Private Equity Activity in the U.S. Broadband Market is Growing. Is That a Good Thing? What the Downfall of Trueline Tells Us.

Key Takeaways

• There has been a significant increase in private equity (PE) activity in the U.S. broadband market, driven by government funding and evolving market dynamics.
• The recent, seemingly overnight, failure of a major PE-owned broadband construction firm illustrates the suddenness with which these firms can unwind, and how little we know about their operations in some cases.
• As states and localities continue to examine how to address their broadband connectivity challenges, understanding the track-records of potential partners is critical, especially given the recent uptick in market entry by PE-backed firms.

Earlier this year, Trueline, a broadband construction firm backed by private equity (PE), abruptly went out of business. The firm was actively involved in high-profile broadband projects and employed several hundred people. It closed seemingly overnight, throwing many of those projects – and the lives of its employees – into disarray. In the immediate aftermath, most of the fired employees filed a class action suit accusing Trueline of running afoul of laws requiring advance notice of mass layoffs.

Businesses fail all the time, but the fact that the company was run by a PE firm is notable given the significant increase in private equity activity in the U.S. broadband market over the last few years. These firms have identified broadband as a growth sector and are actively seeking a share of significant federal funding on offer via ARPA and BEAD. Many PE firms are focused on building and/or owning fiber networks in particular given its high margins and relative dearth in the market.

Private capital is essential to driving broadband deployment and is regularly deployed by ISPs of all kinds. Firms run by a PE shop, however, operate in a much different manner than other firms and tend to prioritize high returns for their investors over a much shorter timeline than publicly traded counterparts. As a result, some PE firms have earned a poor reputation in many sectors due to the ruthlessness with which they cut costs, fire employees, and sell companies for parts.

(It should be noted that several of the largest ISPs in the U.S., including Altice, Cox, and Mediacom, are privately owned. Unlike the PE-backed firms discussed here, however, these privately owned ISPs are more like publicly traded ISPs than not in terms of having significant bona fides as a trusted provider with deep roots in the communities they serve and a proven track record of delivering a quality experience for their customers.)

Given increased entrance into the broadband market by PE-backed firms, it is natural for stakeholders to ask whether these firms, and the people they employ and provide service to, will suffer a similar fate as Trueline. Time will tell whether Trueline’s failure is a harbinger of things to come or an outlier. Regardless, Trueline offers a cautionary tale, reminding stakeholders and policymakers to critically examine the financial stability and track record of any potential partner for a grant-funded broadband project.

What Happened

In February 2025, Trueline Infrastructure Solutions “sent an email to its approximately 300 employees, terminating their employment immediately” and announcing it was closing its doors, only a few months after its formation. The company, owned by PE firm Grain Management, cited “unprecedented changes in the market” and “increasing competitive pressures” as the reason for a “wind-down of [its] business.”

Grain Management, which has invested in a variety of telecom-related companies, formed Trueline in September 2024 after rolling up several other firms, namely Atlantic Engineering Group, Fiber Optic Services, and Young’s Communications. Trueline intended to offer “end-to-end digital and utility infrastructure solutions.” At the time of its launch, the new entity was pitched as “seamlessly integrated” and positioned to “enhance its service offerings and extend its nationwide reach.”

In the article that broke the story, the reporter claims there were “ominous signs the company was in trouble,” including a pause of work in some states and cancellation of a contract with a major ISP client. The article also states that the company’s CFO resigned in January, and its CEO left shortly before the announcement of the company’s closure. In addition, the article includes allegations from a former employee that the company has “left a lot of incomplete construction in Florida and other states.”

Ripple Effects

Prior to its collapse, Trueline was actively involved in numerous broadband projects across the country. Among others, it served as a lead subcontractor on fiber projects in Bloomington, IN, and in Memphis, TN. Those projects are notable because they are being spearheaded by another PE firm, Meridiam, a French firm that recently began to build broadband networks in the U.S.

The Meridiam-Trueline project in Bloomington is part of a multi-city initiative dubbed Hoosier Net. Meridiam has promised to invest some $50 million to deploy fiber in Bloomington. In exchange, Meridiam has received a variety of concessions from the city, including tax breaks for 20 years, to facilitate deployment. All told, Meridiam has committed to investing a total of $90 million to build Hoosier Net. (Another relevant piece of evidence that highlights PE’s increased activity in the broadband sector: the former CEO of Hoosier Net was recently appointed director of Kansas’s state broadband office.)

Construction of the system in Bloomington has not been without challenges. For example, at one point during construction, the city issued a stop-work order in response to “complaints from citizens on damage to their yards” and after “a main underground line” was hit.

Trueline has also been sued twice as part of its work in Bloomington. In one lawsuit, a rival ISP alleged that Meridiam, Trueline, and others engaged in a “pattern of negligent and reckless misconduct” towards it. In another suit, a subcontractor engaged by Trueline accused the now-defunct firm of failure to pay it over $600,000 in fees, alleging that Trueline took the “payments it received and funneled the money upstream…rather than pay its debts.” Both cases are still pending.

As a result of Trueline’s failure, participants at a recent Bloomington public meeting noted that Meridiam will have to spend “one to two months to select, contract with, and onboard another construction company,” which will “delay” deployment. Initially, Meridiam hoped to complete the project by the end of 2025; now, “it is unknown” if the network will be fully built by then. Progress on another component of Hoosier Net, in Bartholomew County, has also halted since Trueline went out of business.

In Memphis, Meridiam has committed to invest $700M+ to build a citywide fiber network. The city will contribute $22M to support the project and to own portions of the fiber network for internal use. Meridiam will receive significant concessions from Memphis, including tax breaks and favorable ROW access, to facilitate deployment (it does not appear that these concessions have been offered or made available to other ISPs). Trueline served as a “major subcontractor” on the Memphis project. It does not appear that the city has publicly commented on the demise of Trueline, but given its lead role in building the network, material impacts (e.g., delayed deployment) are likely.

Why it Matters

According to ACLP tracking (data on file), through September 2024, at least 50 projects involving PE-backed ISPs received grant funding from states via their Capital Projects Fund programs. More recently, the biggest winner of BEAD funding in Louisiana was a consortium of firms, one of which is owned by a PE firm (to date, only three states – Louisiana, Delaware, and Nevada – have tentatively awarded BEAD grants; none has had their grants officially approved by federal officials yet).

The speed and suddenness of Trueline’s downfall – with no public warning or requirements to wind down the business in a transparent manner – should give officials pause when they evaluate proposals by vendors seeking to win grant funding or obtain favorable concessions to enter a market. Not every PE-backed vendor will fail like Trueline, and not every project involving a PE-backed ISP will be delayed like in Bloomington. But some might, and when they do there might be little warning.

Some arrangements involving PE, though, could be more palatable. For example, partnerships involving established ISPs, like AT&T’s Gigapower initiative with BlackRock, appear to be better positioned to succeed over the long term than those involving only PE-backed entities because partners with a robust track-record of success in serving communities for decades are highly unlikely to shutter overnight.

Ultimately, as states and localities continue to examine how to address their broadband connectivity challenges, understanding the potential benefits and pitfalls of working with any partner is critical. Trueline’s failure is unfortunate, but it can serve as a useful case study for decision-makers.