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NEW YORK Verizon Communications Inc (VZ.N) has agreed to buy optical fiber from Corning Inc (GLW.N) for at least $1.05 billion (817.38 million pounds) over the next three years as the No. 1 U.S. wireless carrier aims to improve its network infrastructure, the companies said on Tuesday.
Corning will sell up to 12.4 million miles of optical fiber to Verizon each year from 2018 through 2020, with a minimum purchase commitment of $1.05 billion, according to the agreement. Shares of both companies closed up roughly 1 percent.
In a statement, Verizon said the deal would help it meet its rollout schedule for a fiber-optic network in Boston.
The company also views fiber as critical for a next generation, or 5G network. Verizon is testing a 5G fixed wireless service with equipment maker Ericsson in 11 U.S. markets and expects a commercial launch as early as 2018.
U.S. Federal Communications Commission Chairman Ajit Pai said in a statement that he supported the deal and that the agency would "continue to focus on creating a regulatory climate that favors greater investment and competition."
Both Verizon and competitor AT&T Inc (T.N) have been buying assets in preparation for 5G. On Friday, sources told Reuters that Verizon is considering making a buyout offer for wireless spectrum license holder Straight Path Communications Inc (STRP.A) that would top AT&T Inc's (T.N) $1.25 billion bid. [nL3N1HL5QZ]
Verizon has said it would evaluate opportunities to build out or buy fiber on a market-by-market basis. In February, Verizon said it had closed on its acquisition of XO Communications' fiber-optic network business for about $1.8 billion.
Verizon has also hinted at an interest in buying cable provider Charter Communications Inc (CHTR.O), which would give it access to a fiber and cable network across 49 million homes.[nL1N1HK29X]
Verizon Chief Executive Lowell McAdam told investors in December that a deal with Charter would make "industrial sense," igniting takeover speculation.
But in an interview with CNBC on Tuesday, McAdam said the company had not found the right "architectural fit" that would justify doing a big deal.
(Reporting by Anjali Athavaley; Editing by Dan Grebler and Grant McCool)