Cable One targets rapid fiber expansion with JV deal

Cable One launched a joint venture with a trio of private equity companies, seeking to speed its expansion of fiber to underserved markets.

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 JV includes Cable One’s Clearwave Communications subsidiary as well as certain fiber assets from its subsidiary Hargray Communications. Cable One said these operations represented approximately 3% of its consolidated revenue for the three months ended September 30, 2021.

Called Clearwave Fiber, the new entity will target deployments of fiber-to-the-premises for residential and business customers within and adjacent to its existing markets. Cable One executives previously stated the company was interested in pursuing a joint venture because they believed it would be a “challenge” to invest enough in a rapid fiber expansion on its own.

RELATED: Cable One eyes joint venture to chase fiber growth

Cable One owns a majority stake in the new company, which is led by Executive Chairman Michael Gottdenker and CEO David Armistead.

“This strategic investment will help accelerate the deployment of fiber-based broadband services to a range of markets, including underserved areas of the country,” Gottdenker said in a statement. “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.”

Cable One currently serves more than 1.1 million residential and business customers across 24 states with its family of brands.

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 concluded.