For years, infrastructure investors such as Brookfield Infrastructure Partners LP (BIP), Macquarie Infrastructure Partners Inc., Antin Infrastructure Partners SAS and others have sought out portfolio companies in telecom infrastructure such as fiber networks, data centers or wireless towers. Increasingly, that includes landline telecoms that serve residential customers.

“The opportunity is to take the legacy copper lines and fiber-ize them,” Moelis & Co. managing director Lawrence Chu said.

Though infrastructure investors have pounced on telecoms with residential customers in upstate New York and Kansas City recently, the auction of Cincinnati Bell Inc. may be the forerunner. Brookfield Infrastructure Partners and Macquarie Infrastructure Partners squared off in multiple rounds of bidding from December 2019 to March 2020 before the latter prevailed with a $2.9 billion bid.

“Since the Cincinnati Bell deal, infrastructure funds are expanding the definition of infrastructure to include consumer broadband and providing competition to private equity firms,” said Chu, who led the Moelis team advising Cincinnati Bell.

Many local exchange carriers (LECs), the descendants of the Ma Bell local phone system, have outdated networks in the age of Netflix Inc. (NFLX), remote work and big data. Cincinnati Bell was founded in 1873. Empire Access, which agreed to sell to Antin in March, dates to 1896. The predecessor of Consolidated Communications Holdings Inc. (CNSL) was formed in 1894.

Incumbent telecoms face a daunting challenge to build fiber-to-the-home, abbreviated as FTTH, or fiber-to-the-premises, or FTTP. While Cincinnati Bell had fiber in about 60% of its footprint, Antin senior partner and New York office head Kevin Genieser told The Deal that only about 30% of U.S. households have access to fiber, presenting an opportunity for whoever can lay it down first.

Divesting some markets makes the task a little more manageable. “Some of the strategics just don’t have enough manpower and resources to fiberize everything at once,” Chu said. Selling legacy networks and their declining revenues while raising cash is an interesting proposition for the telecoms.