Cable One invests $50M in Ziply Fiber

Cable One's roots are in hybrid fiber/coax (HFC) networks, but the operator continues to invest in companies focused on alternative access technologies, including fiber-to-the-premises (FTTP) and fixed wireless access (FWA).

Its latest move outside the HFC realm is a $50 million investment in Ziply Fiber, the company formed from the acquisition of Frontier Communications operations in Washington, Oregon and Montana. Cable One's investment enters the picture as Ziply Fiber pushes ahead with a fiber buildout/upgrade plan and the ongoing launch of symmetrical, multi-gigabit broadband tiers.

Figure 1: Cable One's investment gives it a less-than-10% stake in Ziply Fiber.
(Source: Vittaya Sinlapasart/Alamy Stock Photo)

Cable One Chair and CEO Julie Laulis revealed the investment Thursday on the company's Q3 2022 earnings call, referring to Ziply Fiber as Cable One's "newest strategic growth partner." Cable One entered the agreement to invest in Ziply on September 6, according to CFO Todd Koetje.

The investment gives Cable One a less-than-10% equity interest in Ziply Fiber, a Cable One spokesperson told Light Reading.

"We are investing alongside proven operational and financial leaders that we have maintained long-term trusted relationships with and they continue to demonstrate the ability to deliver strong results and shareholder returns that align with our rigorous standards," the official added when asked to elaborate on the decision to invest.

It appears that Cable One's investment is linked to Ziply Fiber's recent raise of $450 million to be applied toward fiber network "edge-outs" (builds that are adjacent to existing Ziply Fiber markets) and to completely new buildouts in the northwest. Other investors identified at the time included WaveDivision Capital, Searchlight Capital Partners, Public Sector Pension Investment Board, British Columbia Investment Management Corp. and Canada Pension Plan Investment Board.

As further proof of that connection, Cable One's Koetje did note on Thursday's earnings call that the Ziply Fiber investment presented an opportunity to invest alongside Wave Division Capital and Searchlight Capital Partners – entities involved in the recent $450 million investment in Ziply Fiber.

Cable One's investment also follows the formation of a joint venture aimed at growing Cable One's Clearwave Fiber LLC business unit.

Cable One's Ziply Fiber investment follows other investments or acquisitions focused on non-HFC technologies. Back in 2020, Cable One acquired stakes in two fixed wireless access ISPs – NextLink and Wisper – and acquired ValueNet Fiber of Emporia, Kansas.

'No immediate plans' to enter the mobile game

For now, Cable One is content to focus on residential and business broadband and stay on the sidelines when it comes to adding mobile services to the bundle.

"That is something we continue to stay close to and watch," Laulis said, not yet convinced that there's a big need or demand for a mobile option among Cable One's subscribers. "If we do see that it provides some stickiness to the bundle, it's something that would provide a bigger lure to jump into the fray ... We have no immediate plans."

Cable One's cable peers, including Comcast and Charter Communications, are having success building out their respective mobile businesses – both posted record mobile line growth in the second quarter.

Meanwhile, the National Content & Technology Cooperative (NCTC) is working on MVNO agreements that will enable its membership of 700-plus operators, a group that includes Cable One, to add a mobile option.

Other tidbits from Cable One's Q3 2022 results and earnings call:

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— Jeff Baumgartner, Senior Editor, Light Reading