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November 4, 2022
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:
Cable One, like other cable operators, is seeing a slowdown in consumer move activity across its footprint. The operator posted an organic gain of just 1,800 broadband subs in the quarter, according to MoffettNathanson, a division of SVB Securities.
Sell-in for 1-Gig service has accelerated to nearly 32%.
Cable One's average revenue per user (ARPU) rose 15%, to $80.46, as customers migrated to faster, higher-priced services or took an unlimited data plan.
Rate increases are "absolutely on the table," Laulis said.
Average data usage reached about 580 gigabytes per month in Q3, up 19% year-over-year.
Cable One, which has DOCSIS 4.0 on its roadmap, has tested symmetrical multi-gigabit speeds, but did not say when it might launch such services.
FWA adoption in Cable One's markets "remains low," Laulis said.
Video losses hit 18,000, widened from a year-ago loss of 8,000. Reflecting Cable One's de-emphasis on video and its laser-focus on broadband, the company's video base eroded by another 28% year-over-year.
— Jeff Baumgartner, Senior Editor, Light Reading
Senior Editor, Light Reading
Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.
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