VOIP services

Comcast Snares a CLEC

Comcast Corp. (Nasdaq: CMCSA, CMCSK) has inked a deal to buy Chicago area CLEC Cimco Communications Inc. , a move that accelerates the MSO's move into the mid-level market for business services, Cable Digital News has learned.

Comcast independently confirmed that it's buying Cimco but isn't releasing the financial terms of the deal. Privately held Cimco is believed to be profitable and have more than 2,300 customers, with about 95 percent of its data and phone subcriber base located in Chicago, where Comcast already serves as the area's incumbent cable operator.

The MSO is purchasing the 24-year-old company as it looks to serve larger, mid-tier business customers with up to 250 employees. Comcast got its commercial services unit off the ground in 2006, focused mainly on businesses with one to 20 employees, using its traditional hybrid fiber/coax (HFC) plant and Docsis technologies to serve them. (See Comcast Gets Bizzy With 100-Meg Tier .)

In the second quarter, Comcast's business services unit generated revenues of $198 million, up 51 percent year-over-year. The MSO estimates that the small- and mid-tier business segment represents a combined opportunity of $30 billion ($15 billion for each segment).

“Cimco is a strong, well-respected company that presents us with an opportunity to accelerate our growth in the mid-market commercial business," said Comcast spokesman John Demming, in a statement. "They have built their business on providing superior service to companies with 20-250 employees and we look forward to integrating their expertise into our offerings for Comcast’s Business Services clients.”

In addition to bringing in a new base of customers, Cimco will give Comcast some new engineering, customer service, operations, and sales expertise tailored for the mid-range business services market. The MSO, however, isn't ready to say how many of Cimco's employees will stay on after the deal is closed. Oakbrook Terrace-based Cimco was not available for comment Wednesday morning, but its LinkedIn profile notes that it has 185 employees.

Cimco's "strategic partners" include Cisco Systems Inc. (Nasdaq: CSCO), Alcatel-Lucent (NYSE: ALU), and Adtran Inc. (Nasdaq: ADTN).

Heavy Reading senior analyst Alan Breznick says the deal offers a natural fit for Comcast and its grander business services ambitions.

"I'm not surprised that they would buy a CLEC," Breznick says. "Cimco gives them some expertise they didn’t have. The only thing that surprised me is that they didn't buy a bigger one."

On that point, he notes that Comcast was rumored to be interested in buying Cbeyond Communications (Nasdaq: CBEY), a much larger CLEC, back in 2007 -- well before the markets went haywire. As it so happens, Cbeyond operates in several Comcast markets, including Chicago, Denver, Detroit, Minneapolis, San Francisco, Washington, Houston, and Atlanta.

If the Cimco purchase and subsequent integration goes well, it could signal a broader acquisition strategy that Comcast might use to complement its organic business services growth. However, the MSO is not commenting about any future CLEC acquisition plans.

— Jeff Baumgartner, Site Editor, Cable Digital News

Sign In