Astound Broadband CEO eyes more M&A, mulls MVNO potential

Astound Broadband just picked up assets in three new markets through a $661 million deal with WideOpenWest (WOW!), but CEO Jim Holanda told Fierce the company still has its eyes peeled for additional opportunities to expand its footprint in new and adjacent markets.

The company, which offers services under the RCN, Grande Communications and Wave Broadband brands, is the sixth largest cable operator in the U.S. In November 2020, it was sold by TPG Capital to private equity firm Stonepeak Infrastructure Partners for $8.1 billion. Holanda said that transaction will likely close in the next four to six weeks.

The CEO said Astound has a history of pursuing accretive acquisitions, with support from TPG. He added Stonepeak is similarly supportive and the company will continue to evaluate strategic moves to bolster its holdings.

Some of Astound’s recent transactions include the acquisition of Texas-based EnTouch Systems in September 2019 and purchase of central California fiber provider Digital West in January 2020. Late last month, it notably scooped up assets from WOW! in Chicago, Illinois; Evansville, Indiana; and Anne Arundel, Maryland.

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Holanda talked up the latter deal as a match made in heaven, noting both WOW! and Astound’s networks are fully equipped with DOCSIS 3.1 and the former’s network in Chicago complements rather than overlaps its own. He added Astound had its eye on WOW!’s assets in Chicago for the past seven or eight years, with deal discussions occurring on and off over that timeframe.

“The fact that they kind of packaged the Chicago market in with Anne Arundel county in Maryland, which is right outside of our D.C. footprint and then the Evansville, Indiana property which is kind of a strong tier-2 market, it really made a lot of sense for us,” he said. “Clearly to us it kind of looked like they built that cluster for our interest knowing that we had had conversations over the years in the past.”

Across the three markets, the WOW! deal netted Astound more than 700,000 homes passed, 5,700 miles of plant and 128,000 residential and business customers. Holanda said Chicago accounts for 480,000 of those passings, adding the deal will essentially double its footprint in the city and expand its D.C.-area footprint by a third. Once integration efforts are complete, he said it will focus on increasing penetration in the newly acquired markets.

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The CEO said the competitors in the WOW! markets are the same as in its other service areas: Comcast and AT&T in Chicago and Verizon and Comcast in D.C. He added Astound has successfully competed against these same rivals in its other markets for more than a decade and “would expect to be able to continue to do that” despite fiber expansion efforts from AT&T and Verizon. He noted it already offers a gigabit speed tier across its entire footprint and “DOCSIS 4.0 is on our radar screen.”

Holanda argued Astound also has a stronger underlying HFC network than some competitors. He explained when it was built back in the 1990s, each node was supplied by 12 fibers and served 120 to 150 homes at a time when the standard was to run four to six fibers per node and pass up to 500 homes. This has made for a more resilient network and allowed Astound to deliver higher speeds to more customers without degradation in the network, he said.

While Astound is “hyperfocused on wireline,” Holanda revealed it has had “off and on MVNO conversations” with all the major U.S. wireless operators over the past several years. He added “that continues and we continue to monitor what our competition is doing.”

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Comcast, Charter Communications and Altice USA have all launched wireless MVNO efforts in recent years, with Comcast recently turning its first quarterly profit from the business. Holanda said Astound doesn’t currently believe it's losing customers as a result of not having a wireless offer, but “we’ll keep that option open should customers want that from us at some point in the future.”