Cable One joint venture to expand fiber based internet access via FTTP

Cable One [1.] (aka Sparklight) has announced a joint venture (JV) with three private equity firms, seeking to speed its expansion of fiber based Internet access to underserved markets.

Note 1.  Cable One, Inc. is an American broadband communications provider. They are a former subsidiary of Graham Holdings Company. The company’s name and current focus date back to 1997; prior to that time the company was known as Post-Newsweek Cable. Cable One currently serves more than 1.1 million residential and business customers across 24 states with its family of brands.
The company now offers fiber based Internet access with up to 940 Mbps download and 50 Mbps upload speeds.
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The JV will support the accelerated growth of Clearwave Fiber LLC (“Clearwave Fiber”). Clearwave Fiber is a newly formed entity that holds Cable One’s subsidiary Clearwave Communications and certain fiber assets of Cable One’s subsidiary Hargray Communications.
Clearwave Fiber is a newly formed joint venture that holds Clearwave Communications and certain fiber assets of Hargray Communications. Cravath is representing Cable One in connection with the transaction. With the formation of the JV, Clearwave Fiber intends to invest heavily in bringing Fiber-to-the-Premise (“FTTP”) service to residential and business customers across its existing footprint and near-adjacent areas.
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As Cable One detailed in a preview of the deal in November 2021, its JV partners include GTCR, Stephens Capital Partners and the Pritzker Organization. Cable One has worked with all three before, acquiring assets from Stephens Capital in January 2019 and Pritzker in May 2021 and teaming with GTCR on Mega Broadband Investments.

The joint venture reflects a shared commitment from Cable One and the investors to provide fast and reliable connectivity via FTTP internet to underserved markets and will allow for more rapid expansion of fiber internet to homes and businesses in small cities and big towns. Cable One owns a majority of Clearwave Fiber and the private equity investors are committed to make substantial cash investments to support the acceleration of Clearwave Fiber’s expansion.

Clearwave Fiber will be led by Executive Chairman Michael Gottdenker and CEO David Armistead, both of whom were part of Hargray’s executive leadership team from 2007 until its 2021 sale to Cable One, providing continuity of proven leadership and a continued commitment to Cable One’s shared culture, purpose, and values.

“This strategic investment will help accelerate the deployment of fiber-based broadband services to a range of markets, including underserved areas of the country,” said Michael Gottdenker, Executive Chairman of Clearwave Fiber. “Our team is motivated by our shared core values of customer service and improving lives through connectivity and is excited to bring fast and reliable Clearwave Fiber broadband to homes and businesses across the country. We are thrilled to welcome GTCR, Stephens, and TPO to the Clearwave Fiber family and look forward to our continued partnership with Cable One.”

Julie Laulis, Cable One President and CEO said:

“We look forward to supporting and sharing in Clearwave Fiber’s growth over the coming years while remaining focused on our primary business, increasing penetration rates, integrating recently acquired companies and driving higher margins and greater free cash flow. We did not take lightly our choice of partners in this transaction and are excited to be working with like-minded individuals who share our core principles.”

“Five years ago, Gig speeds were virtually unheard of in non-urban markets across the U.S. We are proud to have been able to launch Gig service and level the playing field for rural markets where access to affordable, high-speed internet is just as vital as in more urban markets. A fast and reliable internet connection means rural residents can telecommute rather than having to move to find work. It means access to medical care via telehealth services; the ability to achieve a higher education online; and the cultivation of entrepreneurship and economic growth.”

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KeyBanc Capital Markets analysts indicated in a research note the deal is a positive for Cable One, noting it will allow the company to effectively offload heavy investment in fiber to the JV while maintaining majority ownership. They drew a comparison to WideOpenWest’s recently announced fiber expansion plan, writing that “in contrast to CABO, WOW will fund the expansion on-balance sheet, while CABO’s transactions move off-balance sheet, neither being wrong, in our view.”

“We believe this shows there is a lot of FTTP build opportunity within and around CABO’s footprint (likely more than one Company can handle),” Keybanc’s team conclude

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About Cable One:

Cable One, Inc. (NYSE:CABO) is a leading broadband communications provider committed to connecting customers and communities to what matters most. Through Sparklight® and the associated Cable One family of brands, the Company serves more than 1.1 million residential and business customers in 24 states. Over its fiber-optic infrastructure, the Cable One family of brands provide residential customers with a wide array of connectivity and entertainment services, including Gigabit speeds, advanced WiFi and video. For businesses ranging from small and mid-market up to enterprise, wholesale and carrier, the Company offers scalable, cost-effective solutions that enable businesses of all sizes to grow, compete and succeed.

References:

https://ir.cableone.net/news-events/investor-news/news-details/2022/Cable-One-Announces-Formation-of-Clearwave-Fiber-in-Partnership-with-GTCR-Stephens-Capital-Partners-and-The-Pritzker-Organization/default.aspx

https://www.fiercetelecom.com/telecom/cable-one-targets-rapid-fiber-expansion-jv-deal

https://www.cravath.com/news/cable-ones-formation-of-clearwave-fiber-in-partnership-with-gtcr-stephens-capital-partners-and-the-pritzker-organization.html

https://www.prnewswire.com/news-releases/cable-one-looks-to-the-next-evolution-of-high-speed-internet-301428503.html

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