KKR and T-Mobile have teamed up as possible bidders in the auction process for internet service provider Hotwire Communications, said sources familiar with the matter.

Fort Lauderdale, Florida-based Hotwire is working with Goldman Sachs on the sale process, which recently reached the second round.

Trade news publication TMT Finance first reported on the sale earlier this year, naming Goldman as advisor and T-Mobile as a possible bidder. The report also states that dealmakers were weighing a minority stake option.

However, a possible deal is being structured for the entire business, said one of the sources. Four to five parties are involved in the auction, the sources noted.

Hotwire owns and operates fiber-optic networks in Florida, Georgia, Texas, Arizona, Nevada, South Carolina, North Carolina, Pennsylvania and California. It targets residential, commercial, senior-living, hospitality and campuses, according to its website.  ISPs typically lease space on networks owned by other firms.

Growing organically and inorganically

When Blackstone Infrastructure Partners and Blackstone Tactical Opportunities Fund together acquired a 50% stake in Hotwire in April 2021, the company was generating about USD 100m in EBITDA. That figure was expected to grow over the years as Hotwire had several developments underway.

Since then, Hotwire has built out those networks and raised over USD 2bn in asset-backed securities, according to Infralogic data.

Around the same time Blackstone bought Hotwire, KKR made its USD 1bn deal with Oak Hill Capital Partners to acquire a stake in pure-play fiber-optics firm MetroNet, which had a similar earnings profile as Hotwire. Eventually, KKR formed a joint venture with T-Mobile to acquire all of MetroNet in July 2024, a transaction that has not yet closed.

Carriers branch out into fiber

For several years, T-Mobile, as well as Verizon and AT&T, have been getting into the fiber business as a path to growth.

A year ago, T-Mobile formed a joint venture with EQT Infrastructure VI to acquire fiber-to-the-home Lumos from the EQT Infrastructure III fund. That deal closed weeks ago with T-Mobile investing USD 950m into the JV, with an additional USD 500m planned between 2027 and 2028 to support further expansion.

Meanwhile, Verizon last year acquired Frontier Communications in an all-cash transaction valued at USD 20bn as part of its fiber strategy. In May 2023, AT&T formed a joint venture with BlackRock’s infrastructure business to establish fiber-network firm Gigapower.

AT&T has also been rumored to be a potential buyer of Lumen Technologies’ consumer fiber business.

Hotwire Communications, KKR and Blackstone declined to comment. T-Mobile and Goldman Sachs did not respond to requests for comment.