- Cox and other cable cos face significant overlap with Lumen’s copper and fiber networks
- Consolidation is rising but the competitive threat to cable remains the same, said New Street Research
- Fiber is poised to reach up to 90% of cable’s footprint
As if cable didn’t have enough problems with fiber competitors, AT&T’s $5.75 billion Lumen deal shows just how much operators have to weather from the consolidation storm.
Cox, which is merging with Charter for $34.5 billion, has the biggest exposure to Lumen, said the analysts at BNP Paribas, as 36% of Cox’s footprint overlaps with Lumen’s legacy copper network.
“This deal may well explain one reason why Cox was finally willing to sell/merge with Charter,” the firm said.
Lumen is selling most of its Mass Markets consumer fiber business, but it’s notably keeping its copper-based customers. After Cox, Cable One has the second largest overlap with Lumen at 30%, followed by Comcast (16%) and the combined Charter/Cox footprint (11%).
When it comes to fiber, Comcast isn’t out of the line of fire. According to New Street Research, the operator has the most exposure to Lumen’s current and future fiber markets, which so far consist of nearly 1 million subscribers in 11 states. Charter meanwhile has a “relatively small presence” in the Lumen fiber footprint.
For AT&T’s part, it plans to double its fiber passings goal to around 60 million locations by 2030, expanding its presence in the central U.S. and Pacific Northwest markets.
Fiber consolidation is indeed speeding up, as the FCC just approved Verizon’s $20 billion Frontier purchase and T-Mobile’s Lumos acquisition. For the cable competitive landscape, it's just business as usual, said NSR’s Jonathan Chaplin.
The cable state of play
The AT&T/Lumen transaction “changes who owns the fiber opportunity; it doesn’t change the magnitude of the opportunity for fiber or the threat for cable,” Chaplin said in a note to investors.
Assuming fiber reaches every location where it is economically viable, NSR predicts fiber will eventually go to around 74% of U.S. locations and cover 80%-90% of cable’s overall footprint.
“Cable has generally governed the densest markets where fiber economics are best,” Chaplin added.
Bad broadband beats keep on coming for cable, with Comcast and Charter losing 199,000 and 60,000 subscribers in Q1. A potential population slowdown - due to the Trump administration’s immigration policy – could mean cable net adds may not return to growth for another four years, per NSR’s estimate.