Mediacom Eyes Clearwire
First candidate: Mediacom Communications Corp.
"I think this [Clearwire-cable partnership] is very interesting and will give Mediacom the ability to achieve the same things the larger cable companies will be able to do," chairman and CEO Rocco Commisso said today. "It's just a matter of time before we get involved, as opposed to whether we will get involved or not."
Commisso had been asked to weigh in on the topic during a conference call to discuss the MSO's first quarter results.
Although Mediacom steered clear of the collapsing "Pivot" wireless service joint venture, Mediacom has had a formal relationship with Sprint Corp. (NYSE: S) going back almost four years. In August 2004, Sprint signed on to support Mediacom's hardwired VOIP service, supplying key elements such as provisioning, local number portability, 911 support, and interconnection services.
"We have a great relationship with Sprint," Commisso said. He stressed that Mediacom was fully aware of the Clearwire conversations, noting that if the new venture wants to create a national footprint, it will likely need the help of other operators, including Mediacom, Suddenlink Communications , and Cox Communications Inc. , which is said to be moving ahead with its own wireless buildout using spectrum won in the high-profile 700 MHz auctions. (See The Great Cable Spectrum Speculation.)
Mediacom shares surge
Wireless discussions aside, Mediacom shares were up more than 15 percent in late day trading, to $5.26, after the MSO pounded out better-than-expected subscriber growth and raised its forecast for the balance of 2008. (See Mediacom Posts Q1.)
One good sign: Mediacom added roughly 2,000 basic video subscribers in the quarter, the first time it's added customers in this category on a sequential basis since early 2005. Mediacom lost 18,000 basic subscribers a year earlier.
It also added 27,000 digital video subscribers, extending the total to 584,000. About 31 percent of the company's digital base took Mediacom's digital video recorder (DVR) and/or high-definition television service.
The MSO also signed up 30,000 high-speed data customers, giving it a total of 688,000. Today, Mediacom announced it will launch a new 20 Mbit/s (downstream) tier in 98 percent of its footprint by June 30. In the first quarter, Mediacom, which competes with both Verizon Communications Inc. (NYSE: VZ) and Qwest Communications International Inc. (NYSE: Q), also launched a low-end tier to compete with DSL offerings.
Mediacom added 19,000 phone subscribers in the first quarter, giving it a total of 204,000, or a penetration rate of 8 percent.
Revenue rose 10 percent to $339.7 million, but that wasn't enough to avoid a loss of $30.6 million (31 cents per share), widened from a loss of $16.9 million (15 cents per share) a year ago.
But, based on subscriber strength in the first quarter, Mediacom decided to goose its forecast, projecting 2008 revenue growth of 6.5 percent to 7.5 percent, compared with its old prediction of between 6 percent to 7 percent.
The MSO also expects capital expenditures to come in at $275 million, versus previous estimates of $255 million to $265 million.
— Jeff Baumgartner, Site Editor, Cable Digital News