Verizon is on a mission to declare its dominance in the fiber-based networking space. The telecom giant Tuesday committed to purchasing $1.05 billion in fiber-optic cable from specialty manufacturing company Corning.
Via the terms of the new deal, Corning will provide Verizon with up to 12.4 million miles of optical fiber cable and associated hardware for three years, starting in 2018 and going through 2020. The three-year, $1.05 billion deal is a minimum purchase commitment, Verizon said in a statement.
Verizon said that it will put this fiber investment toward the expansion of its Fios platform, the carrier's fiber-based network that delivers high-speed Internet, TV, and phone services to consumers and small-business customers. The purchase will also help support Verizon's next-generation networking plans, which include an architecture that can support all the carrier's business units, improve 4G LTE coverage, and speed the deployment of 5G.
The Basking Ridge, N.J.-based carrier said that it identified a fiber supply shortage and has been working with its business teams to fill supply gaps with its existing suppliers and calculate future demand. The carrier said that with Corning's help, it will be able to meet its fiber rollout goals.
"Corning's unique combination of capabilities delivers solutions that provide us with performance and cost advantages as we continue to expand our network coverage and capacity," Roger Gurnani, Verizon's chief information and technology architect, said in a statement.
Verizon has been aggressively acquiring new fiber assets and building out its network. Verizon closed its $1.8 billion acquisition of XO Communications in February, which gave Verizon access to XO’s robust fiber-based IP and Ethernet networks. The deal brought Verizon's fiber footprint into 45 of the 50 largest U.S. cities.
Verizon in 2016 launched One Fiber in Boston, a multi-purpose network that can deliver consumer wireline, wireless and business services that is said to be the next generation of Fios. The carrier has plans to invest $300 million over the next six years to further deploy its One Fiber infrastructure throughout Boston and replace the city's legacy copper-based network infrastructure with fiber.
News of the deal sent Corning's stock up on Tuesday morning by 2.41 percent to $27.18 per share.