Verizon signs $1 billion dark-fiber deal with Google to connect data centers

Source: Reuters Author: William Foxley Read Time: 3 min

• VZ: +3.01%
• GOOG: +0.20%

Verizon CEO Dan Schulman announced Friday that the company has entered into a contract with Google valued at over $1 billion to supply dark-fiber links for the search engine giant's data centers.

Schulman disclosed the agreement during Verizon's post-earnings call, according to Reuters. Neither company provided details on the contract's duration, geographic scope, or deployment schedule.

Dark fiber refers to installed fiber-optic infrastructure that customers operate using their own networking equipment. Unlike managed network services, this arrangement gives customers greater control over capacity and network design. For Google, the deal will support connectivity between its data-center facilities.

Google's AI Spending

Alphabet reported negative free cash flow of approximately $5.9 billion in the second quarter—its first negative quarter since going public in 2004—as spending on AI infrastructure accelerated.

The Google parent company raised its 2026 capital-expenditure guidance to between $195 billion and $205 billion, up from $180 billion to $190 billion. Most of the spending is directed toward servers, data centers, and networking equipment. Alphabet also plans to expand its use of third-party compute capacity as a temporary bridge while building additional internal infrastructure.

Data Center Growth

Verizon expects to announce additional agreements before the end of 2026, though Schulman did not identify prospective customers or provide individual contract values.

"We have other deals that we expect to announce by year end that taken together are expected to be worth multiple billions of dollars in revenue over the next several years," Schulman said.

These expected agreements would create a multiyear revenue opportunity beyond Verizon's core consumer wireless and home-internet operations. The Google contract concerns data-center connectivity and is separate from the companies' earlier work involving artificial intelligence, cloud services, and 5G networks.

In 2021, Verizon and Google Cloud agreed to combine Verizon's 5G network with Google's computing services for factory automation. Verizon later offered Google One AI Premium to eligible wireless and home-internet customers, while Google's Gemini models have been integrated into Verizon's customer-service systems.

Verizon Raises 2026 Outlook

Verizon disclosed the dark-fiber deal as it reported second-quarter results and raised its full-year forecasts for adjusted earnings and free cash flow.

Key highlights from the quarter:

• Wireless subscriber additions: 184,000 monthly bill-paying subscribers, exceeding the 103,900 additions expected by analysts surveyed by FactSet
• Adjusted earnings: $1.30 per share, above the $1.27 analyst estimate, supported by cost controls and lower device-subsidy spending
• Revenue: $34.3 billion, missing the $35.16 billion consensus estimate as customers kept phones longer, reducing equipment sales

Verizon now expects:

• Adjusted earnings for 2026: $4.99 to $5.04 per share, up from the previous range of $4.95 to $4.99
• Free cash flow growth: 9% to 10%, compared with the earlier projection of about 7% or more

Verizon shares rose 3% in premarket trading following the results.

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