Other Bets" category, which encompasses businesses beyond Google, such as health company Verily and self-driving car venture Waymo. In 2023, the Other Bets collectively recorded a loss of $4.1 billion on revenue of $1.5 billion, primarily from internet and healthcare services.

Porat highlighted Alphabet's strategy to focus investments on promising technologies within its portfolio while pursuing cost efficiencies. This includes seeking external capital for Alphabet's moonshot division, X, to advance innovative projects.

Alphabet's broader efforts to streamline costs have included recent job cuts, although the company has not commented on any direct correlation between GFiber's fundraising initiative and its overall cost-efficiency program.

(With Reuters inputs)