Cable One doubles down on fiber with $50M Ziply investment

Cable One stuck its hand back in the fiber cookie jar, investing $50 million to acquire a minority stake in northwestern U.S. operator Ziply Fiber.

Though it inked the deal back on September 6, it came to light on Thursday when the company reported Q3 2022 earnings. A Ziply representative confirmed the sum from Cable One was part of the $450 million in new funding it announced on September 8. WaveDivision Capital and Searchlight Capital Partners were among the other investors who contributed. The representative added the addition of another new investor “shows the continued strength of our business and belief in our growth strategy.”

In a 10-Q filing, Cable One noted it handed Ziply an initial $22.2 million in November 2022 and expects to dole out the remaining $27.8 million before the end of September 2023. Its investment netted the company less than a 10% equity interest in Ziply.

Speaking on an earnings call, Cable One CFO Todd Koetje said the move was part of its “relatively unique but simple approach of extending and advancing our partnerships with some of the best and brightest operational and financial minds across the communications landscape.”

The move is Cable One’s latest in the fiber realm. At the start of 2022, Cable One teamed up with three private equity companies to form a joint venture called Clearwave Fiber, aiming to reach 500,000 rural locations by 2027. Cable One contributed assets from its Illinois-focused Clearwave Communications and South Carolina-based Hargray Communications businesses as part of the deal. Shortly after its formation, Clearwave Fiber acquired the assets of Kansas-based operator RG Fiber to gain a foothold in the state.

Earlier this week, Clearwave Fiber revealed it has already crossed the 100,000 passings mark. By the end of this year, the company said its services will be available in a total of 35 markets across four states: Illinois, Kansas, Georgia and Florida. 

Q3 report

Cable One’s Q3 report, however, did not include results from Clearwave or Ziply. Consolidated revenue of $424.7 million fell 1.3% year on year, as a 6.3% increase in residential data revenues failed to offset an 11.5% decrease in business services revenue as well as declines in video and voice revenue. Net income jumped 35.1% to $70.6 million.

The operator added 30,000 residential internet customers in the quarter, leaving it with a total of 965,000. It ended the quarter with 2.69 million passings, up from 2.65 million in the year ago quarter.