T-Mobile has acquired U.S. Internet.

T-Mobile has announced another acquisition, this time of US Internet (USI). The company is a small fiber broadband provider serving residential and commercial clients in Minneapolis and some areas of Wisconsin. USI customers have been informed via letter that they will transition to T-Mobile on or after September 2.

The letter to USI customers did not include the terms of the acquisition but stated that following regulatory approval, they would become T-Mobile customers on or after Sept. 2. T-Mobile's purchase of USI follows its recent acquisitions of Metronet and Lumos, as it expands its fiber network.

According to New Street Research analyst Vikash Harlalka, USI is not a large acquisition. He estimates that USI covered 152,000 locations a couple of years ago, growing to 192,000 by the end of last year, primarily in Minnesota's Hennepin County. The acquisition follows a recent downgrade of T-Mobile's shares by KeyBanc Capital Markets analyst Brandon Nispel.

Nispel reduced his rating on T-Mobile's shares to "Underweight" last month, setting a price target of $200. T-Mobile shares closed today at $251.95, a decrease of $6.23, or 2.41%. Nispel stated in a July research note that T-Mobile needs more fiber in a converged market, even after the Metronet and Lumos acquisitions.

USI offers service in Minneapolis with pricing tiers based on speed. Prices range from $65 per month for 500 Mbit/s to $195 per month for 10 Gbit/s. Harlalka suggests that T-Mobile's current fiber footprint is insufficient, stating that larger combinations with major cable operators are needed if management is serious about convergence, as these acquisitions are not enough.

Craig Moffett, co-founder and Senior Research Analyst at MoffetNathanson, notes that AT&T has fiber coverage in 13% of the U.S. and plans to reach 31% by 2030. Verizon will also have fiber in 13% of the U.S. when it completes its acquisition of Frontier Communications early next year.

In comparison, T-Mobile's U.S. fiber footprint is 1.5% after acquiring Lumos and Metronet but before acquiring USI. Moffett says this is not a winning strategy. Harlalka also believes that T-Mobile's fiber footprint is too small for a convergence strategy. New Street Research suggests that Brightspeed, Uniti/Windstream, Consolidated Communications, TDS Telecom, Altafiber, and Shentel could be acquisition targets for T-Mobile.

T-Mobile launched its home fiber internet service on June 5, aiming to reach 12 to 15 million households by 2030. T-Mobile's 5G home internet service currently has 7 million subscribers.

USI customers will transition to T-Mobile Fiber Home Internet with plans ranging from 500 Mbps to 2 Gbps. There are no equipment fees, installation charges, or annual contracts. T-Mobile Fiber features a five-year price guarantee for a limited time. The company is also offering a Fiber Founders Club plan in select areas with 2 Gbps speeds for $70/month and a 10-year price lock, and subscribers will be eligible for T-Mobile Tuesdays perks.