(Reuters) Verizon Communications Inc has agreed to buy optical fiber from Corning Inc for at least $1.05 billion 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. The announcement sent Corning shares up 2.5 percent to $27.21 in midday trading. Verizon shares rose 3 cents to $48.84.
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.
Both Verizon and competitor AT&T Inc 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 that would top AT&T Inc's (T.N) $1.25 billion bid.