Cable Tech

Cable One appears to be passing on the Suddenlink opportunity

Cable One execs might just be playing it coy, but it appears that the operator has little to no interest in making a play for Altice USA's rural-focused Suddenlink cable network assets.

Following a Bloomberg report that Altice USA is exploring a sale of Suddenlink, the portion of the company that largely serves rural parts of the southern and central US, CEO Dexter Goei confirmed as much last week on the company's Q2 2022 earnings call. Altice USA has reportedly hired Goldman Sachs to pursue a sale that could fetch up to $20 billion.

Goei said Altice USA has received "a lot of inquiries" from potential buyers interested in all or part of Suddenlink, a batch of systems that have recently been given the "Optimum" brand, which Altice USA uses for the former Cablevision Systems properties serving portions of New York, New Jersey and Connecticut. Altice USA plans to upgrade a portion of the Suddenlink footprint to fiber, but Goei said he believes now is "a good time to pause" and consider a possible deal.

Analysts have speculated that Cable One, which has been on an M&A tear in recent years, would at least be interested in the Suddenlink assets. But Cable One execs weren't about to take the bait when asked late last week if the company had an appetite for a deal the size of Suddenlink.

Todd Koetje, Cable One's new CFO, declined to comment on M&A speculation when the question came up on the company's Q2 2022 earnings call.

"But I will tell you right now, we continue to be highly focused on the integration and operational success of the brands that we have recently acquired and the great teams that we're partnering with on those opportunities," he said, according to a SeekingAlpha transcript of the call.

But Cable One has been active with other, much smaller transactions.

The company confirmed it recently made a $7.2 million equity investment in Visionary Broadband in partnership with GTCR. That deal gives Cable One a less than 10% stake in Visionary, an Internet service provider (ISP) focused on bringing broadband to underserved rural markets in Wyoming, Colorado and Montana. Visionary, which is building fiber projects based on XGS-PON, said the investment will help it match requirements for upcoming state-led broadband grant programs.

Separately, on April 1, Cable One contributed its Tallahassee, Florida, system to Metronet Systems in exchange for combined cash and equity interests totaling $15 million. On May 20, Cable One divested Hargray Communications' managed IT service, which Cable One considered "non-core," Koetje said.

Small broadband gain in Q2

Unlike Charter Communications, Comcast and Altice USA, Cable One squeaked out a small gain of 3,000 broadband subs in the second quarter of 2022. Cable One's broadband growth, at 3.5%, is still above its larger peers but down sharply from a growth rate of 4.8% a quarter ago and a rate of 7.8% in the year-ago quarter, according to MoffettNathanson analyst Craig Moffett.

Cable One's residential broadband average revenue per user (ARPU), at $80.44, still towers above that of Altice USA ($76.78), Comcast ($68.24) and Charter ($65.56).

Cable One's deemphasis of pay-TV continued as its video penetration of homes passed dropped to just 8.2% at the end of the second quarter.

Company CEO Julie Laulis reiterated that Cable One is seeing the most fixed wireless access (FWA) competition from T-Mobile (with an overlap of between 40% to 50%) but hasn't seen that service make much of an impact. She guessed that T-Mobile is finding more success stealing share from DSL.

Most of Cable One's fiber competition is coming from AT&T and CenturyLink/Lumen. Koetje said Cable One is seeing fiber overlap in about 21.5% of its footprint but overall noted that the company sees competitors offering 100 Mbit/s or more in just 30% of its markets. Additionally, Cable One sees competition from two or more operators in just 6% of its markets.

Cable One has invested in two wireless ISPs but has yet to make a move into mobile. The recently rechristened National Content & Technology Cooperative (NCTC), of which Cable One is a member, is working on agreements that will enable smaller operators to launch premium mobile plans at a discount and under their own branding. NCTC expects to be in a position to offer that option by the fourth quarter of 2022.

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— Jeff Baumgartner, Senior Editor, Light Reading

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