Mediacom Snipping VoIP Ties to Sprint

Time Warner Cable Inc. (NYSE: TWC) isn't the only cable operator that's getting ready to sever its wireline VoIP relationship with Sprint Corp. (NYSE: S).

Mediacom Communications Corp. , the seventh-largest incumbent cable operator in the US and a longtime Sprint partner, also intends to take control of its IP voice service.

In August 2004, Mediacom signed Sprint to handle several VoIP service-related tasks, including routing voice traffic on the public switched telephone network (PSTN), delivering E911 service, and assisting in local number portability and long-distance traffic carriage. (See Sprint Helps Mediacom Offer VOIP.)

"We have initiated a project to transition these services in-house, beginning in 2010," Mediacom revealed in a 10-K document filed with the Securities and Exchange Commission on March 5, 2010.

Mediacom declined to offer more details on how it will go about making that transition, or when it intends to wrap it up.

Mediacom's decision will mark the latest hit on Sprint's wireline business. Last week, Time Warner Cable confirmed that it will phase out its VoIP relationship with Sprint, calling it a cost-cutting move. That migration, which could take about four years to complete, could cost Sprint as much as 25 percent of its wireline EBITDA (roughly $250 million annually), according to an estimate from Sanford C. Bernstein & Co. Inc. analyst Craig Moffett. (See Time Warner Cable to 'Go It Alone' With VoIP .)

The loss of Mediacom, which ended 2009 with 287,000 VoIP subs, won't cut Sprint quite as deeply. Moffett noted via email that Mediacom represents about $1.5 million per month, or roughly $18 million per year, in EBITDA to Sprint based on his estimation that Time Warner Cable currently accounts for about $5 per VoIP sub per month in EBITDA for Sprint.

Sprint's WiMax relationship with TWC (through Clearwire LLC (Nasdaq: CLWR)) won't change. Mediacom is not among the MSOs investing in Clearwire, though the company has expressed some interest in using WiMax to deliver mobile broadband services. (See Mediacom Eyes Clearwire.)

Sprint did not have an immediate comment on the Mediacom situation.

— Jeff Baumgartner, Site Editor, Light Reading Cable