Cloud Services

Charter Unloads Navisite Unit

As part of an effort to streamline its business services portfolio, Charter Communications announced Monday that it is selling Navisite to fellow data management and cloud management services company RDX.

Financial terms were not disclosed. Charter inherited Navisite, a provider of managed cloud services, via its 2016 acquisition of Time Warner Cable. TWC bought Navisite in 2011 for $230 million, a deal that included about 570 employees and ten data centers, as that cable operator looked to broaden its business services portfolio and push further up market to serve larger enterprise customers.

Charter does not break out revenues for Navisite, a unit that's part of Spectrum Enterprise, but the sale will not have a material impact on the cable operator's financials, a person with knowledge of the agreement said. Charter pulled down $1.61 billion in commercial revenues in Q2 2019, up from $1.54 billion in the year-ago quarter. Enterprise growth at Charter rose 4% in Q2, but was up 6.7% excluding cell backhaul and Navisite.

The Navisite sale is expected to close "within the next few weeks," the companies said. Citi was Charter's financial advisor on the deal.

Why this matters
The sale is part of a streamlining effort at Spectrum Enterprise, which is focusing more heavily on fiber-based connectivity and services.

"As part of our ongoing prioritization and refinement of our portfolio, this divestiture will accelerate the execution of our strategy to serve America's largest businesses and communications service providers as a national service provider of scalable fiber-based technology solutions," Phil Meeks, EVP and president of Spectrum Enterprise, said in a statement.

The sale coincidentally also enters the picture as Meeks moves ahead with a plan to retire in January 2020. Meeks, an exec late of Cox Communications and Time Warner, has been running Charter's business services unit since the fall of 2015.

Speaking of Cox, it recently went in the other direction with respect to managed cloud services, snapping up RapidScale about a year ago. Altice USA, meanwhile, has been exploring strategic options for Lightpath, the fiber-based business services unit inherited from its purchase of Cablevision Systems.

As Navisite was not deemed core to Spectrum Enterprise's portfolio, the unit seems a better fit for RDX, a company founded in 1994 that is entirely focused on offering managed services both on-premises and via the public cloud, supporting Microsoft Azure, Amazon Web Services and Oracle DB Cloud. RDX is backed by Madison Dearborn Partners, a private equity firm with aggregate capital of $23 billion.

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— Jeff Baumgartner, Senior Editor, Light Reading

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