(Reuters) - U.S. wireless carrier Verizon Communications Inc (VZ.N) is in talks to acquire cable operator WideOpenWest Inc’s WOW.N fiber network in the Chicago area for more than $200 million, according to people familiar with the matter.
There has been a flurry of dealmaking for fiber assets, as growing demand from U.S. businesses for data transmission has fueled a revival in fiber optic services and is pushing large telecommunication companies to bulk up in fiber.
Earlier this month, tower operator Crown Castle International Corp (CCI.N) said it would buy Lightower Fiber Networks for $7.1 billion, in a bid to boost its data traffic capabilities.
No deal between WideOpenWest and Verizon is certain and negotiations could still fall apart, said the sources, who asked not to be identified because the negotiations are confidential. Another buyer could still emerge for the asset, the sources added.
WideOpenWest, which has market capitalization of around $1.4 billion and went public in May, is working with a financial adviser to explore a sale of the unit, the people said.
WideOpenWest did not respond to a request for comment. Verizon declined to comment.
Since 2014, WideOpenWest has built about 1,200 miles of fiber in the Chicago market for a “leading wireless carrier,” according to a corporate filing. The sources identified this carrier as Verizon.
Verizon uses WideOpenWest’s fiber system in Chicago for backhaul, which is the data transfer of mobile traffic over wired lines, according to the sources.
While it is under a long-term contract with the wireless carrier, WideOpenWest had said it expected it would find more business customers to use the fiber.
Verizon views fiber as critical for its next generation 5G wireless technology and has been testing a 5G fixed wireless service with equipment maker Ericsson (ERICb.ST) before a commercial launch as early as 2018.
Verizon has also said it would evaluate opportunities to build out or buy fiber on a market-by-market basis. In April, it struck a deal to buy optical fiber from Corning Inc (GLW.N) for at least $1.05 billion over the next three years. In February, it closed on its acquisition of XO Communications’ fiber-optic network business for about $1.8 billion.
Verizon reported quarterly revenue that topped analyst expectations on Thursday, adding 614,000 subscribers who pay a monthly bill, including tablet customers..
Reporting by Liana B. Baker; Additional reporting by Anjali Athavaley in New York; Editing by Leslie Adler