Time Warner Cable is adding a lot more fiber to its diet.
Time Warner Cable Inc. (NYSE: TWC), the second-largest US MSO, announced its intention Monday to buy DukeNet Communications from Duke Energy Corp. and Alinda Capital Partners for $600 million. The acquisition will give TWC a regional fiber optic network in the Southeast that's more than 8,700 miles long.
While largely concentrated in North and South Carolina, the fiber network also extends into regions of Virginia, Georgia, Tennessee, Florida, and Alabama. About 80 percent of the fiber network reportedly falls within Time Warner Cable's footprint, which covers much of the Carolinas.
Time Warner Cable is emphasizing the importance of the DukeNet acquisition to its commercial services business, which produced record revenues of $565 million in the second quarter, up nearly 22 percent from the same period in 2012. Over the first half of the year, business services generated about $1.1 billion in revenue for TWC, up more than 23 percent from last year, putting it on track to crack the $2 billion mark for the first time. (See Broadband Saves TWC's Sales.)
In a prepared statement, TWC Executive Vice President Phil Meeks noted that business Services is "a key growth area for Time Warner Cable." Meeks, who took over TWC's business services division in June after heading up Cox Communications Inc. 's business services unit for five years, said "this acquisition will greatly enhance our already growing fiber network to better serve customers, particularly those in key markets in the Carolinas."
Since assuming command of the TWC business services unit just four months ago, Meeks has already restructured the division to spur even faster growth. In particular, he's looking to move the MSO upmarket by targeting larger companies, carriers, and the wholesale telecom business while continuing to serve small-to-midsize businesses (SMBs), similar to his expansion strategy at Cox. In addition, Meeks has set an ambitious growth target for the TWC unit, aiming to reach $5 billion in annual revenues within five years.
There is one other interesting wrinkle to the DukeNet acquisition story. Time Warner Cable formally submitted a bid to participate in the North Carolina Next Generation Network (NCNGN) project last April. Dedicated to educational and economic development in the state, NCNGN is working to accelerate high-speed network deployments and is actively seeking vendor partners for the project. Although TWC did not respond to Light Reading's request for details on the matter, the DukeNet purchase could be, at least in part, a play to strengthen the company's NCNGN bid.
— Mari Silbey, Special to Light Reading Cable
Interested in learning more on this topic? Then come to a Light Reading Live event that takes place Wednesday, December 4, 2013 at the Westin Times Square in New York City. Back by popular demand for the seventh straight year, The Future of Cable Business Services 2013 is a one-day conference that will examine the progress that cable operators are making in the roughly $140-billion US business telecom services market and the challenges they face in keeping up the momentum. For more information, or to register, click here.