AT&T announced on Monday wholesale agreements with four commercial open-access fiber broadband providers.

The deals, which will involve AT&T’s existing Gigapower JV with investing firm BlackRock, is intended to help the company grow its fiber network offerings.

The announcement comes as fellow wireless providers race to expand their own fiber networks — Verizon Communications spent $20 billion to acquire pure-play fiber provider Frontier Communications last Thursday, while T-Mobile inked a deal to buy a 50% stake in the fiber operator Lumos in April.

Also Read: Dumb in Dallas? AT&T Keeps Pushing a ‘Convergence’ Advantage It Simply Does Not Have

AT&T will now begin construction on several expansion projects in Texas, Florida and Minnesota with its new partners: Boldyn Networks, Digital Infrastructure Group, Prime Fiber and Uniquity.

“Each company AT&T is working with was selected because they provide opportunities to expand AT&T Fiber distribution to new service areas without existing fiber options,” the company wrote in its release. “As these providers add fiber locations, AT&T will evaluate where it wants to offer AT&T Fiber.”

AT&T didn’t specify the scale of its initial projects, but said it is on track to pass its goal of 30 million locations with fiber by the end of 2025.

Currently, the telecommunications giant serves more than 8.8 million fiber customers and passes 28 million total consumer and business fiber locations, according to a press release.

“In new service areas, Gigapower is ramping well,” AT&T CEO John Stankey said in a statement. “We’re targeting additional geographies for growth with the joint venture and other commercial open-access agreements. Customers tell us they want a high-performance wireless and broadband experience from a single provider, and AT&T is best positioned to serve this growing need.”

AT&T and BlackRock have so far announced plans to build in Alabama, Arizona, Florida, Minnesota, Nevada, Pennsylvania and the Carolinas.

The pandemic has exposed the pernicious effects of digital disparity on health, education, and other aspects of life, prompting governments worldwide to invest massively in bridging the so-called digital divide. The U.S. government alone is allocating over $73 billion to extend broadband’s reach to unserved or underserved markets and is investing an additional $14.2 billion to subsidize broadband cost and devices for lower income subscribers, spurring demand.

Traditional broadband providers, such as telcos and cable companies are major players in this massive broadband expansion, but they are not the only ones. Funding is increasingly being awarded to municipalities, utilities, tier 3 operators, and others. For industry vendors, this presents a significant opportunity, but also multiple challenges, including:

• The new industry players may have new requirements that vendors, whose solutions were developed for more “traditional” players may not meet.
• Unlike “traditional” players, who typically fund their deployments from cash from operations or from capital markets, the new entrants need to apply for grants from governments. Grant applications require a specialized skillset, a good understanding of what is needed, and network buildout plans with approximate costs.
• The new entrants are often not subject matter experts, and therefore need more education, training, support, and often turnkey capabilities.
• The new entrants present a fragmented market, and significant diversity in their requirements. For example, even at a simplistic level, a utility will have a different set of needs than a municipality.
• They present significant challenges from a go to market (GTM) perspective. Vendors typically have well defined go to market strategies that are aligned with the existing ecosystem that their customers live in. The new players exist in often completely different ecosystems and need new GTM strategies.
• The new players often rely on ecosystems that could be divorced from the ones more traditional operators live in.

So, what is a vendor to do to capitalize on this massive opportunity?

• Develop a good understanding of the ecosystems that the emergent customers live in. For example, whom do they go to for advice, help in grant writing, what vendors do they work with, what distributors, etc. Here is a high-level view of what the ecosystem may look like.

• Get in the early part of the value chain. Some of these entities need help in writing grants for government funding. Vendors can provide free resources and support, which would help the applicants and solidify the relationship. Some vendors are already doing this.
• Gain insights into target customer’s needs, decision-making process, steps, roles, timing, selection criteria and other.
• Engage with the broader ecosystem to develop a better understanding of the above:
  • What type of players? Who are they? 
  • Who are their customers?
  • What solutions and capabilities do they offer?
  • What markets / geographies do they serve?
  • What are their business models?
  • What do they offer target customers?
  • What are their needs, met or unmet?
  • What organizations do they belong to?
  • How do they engage with end customers?
• Identify gaps in the solutions, level of support and the broader ecosystem.
• Establish relationships with the end customers to better understand personas, needs, buying behaviors and so on.

The vendors’ ultimate goal is to evolve their solutions to be better suited for the needs of these developing market segments and create go to market strategies that best suited to enable them to gain market share.

We at ACG Research are investing effort in understanding this new ecosystem, in order to help develop go to market strategies for vendors who are looking to capitalize on this growing market opportunity. 

Contact Liliane or Mark to learn more. ■

As companies scramble to build out fiber networks to capture market share in the increasingly competitive broadband market, Charter Communications chairman and CEO Tom Rutledge told an industry audience Wednesday that wireless connectivity will separate the winners from the losers.

At the Goldman Sachs Communacopia + Technology conference Wednesday, Rutledge, when asked about the company's competitive stance against fixed wireless and fiber broadband competitors, said the combination of its broadband and mobile networks only makes it stronger.

Charter does well in markets where it competes with fiber and fixed wireless broadband, Rutledge added. Its mobile network can offer speeds up to 1 Gigabit per second today, and could get even faster as more and more traffic is shifted from its Verizon MVNO to its own WiFi network, he said.

“We can have the fastest mobile product around,” Rutledge said. “Eighty percent of the bits are actually on the WiFi network and we’ve got a pathway to put even more traffic onto the WiFi network and to CBRS.”

He added that more and more of the business is wireless — there are 450 million devices connected to Charter’s network and most are wireless — which also gives his company the upper hand against the competition.

“I think we have a competitive advantage there because we have advanced WiFi, we have an integrated mobile product with that, and even our future video product with the Xumo joint venture is wirelessly delivered,” Rutledge said. “We’re going to an environment where every device connected to our network is wireless.”

Charter entered into the JV with Comcast in April, where Comcast is licensing its Flex streaming platform as well as the retail business of its XClass TVs and its Xumo streaming service. Charter will contribute $900 million over several years.

That Comcast partnership also could serve as a boost to the video business, which  continued to lose subscribers in Q2, but could be on the cusp of an evolution in part spurred along by the JV.

“I don’t think it’s about to precipitously fall apart,” Rutledge said of the current video business, adding that reductions in subscribers and increases in costs will likely remain for the next several years. But as the video business moves to an app-based model, the Comcast JV puts Charter in a strong position.

Also: Could Comcast and Charter’s New Streaming Platform Be The Launching Pad for Something Bigger?

“I think this new platform that we’re developing with Comcast, the joint venture, gives us an opportunity to monetize video and to use our customer relationships to drive that platform deeper into the market and to create an advertising business and a transaction business where we monetize the platform by helping direct-to-consumer media companies get more customers and take a fee for doing that, helping them sell the product,” Rutledge said. “The other opportunity that comes from it is advertising. To the extent that you get a big platform deployed and you’ve got viewership, you can monetize that and get better CPMs because it’s targeted advertising.” ■

Fueled by an accelerated fiber rollout across its footprint, Altice USA, which has endured four consecutive quarters of broadband subscriber losses, should turn the corner in Q4 and beyond, outgoing CEO Dexter Goei told an industry audience Tuesday.

But that means that Altice USA investors will likely see continued declines in Q3. At the Goldman Sachs Communacopia + Technology conference in San Francisco, Goei said while the company has made strides in deploying its fiber network -- it expects to finish 2022 with up to 2.3 million homes passed with the technology -- it is still seeing customer declines in its former Cablevision and Suddenlink footprints. 

In Altice’s former Cablevision systems in metropolitan New York City, gross additions are lower, there is less move activity and churn levels are low, but the company also is competing against a telco -- Verizon Communications -- that has been extremely aggressive on price. In its Suddenlink markets mainly in the Midwest, gross addition activity is high but churn is high, especially in markets where it is being overbuilt.

“We’re still losing subs in both markets but for different reasons,” Goei said. “We feel good about the fourth quarter turning around and looking better next year.”

Altice USA lost about 3,000 subscribers in 2021 -- the only major cable operator to do so -- and shed more than 50,000 broadband customers in the first half of this year.  

Altice began accelerating its fiber rollout last year, with a goal of passing 6.5 million homes by 2025. At the Goldman conference, Goei said the company expects to end 2022 with 2.2 million to 2.3 million homes passed with fiber (an increase of about 1 million homes), and should add another 1.6 million to 1.8 million households by the end of 2023. 

While other cable operators have seen an increase in competition from fixed wireless access providers from telcos, Goei said most of Altice USA’s telco competition is replacing slower DSL lines with fiber, hence the acceleration of its own fiber buildout plans. But he shared his peers’ disdain for fixed wireless access (FWA), agreeing with some pundit predictions that the technology will reach a performance and penetration plateau in the next two or three years.

Goei announced his intention to step down as CEO earlier this month, and will become executive chairman of Altice USA on October 3. In his place the company named Comcast executive Dennis Mathew as CEO, also effective October 3. Mathew has 17 years of experience with Comcast, most recently as senior VP of its Freedom Region (Southeast Pennsylvania, New Jersey and Northern Delaware). He earlier served as senior VP for its Western New England Region (Connecticut, Vermont, Western Massachusetts and areas of New York and New Hampshire) and has extensive experience in running cable businesses. 

Goei said at the Goldman conference that his main motivation for stepping down was a desire to return to Europe, where he spent his childhood and most of his professional career, with his family. He added that he notified the Altice USA board of his decision about a year ago, starting the search process for a replacement about six months ago. He believes he’s leaving Altice USA in capable hands. 

“I interviewed many, many people during the process; Dennis fits the bill across the board,” Goei said, adding that Mathew has a proven track record in operations, running one of Comcast’s most high-profile regions (the Freedom Region) and will fit in well with the Altice team. “He’s just a great guy, a team player, will focus on the prize and is someone who would do very well with the executive team at Altice USA.” ■

Lightpath said Wednesday that it will expand its fiber network in western Connecticut with a 70-mile build that will connect two locations in the state -- Trumbull and Norwalk -- with Katonah, New York.

Lightpath provides fiber-based high-speed connections and services to businesses. Connecticut is home to 14 Fortune 500 companies participating in industries like advanced manufacturing, aerospace, bioscience, insurtech and medtech, according to Lightpath.

“Lightpath’s all-fiber fiber network offers organizations across all industries access to robust connectivity with the highest levels of flexibility, reliability and security,” Lightpath SVP of sales Doug Turtz said in a press release. “Lightpath continues to invest in Connecticut, as well as the greater New York City Metropolitan Area, as we have for over 30 years now. We are committed to enhancing our network and services for our existing customers, as well as continuing to bring Lightpath to new customers in more places.”

Lightpath is majority owned by Altice USA, which sold a 49.99% interest in the company to Morgan Stanley Infrastructure Partners in 2020 in a deal valued at $3.2 billion. According to Lightpath, the Connecticut expansion is part of an aggressive growth strategy and that over the past year it has:

●    Reached a milestone of 20,000+ route miles and 13,500+ service locations

●    Completed a 300-mile expansion from New York metro to Ashburn, VA

●    Finished a 54-mile network extension throughout Princeton, New Jersey

●    Built a 100-mile of state-of-the-art network across Queens, New York

The company also recently opened new offices in Midtown Manhattan and Boston. ■  

Frontier Communications promised to expand high-speed fiber internet service into unserved and underserved urban and rural areas of Connecticut, eliminate hidden surcharges and improve its marketing and customer-service functions, all part of a settlement with the state attorney general valued at $60 million.

The settlement, unveiled August 31, was part of an overall investigation by the attorney general’s office and the Connecticut Department of Consumer Services as to whether Frontier deceived or misled consumers in the state in the marketing and sale of its internet services. The two agencies jointly reviewed more than 1,400 consumer complaints against the company, ranging from fees for equipment already returned, poor customer service and charges that continued after service had been canceled. 

“Frontier failed Connecticut consumers,” Connecticut Attorney General William Tong said in a press release. “Their DSL internet quality was slow and unreliable, and their customer service was unacceptable. They tacked on hidden fees, charged families for returned equipment, and kept charging customers even after services had been cancelled. That ends now.”

Also: Nearly 2,000 Striking Frontier Workers Back on the Job in California 

In a statement, Frontier said the complaints dated back to old legacy services and the company admitted no wrongdoing. 

“Frontier is investing hundreds of millions of dollars to build a fiber infrastructure that will provide high speed, reliable connectivity across the State of Connecticut,” Frontier said in a statement. “The settlement with the State of Connecticut is primarily related to legacy DSL services and stipulates that Frontier has admitted no wrongdoing. We settled the investigation in good faith to put it behind us so we could focus on our business – that’s in the best interest of all our customers.”

As part of the settlement, Frontier will spend $42.5 million over the next 3.5 years to upgrade outdated digital subscriber line (DSL) service in the state, with at least half of those improvements made in economically distressed urban and rural communities, or about 40,000 homes. In addition, Frontier has agreed to eliminate what the state called a $6.99 hidden monthly surcharge for internet service (amounting to $16 million last year alone), to pay $1 million to the state and to dole out $200,000 for credits and refunds to consumers who filed complaints beginning in 2019.

“We intend to hold Frontier accountable to every word of this agreement,” Tong continued. “If you continue to have any problems with Frontier, we want to hear from you.”

This is the second settlement Frontier has made in the past three months. In May it agreed to pay $8.5 million in civil penalties and costs and return $250,000 to consumers in California as part of a settlement with the Federal Trade Commission and two California law enforcement agencies over DSL service.  

Also: FCC to Investigate Frontier Outages in Arizona  

Also as part of the Connecticut settlement, Frontier must meet several accountability targets over the next six years, including new price and billing disclosures, advertisement disclosures that address its DSL representations, requirements that Frontier deliver promised internet speeds or provide options for consumers who do not receive promised speeds, and assurances that the company will implement transparent and fair cancellation and equipment return processes. Failure to meet those requirements could end in another $6 million in penalties levied against the company by the state. 

The agreement also provides protections for consumers offered the upgrade, including a 45-day period to decide whether to transition to fiber internet, protections against early termination or disconnection fees if they elect to cancel Frontier service, access to new customer promotional rates, and information about internet subsidies through the Affordable Connectivity Program (ACP). ■

About 2,000 Frontier Communications employees that walked off last Friday in several California communities over a dispute involving the use of non-union subcontractors were back on the job August 25, according to the Communications Workers of America. 

The CWA members went on strike on August 19, objecting to Frontier’s use of subcontractors for buildout work they said was in violation of the collective bargaining agreement between the union and the telecom company. Under that agreement, no more than 5% of Frontier’s workforce could be subcontracted.

As part of the new agreement, the union said Frontier has committed to follow the limits of subcontracting as put forth in the collective bargaining agreement, including posting job requisitions for at least a hundred Term Cable Splicer positions; meeting regularly with CWA on the status of the postings; offering union jobs in lieu of contract workers; and utilizing the existing referral program for union members to assist the company in finding qualified applicants. According to the union, the strike ended at  11:59 p.m. PT on August 24, and all employees returned to work on or before August 25. 

“This is a huge victory for CWA members at Frontier who stayed one day longer, one day stronger on the picket line and refused to settle for the company’s excuses and empty promises. It’s proof that we can successfully fight back when we come together, mobilize and build solidarity,” said CWA Local 9510 Executive Vice President Kenny Williams in a press release. 

Frontier officials did not respond immediately to a request for comment, but in earlier press reports said that the dispute had been mainly a misunderstanding. 

“Like most companies, we’re using contractors to fill a gap as we actively recruit new talent in a tight labor market,” Frontier said in a statement to the San Gabriel Valley Tribune. “Other factors have also pushed us to engage more contractors than normal, like weather-related repair issues, meeting PUC service requirements and employees not willing to meet overtime requirements.”

Telecom companies across the country have been experiencing a worker shortage as fiber build projects grow and the labor pool of skilled workers dwindles. 

Also: Equipment, Worker Shortage Could Delay Fiber Buildout

And though the CWA claimed victory in this dispute, it still is waiting for a new contract with Frontier. According to the Tribune, its previous collective bargaining agreement expired in September 2021, but workers have been without a contract since its last extension expired in April. 

“I am grateful for all of the members of the community who have been persistently supporting CWA members at Frontier and fighting alongside us to protect good jobs and the quality of service our customers receive. Although the issues relating to this grievance are resolved, we are still fighting for a new contract. I have no doubt in my mind that our members are ready, able and willing to do whatever it takes to ensure that Frontier provides quality service and good jobs for Californians,” said CWA District 9 Vice President Frank Arce in a press release.

Shares in AT&T were down nearly 11% on Thursday (July 21) after the telecom giant said its free cash flow guidance for the year would be lower than expected. That, coupled with a loss of 25,000 total broadband customers in Q2, wasn’t enough to offset near-record growth in its fiber division.

AT&T shares fell to $18.24 per share in early trading on Thursday, down 10.9% or $2.24 each. While the stock rose slightly in later trading — it was priced at $18.61 per share at 10:40 a.m.—- driving the decline was the company’s decision to reduce full-year free cash flow guidance to “the $14 billion range” to reflect heavier investment in growth. Previous guidance was for about $16 billion in free cash flow for the year. The stock closed July 21 at $18.93 each, down 7.6% or $1.55 per share.

“Our results the last eight quarters demonstrate that our deliberate strategy of focusing on growth is helping us gain valuable customer relationships, and we’re confident in our ability to maintain this momentum while also continuing to reduce debt and deliver an attractive dividend,” the company said in a press release.

Consolidated revenue was down 17.1% to $29.6 billion, mainly due to the separation of its DirecTV video business in Q3 2021. Excluding that deal, revenue was up 2.2% in the quarter. AT&T completed the spin-off of its WarnerMedia business in a deal with Discovery Inc. valued at $43 billion in April.

AT&T managed to beat its own estimates for fiber growth, 316,000 compared to guidance for 275,000 additions. But steeper losses in its IP broadband business — 341,000 vs. company estimates of a 275,000-customer loss — pushed overall broadband subscriber performance into the red. For the period, total broadband losses were 25,000 customers.

AT&T said it now has about 6.6 million fiber broadband customers — up by 2.3 million customers from two years ago — and is available in 18 million locations in more than 100 metro areas in the U.S.

Wireless subscriber growth at 813,000 bested analysts’ consensus estimates of 542,000 additions. Consumer wireline revenue rose 1.1% in the period, driven mainly by fiber broadband increases (revenue was up 28%), offset by non-fiber broadband revenue declines of nearly 10%.

Business wireline revenue fell by 3% in the period, while EBITDA at the unit was down 14% year-over-year. ▪️

With the second-quarter earnings season almost upon us, cable investors should prepare themselves for an even steeper falloff in broadband subscriber growth, according to Barclays Group media analyst Kannan Venkateshwar.

Comcast is expected to kick off the Q2 earnings season on July 28, followed by Charter Communications on July 29. But in a research report Thursday, Venkateshwar wrote that there is little hope that the months-long slowdown in broadband growth is nearing an end.

It’s been almost a full year since analysts began bracing for cable broadband additions to slow, and it seems like every quarter there is another call that the impact could be even greater than expected. Analysts have already modified their forecasts for the bigger operators, with some expecting full-year 2022 additions to be nearly one-third of those of the peak year of 2020. Now, with the added pressure of increased fiber buildouts by telcos like AT&T and Verizon Communications, aggressive pricing, the near disappearance of digital subscriber line customers — once a top feeding ground for cable broadband — and sluggish new household formation, that impact could be even worse.

On the telco side, Venkateshwar believes that fixed wireless offerings from Verizon and T-Mobile could have greater unit growth “than the entire cable industry” during the quarter. 

Charter Communications chief financial officer Jessica Fischer pointed to another potential pitfall for cable at the Credit Suisse Communications conference in June, telling the audience that about 60,000 to 70,000 broadband subscribers that had been part of the Federal Communications Commission’s Emergency Broadband Benefit program did not make the transition to the fed’s new broadband subsidy offering, the Affordable Connectivity Program. While Fischer said she believes broadband is a growth business and still expects Charter to add subscribers in Q2, it has caused analysts some pause. 

Venkateshwar, who had earlier predicted Charter would add about 100,000 broadband customers in Q2, now believes they will add none, adding that the gap between it and No 1 cable operator Comcast could be bigger than usual. 

In his note, Venkateshwar wrote that while Q2 is generally seasonal as students leave college and residents move to summer homes, “the slowdown being seen intra quarter goes beyond seasonality impacts.” 

“Charter talked down broadband sub growth for Q2 due to the impact of the rollover from old subsidy programs into new programs in late Q1, and the company’s consumer broadband net adds may tip into negative growth in the quarter,” Venkateshwar wrote. “This is difficult to explain without assuming continued structural impacts on gross adds due to competition as well as broader market saturation.”

The Barclays analyst expects Comcast to add about 74,000 broadband customers in the quarter (down from 354,000 last year), while Altice USA should lose about 20,000 high-speed internet subscribers in the period, compared to zero additions in the same period last year.

While telcos seem to have an advantage given their increased fiber deployment, Venkateshwar wrote that their efforts have been largely tactical, adding that there isn’t much visibility as to the long-term trends. And any big dropoff in cable broadband could lead operators to focus more heavily on wireless, which wouldn’t be good news for telcos. 

“Longer-term, it is tough to see how either industry ends up benefiting from the ongoing convergence in wireless/wireline offerings,” Venkateshwar wrote. “The end state of this process is likely to be potentially more M&A; however, with capital costs rising and a tougher regulatory environment, this may not be available as a solution for a while.” ▪️

About one year after emerging from Chapter 11 bankruptcy protection, Frontier Communications has been a surprising success story, moving full-speed ahead with building out its fiber footprint, doing it at a cost lower than even the company expected and watching its stock, driven by changing investor sentiment, rise more than 20% in the past three weeks. 

Frontier’s outlook wasn’t always so bright. In 2020, saddled with huge debt, a dwindling subscriber base and an outdated network, the company cleaned house under bankruptcy protection, refinanced its debt and refocused on delivering broadband via a state-of-the-art fiber network. About 14 months later — Frontier emerged from Chapter 11 protection in April 2021 — the company has a clear vision and a mission to beef up broadband speeds and reliability in its predominantly rural markets. Topping it all off is a new logo launched in April to reflect the company’s new direction and commitment to “relentlessly pursue betterness in our business and for our customers,” CEO Nick Jeffery said in a press release at the time. 

That Frontier decided to merely change its logo rather than scrap its name and conduct a total rebrand was telling to MoffettNathanson telecom analyst Nick Del Deo. In a May research report, Del Deo wrote that the decision to refresh the brand was “indicative of the positive effects the changes being made throughout the organization are already having on customer perceptions and marketplace traction.” 

Also: Equipment, Worker Shortage Could Delay Fiber Buildout

Del Deo added that management’s data-driven approach to the business has improved customer perceptions — its American Consumer Satisfaction Index scores are steadily moving up and its Net Promoter scores have surged in markets where it has fiber. 

“Put simply, the choice to refresh the company’s font and logo rather than totally rebrand is further evidence that changes to the business are working,” Del Deo wrote.

That change in sentiment also is evident in Frontier’s stock price. Frontier shares have risen about 21% between May 12 ($22.21) and June 3 ($27.03). While the stock is still down about 8% from the beginning of the year, Del Deo’s $33 target price for the stock seems to signify some decent upside.

Wells Fargo Securities telecom analyst Eric Luebchow was even more optimistic, calling Frontier the “best risk/reward opportunity that has meaningful exposure to fiber overbuilds” in a recent research note. Luebchow estimates Frontier will see an internal rate of return (IRR) of 20% or more at 40% penetration on its fiber build, well outpacing its cost of capital. 

“[Frontier] also has proven metrics that its fiber deployment is gaining traction, with its 2020 cohort of homes already exceeding 40% penetration just 24 months after completion (vs. its 25-30% initial expectations),” Luebchow wrote. “We believe this early success can continue, in part because FYBR on average is undercutting its cable peers on price by ~20% on average over a 3-year period for symmetrical broadband.”

Luebchow added that although year-over-year EBITDA and revenue growth was negative in Q1 — at $1.4 billion, revenue was down 10.7% in the period and  EBITDA of $509 million fell 22%, but both were in line with consensus estimates — he expects them to turn positive in late 2022 and 2023, respectively.

”We strongly view [Frontier] as a mispriced asset and presents a unique opportunity for the longer-term investor,” he wrote.

In a May research note, J.P. Morgan telecom analyst Phil Cusick wrote that Frontier’s fiber buildout was beating expectations, with the third phase of construction -- targeting the last 5 million households of its 15-million home footprint, costing less than the $900-to-$1,000 per passing earmarked for Phase 2. In addition, sell-through was higher and faster than earlier expectations. 

Cusick added that the company was optimistic concerning federal support of the network buildout, and that Frontier has already staffed up to pursue those funds, with the greatest impact expected in 2023. Nevertheless, Frontier believes Phase 2 of the buildout is funded through 2024.

Cusick noted that Frontier plans to build the network out to another 6 million homes in Phase 2, bringing the total number of homes where fiber is available to 10 million. So far, he wrote, Frontier is tracking ahead of schedule, building 640,000 fiber passings in 2021 (ahead of a 500,000-home target) and plans to finish 1.1 million to 1.2 million passings this year, up to 20% ahead of its earlier goal of 1 million additional passings.

In the first quarter, Frontier added 52,000 residential fiber broadband customers, its biggest quarterly addition in that metric ever, and beat analysts’ consensus expectations of 48,000 additions. 

In his report, Luebchow estimated that Frontier would more than triple its residential broadband subscribers over the next five years, from 1.5 million in 2022 to 4.8 million in 2027. Most of those additions will be fiber customers, as the analyst predicts that its legacy copper broadband customers will fall from 1.1 million in 2022 to 650,000 by 2027.

“[Frontier], in our view, remains the best ‘pure-play’ operator given its relative exposure to residential fiber, with a pathway toward revenue growth in early 2023 and a current valuation that makes for an attractive entry point,” Luebchow wrote. ■

Fixed wireless access broadband could add more than 10 million subscribers in the next five years, driven by programs geared toward rural markets, according to a report by Wells Fargo telecom and media analysts Eric Luebchow and Steven Cahall.

In their report, the analysts predict that total broadband subscriber additions will accelerate to 4.5-to-5 million annually in 2023 and 2024, fueled mainly by FWA and fiber overbuilds. Over the next five years, Luebchow and Cahall predict FWA will rise from 7.1 million total subscribers at the end of 2021 to 17.6 million in 2027. That growth will come at the expense of cable operators, who the analysts predict will watch their market share erode quickly over the next few years. 

While fixed wireless has been around for awhile, Luebchow and Cahall expect competition to heat up significantly in the next three years as federally funded programs spur both wireless and fiber build outs for broadband. In their report, they estimate that FWA would capture 60% of net additions through 2024. Then momentum shifts to fiber overbuilders as new inventory comes on the market. 

“In total, we expect +50 [million] new premises to be connected with fiber through 2027 that will reach [two-thirds] of addressable locations,” Luebchow and Cahall wrote. “The competitive dynamics will make the net add story increasingly difficult for the cable players, as we project cable’s share of industry net adds will fall to ~30-35% in 2023 and beyond (vs. ~94% on average the past three years).”

Wells Fargo estimated that fiber builds passed about 50 million homes in 2021 and would more than double that pace to 102 million by 2027. 

While there has been some concern around the lack of a labor force to build fiber networks the analysts believe that is less of a factor with bigger telcos. 

Initially, Luebchow and Cahall see FWA as being the biggest disruptor, mainly because of its low price -- in some cases as much as 50% lower than wireline broadband offerings -- and adding about 5 million new customers in 2022 and 2023. Fiber will take hold in 2024 and beyond, about the time that many of the build out projects started in the past few years will be completed. While that includes some cable operators -- Altice USA plans to pass 6.5 million homes with fiber by 2025 and Charter and Comcast have extended their fiber reach by about 1 million homes per year over the past few years -- Luebchow and Cahall don’t believe it is enough to reverse the coming share shift.

“The net impact is cable players will have to face stiffer competition within their footprints, and they threaten to be crowded out of a secular story that only has room for [about] 3-5 million net adds per year,” they wrote, adding they expect cable’s share of broadband net additions to drop from 87% in 2021 to 30% to 40% by 2027. 

Cable has punched back by bundling broadband and wireless phone service -- Comcast and Charter are both pairing high-speed data service with mobile offerings at a discount. 

T-Mobile and Verizon Communications have been most aggressive on the fixed wireless front, adding 532,000 FWA customers in Q1, according to Leichtman Research Group.  But so far, most cable companies claim they haven’t seen much impact from the service, which for the most part has been concentrated on less populated areas and has targeted business customers like food trucks and construction trailers. 

At the MoffettNathanson Media & Communications Summit May 18, Comcast Cable CEO Dave Watson said so far, FWA hasn’t been a major competitive factor, but that the company is keeping a close eye on the service.

“It doesn't mean that it's not competitive. It doesn't mean that we're going to take it lightly. We're not,” Watson said at the conference, adding that fixed wireless has some issues around speed and latency. T-Mobile advertises FWA speeds between 33 Megabits per second and 182 Mbps, while Verizon FWA service can range from 300 Mbps to 1 gigabit per second. Watson added that two-thirds of Comcast broadband customers take 300 Mbps and higher.

“We're coming from a position of strength in regards to network performance and WiFi performance in the household and we're not going to stop,” Watson said at the conference. 

In their report, Luebchow and Cahall noted that FWA speeds are lower than cable, but they are more than adequate for the most popular applications like streaming video.

“FWA should not be dismissed and will be a viable competitive threat, particularly in rural areas and for customers that prioritize a lower price vs. higher speeds,” the analysts wrote.  ■ 

After Netflix’s disappointing first quarter — and another one due on the horizon — a general sense of panic that streaming video may not be what unseats traditional pay TV from its throne has enveloped the entire industry over the past few months. Wouldn’t it be an actual hoot if what saves Netflix and its broadband-delivered brethren ends up being something as mundane and dumb-pipe-like as fiber deployment?

Netflix said back in April that it lost about 200,000 global subscribers, its first quarterly loss ever, adding that it could lose another 2.5 million in Q2. At the same time cable and telcos are furiously building out fiber networks, fixed wireless access and 5G offerings across the country to close the broadband gap, mainly in rural markets. With that fiber deployment, fueled in part by billions of dollars of federal money, could come millions of new broadband customers itching to try out streaming for the first, or maybe the second or third time.

Netflix obviously has other problems — it has shed nearly $200 billion in market cap since December 31 as its stock price has fallen 71% and investor sentiment has literally done a 180-degree turn on the company. Investors who were unconcerned about the ever-escalating content spend (about $17 billion in 2021) as long as the subscriber growth trajectory was maintained, are now urging Netflix to close its wallet.  

And while Netflix stock has seen its ups and downs in the past, this time it was serious enough to force the company to embrace two things it has vehemently resisted in the past: offering a lower-priced ad-supported version and going after paying subscribers that share their passwords. According to reports, an ad-supported version of Netflix could come as soon as the fourth quarter of this year. 

 Fiber Blowout

Fiber deployment and construction are the new buzzwords in the cable and telco business, with AT&T claiming they will pass an additional 30 million customer locations with the technology by 2025. Cable operators are regularly extending their existing footprints with fiber — Comcast and Charter Communications are adding roughly 1 million homes per year through fiber edge-out programs — and smaller operators are constantly announcing new fiber builds. So far in May alone, nine small operators and telcos have announced plans to build fiber networks, with TDS Telecom pledging to pass an additional 160,000 homes with fiber this year and Wide Open West pledging $400 million to extend fiber to an additional 400,000 homes by 2027. 

Forget that there are still some questions as to whether there are enough skilled techs to actually build networks. Forget that these networks won’t be fully built for another five years at least.  Chances are if there wasn’t a worker shortage, the number of projects would be even greater — because nothing creates a growth surge more than money, and the federal government has earmarked $65 billion for network buildouts in areas they deem have insufficient broadband speeds. And even though a lot of those projects will be done in areas that have incumbent providers, more choice and higher speeds can only be good news for streaming service providers, right? 

Netflix obviously needs more subscribers. And cable operators, telcos and soon-to-be-Twitter owners are all spending huge amounts of cash to extend broadband services to rural areas. And since some of the customers in those markets don’t have Netflix or other SVOD services -- because you need broadband to stream video — that would appear to represent a pretty big untapped market. Maybe not hundreds of millions of people, but at least a few million. And every little million helps. 

Sounds pretty simple?

Some Gray Areas

Not really. Like everything else in the media business, there are some gray areas. 

Perhaps the grayest is just how many homes don’t have sufficient broadband. The federal government says there are 30 million people that live in areas that don’t have sufficient high-speed data, but doesn’t say how many homes that works out to be. And though DSL service may be a lot slower than cable broadband, with top residential  speed of 100 Megabits per second vs. 1 Gigabit per second for cable, it’s still fast enough to stream video. So technically, truly new broadband customers — those who have never had broadband and therefore, SVOD — are probably pretty few. 

That’s what  Leichtman Group president Bruce Leichtman thinks. Sure, he said in a recent interview, new fiber builds may attract some new subscribers to Netflix, but it will be a marginal amount. More likely, he added, is that a combination of faster networks, lower prices for ad-supported streaming and the advent of free ad-supported TV (FAST) could present an opportunity to convince customers in those areas to subscribe to other SVOD services.

“I think it's an opportunity, but it’s more of a gradual opportunity,” Leichtman said of the fiber build’s impact on Netflix and other SVOD providers. “Remember, they have to build these markets, and the building takes a while. And we’re talking about the 86th percentile. These are not the early adopters that we’re talking about.”

But Growth is Growth, Isn’t It?

Although there has been a lot of talk about the slowdown in broadband growth, it’s still growing. Leichtman believes that one of the biggest catalysts for Netflix and other streaming services would be a return to new housing growth, which has been stagnant throughout the pandemic. New homes means new subscribers for broadband as well as SVOD services.

“While the breadth [of the SVOD market] is mature, the depth will continue to grow,” Leichtman said. “That means more services per household.” 

LightShed Partners expects total broadband subscriber additions to be fairly constant over the next three years: 3.5 million in 2022, 3.3 million in 2023, 3.2 million in 2024 and 3.2 million in 2025. 

At the same time, traditional pay TV losses are accelerating. Wells Fargo Securities media analyst Steven Cahall estimated that traditional pay TV lost 2.2 million subscribers in Q1, 400,000 more than in the same period last year. 

Our own Next TV estimated that cord cutting accelerated 31% in Q1, due mainly to losses at virtual MVPDs and satellite TV service providers.    

MyBundle.TV CEO and founder Jason Cohen said what some observers are missing is that broadband is still growing.

“That’s the piece of the puzzle that the streaming marketplace isn’t very focused on,” Cohen said, adding that his company has nearly tripled its number of broadband partners from 31 in June 2021 to 90 currently, including many small market ISPs that are bringing broadband to people for the first time.

“Some of these people still don’t have Netflix,” Cohen said. “Is there another 100 million households for Netflix to gain in the US? No. But we’re talking about, on the margin, there are millions left. If you're talking about the smaller streaming services, there are still tens of millions [of subscribers] to gain. There's a lot of investment happening to bring more broadband to the table.”

Streaming is Not Dead 

Cohen bristles at those who claim streaming is dead, pointing to the roughly 68 million households who spend about $120 per month on traditional linear pay TV subscriptions. (That’s $98 billion annually, for those without a calculator) Those ranks are definitely going to deplete as those homes cut the cord, but that doesn’t mean they are going to start reading books and learning how to play the piano for entertainment. They’re going to stream video, either through a service they already have or via one to which they will soon subscribe.

“This idea that streaming is saturated we think is 100% incorrect. Those dollars are going to be shifting from those cable bills. Whatever it is, more broadband means there is going to be more streaming,” Cohen said, adding that consumers unwilling to pay $15 per month for a streaming service may be attracted to paying $9.99 for an ad-supported one.

Netflix won’t be alone in its ad-supported efforts. Others like HBO Max — which introduced its ad-carrying version in June 2021 -- Paramount Plus, and NBCUniversal’s Peacock all have introduced AVOD tiers to varying degrees of success. Disney Plus said it would launch a lower-priced ad-supported version later this year.

Disney Plus added 7.9 million new customers worldwide in fiscal Q2, exceeding analysts’ consensus estimates of 5.9 million additions. Including its Hulu, ESPN Plus, and Disney Plus Hotstar brands, total customer additions were about 9.2 million in the period. But the company warned that because the first half of the year came in so much better than expectations, the second half may not be as strong.

“...[T]he first half came in better than expected, so that delta that we had initially anticipated may not be as large,” Disney chief financial officer Christine McCarthy said on a conference call with analysts Wednesday to discuss quarterly results. “But we still do expect an increase in the second half to exceed the first half.”  

The push towards AVOD is a logical next step for streaming, and could ease the pressure to spend heavily on new content just from the nature of the business model. With AVOD, the longer a consumer watches, the more money the service makes, while the absence of advertising means as consumers burn through shows, more content has to be created to keep their attention. 

FAST and Furious 

At the same time, free, ad-supported TV (FAST) services like Paramount’s Pluto TV, Fox’s Tubi TV, the Roku Channel and others are becoming the fastest growing segment in the streaming universe. Pluto TV has about 68 million monthly active users, Tubi about 51 million and indications are that the segment will continue to soar as new players enter the fray. 

Cohen added that the FAST segment is where he believes the ad dollars once earmarked for linear networks will go, adding that MyBundle.TV is building a FAST component into its platform to take advantage of that growth.

“We know people want free TV, they want to pay for no adds, they're willing to pay less to get ads, and then some of them are willing to lean back and say, ‘You know what, I’m willing to take a little bit lower quality content so I can flip through channels,’ ” Cohen said. “Whether it's Pluto or Tubi, you name it, there's a real market for that free TV.”

MyBundle.TV obviously is in the position to take advantage of the shift in how programming is delivered, and Cohen believes that his service, which enables customers to navigate the growing number of streaming services to find the content they want to watch, will become even more valuable as choices increase and traditional linear bundles erode. 

That is even more true today as the number of services increases and the sheer amount of available programming balloons. Tubi alone has a content library with more than 40,000 titles. And as more and more content providers are focusing on originals and other exclusive shows, finding programming across the various streaming services can almost become a full-time job.  

It’s About Aggregation, Not Consolidation

“It’s not what I’m paying for my apps, it’s what am I getting out of it,” Cohen said. “Right now if I subscribe to an app and I'm not going to it to find the content and I’m not finding new shows or movies, then that might be a problem. There’s a lot of content out there, and a lot of good content, on multiple different streaming services. … By helping consumers discover new shows and movies across their services there's another way to increase that value.”

“To me, it’s not streamer vs streamer, it’s still streaming vs the $160 billion [in revenue] between the subscriptions and the advertising that is still spent by advertisers on traditional linear TV,” Cohen continued. “That money is shifting over through this new delivery mechanism that is streaming.”

And Cohen believes that the industry can support more streamers, just as long as there are simple ways for consumers to access the content they want.   

“I think that ultimately our view of the market, there doesn't need to be consolidation, but there needs to be aggregation,” Cohen said. “There needs to be a way for consumers to more simply navigate this process. We think this because the way that consumers build their own bundle that will still include Netflix, that will still include these other big services, as well as the niche services for people’s  interests. 

The pay TV industry is not blind to the need for aggregation either. Comcast and Charter Communications unveiled a joint venture earlier this month that would serve as a streaming platform for its broadband-only customers, one that could easily become a streaming app aggregator.

Cohen acknowledged that larger pay TV companies will likely go on their own when it comes to app aggregation. But he added there is plenty of room for the smaller guys, adding that there is a growing number of ISPs with 200,000 or 300,000 subscribers that would welcome help. 

“We do not think Comcast is going to be using MyBundle.TV,” Cohen said. “But for everybody else, we view ourselves as that aggregator. We consider ourselves the streaming aggregator for the broadband industry.” ■

Growth in residential broadband subscriptions will mainly be a market share game between cable, telco and satellite providers for the foreseeable future, as total high-speed internet penetration passes 90% in the U.S., according to Kagan, the media research unit of S&P Global Market Intelligence. 

Kagan estimates that total U.S. broadband subscriptions will reach 122 million at the end of 2022, as cable operators continue to expand their existing footprints through edge-out programs, telcos upgrade their plant with fiber builds, wireless carriers deploy 5G service, and the federal government offers incentives to bring broadband to rural markets through programs like the $42.5 billion Broadband Equity Access and Deployment (BEAD) project.

Cable broadband growth has been on a slower pace compared to the record growth during the pandemic, a combination of high penetration rates, stiffer competition and a slowdown in new housing starts.

Both Comcast and Charter reported broadband subscriber growth in Q1 that was half that of the prior year, and while most analysts expect operators and telcos to grow their high-speed data customer bases, none expect the pace to quicken anytime soon.

Kagan warns that growth will come at the expense of other players. In the research report, Kagan analysts Ian Olgeirson and John Fletcher write that “there simply are not enough subscribers to accommodate the growth ambitions of each segment.” 

As a result, Kagan expects cable, the hands-down dominant player in the broadband segment for the past decade, to begin to show signs of slippage, with market share dipping slightly to 61.9% through 2026. Telcos will see the biggest market share jump -- from 8% to 12.6% by 2026 -- mainly due to their aggressive fiber buildout, although that is somewhat muted by their legacy copper DSL offerings.

Although the next generation of satellite broadband offers some hope, unfavorable cost and speed comparisons should limit growth expectations, according to Kagan, who estimates their share of the market will remain steady at 1% through 2026. ■ 

“Nothing” is faster than fiber. Literally.

Comcast said it's proving the point with new “hollowcore fiber” technology that it said transmits data 150% faster than traditional fiber with a 33% improvement in latency. 

Hollowcore fiber is, well, hollow at the center and takes advantage of the fact that light travels 50% faster through air than glass. 

Comcast is claiming to be first in the field with the new tech, partnering with United Kingdom-based fiber vendor Lumenisity to transmit data at symmetrical speeds ranging from 10 gigabits per second to a mind-boggling 400 Gbps over a 40 kilometer hybrid span of hollowcore and traditional fiber between two locations in Philadelphia. 

The new fiber tech is blended with a range of so-called DOCSIS 4.0 schemes, and all of it is placed under the catch-all "10G" marketing umbrella that the cable industry has applied to its next-generation network technology development. 

The wireless industry's got “10-Minute Abs?” Well, the cable industry wants to cut your workout time in half. 

“Hollowcore fiber is a leap forward in how we deliver ultra-fast, ultra-low latency and ultra-reliable services to customers,” Comcast Cable executive VP and chief network officer Elad Nafshi said. 

“As we continue to develop and deploy technology to deliver 10G, multi-gigabit performance to tens of millions of homes, hollowcore fiber will help to ensure that the network powering those experiences is among the most advanced and highest performing in the world,” he added. ▪️

With the start of the first-quarter earnings season about 10 days away, J.P. Morgan media and telecom analyst Phil Cusick expects total broadband customer additions to continue to slow, but said a boost from some fixed wireless access providers will make what could have been a really bad quarter a little better.

Comcast is expected to kick off the 2022 earnings season on April 28,  when it reports Q1 results, followed by Charter Communications on April 29.  

In a research note, Cusick estimated total broadband additions of about 674,000 in Q1, a 32% decline from the prior year. But the analyst noted it could have been worse -- his Q1 estimates include 274,000 fixed wireless access (FWA) additions from T-Mobile. Without those FWA customers, total broadband additions would be down 56% in the period. 

Cusick blamed the overall broadband slowdown on sluggish cable growth, weak housing growth (moves are down 17% for the year, according to U.S. Postal Service data), and the loss of about 5 million consumers with access via the Keep Americans Connected COVID-19 program since 2020.  

Cable operators will continue to see sluggish broadband growth in Q1. Cusick estimates that total cable broadband additions will fall 51% to 445,000 in the period from 910,000 in Q1 2021. For the full year, he expects cable operators to add about 1.78 million broadband customers, down from 2.64 million additions in 2021.

Overall, Cusick expects total broadband additions of 2.94 million, a 4% decrease from 3.07 million additions in 2021. Fixed wireless is expected to add about 1.77 million new customers in 2022, down from 2.55 million in the prior year.

But Cusick still expects cable to attract about 66% of new broadband additions -- FWA is in second place with 39% -- mainly because in many areas, cable is the best choice for reliable high-speed connection.

Comcast and Charter are expected to add about 180,000 residential broadband subscribers each, compared to the 448,000 and 334,000 broadband customers, respectively, they added in Q1 2021. 

Analyst: No Sign of a Cable Slump

In his research note, Cusick explained that he hasn’t taken down his overall cable broadband estimates -- unlike some of his colleagues -- not because he believes cable MSOs will do better, but because he hasn’t seen any evidence they will do much worse. 

“Typical seasonality would be for 1Q to be stronger, and most cable commentary in 4Q was that the business improved through 4Q until omicron hit,” Cusick wrote “[W]ith no useful commentary from the companies, aside from consistently denying that FWA is impacting, we prefer to leave our estimates unchanged than reflexively lower the bar due to bullish FWA commentary from [T-Mobile and Verizon].”

Low housing moves and increased pricing will also most likely help boost cable margins, the analyst continued, adding that Charter repurchased about $3.7 billion of its shares during Q1, usually an indication of strong cash-flow growth despite slower subscriber additions. 

For other operators, Cusick sees flat broadband subscriber adds at Altice USA in Q1, and about 11,000 additions at Cable One.

On the telco side, Cusick predicted AT&T would lose about 10,000 broadband customers (15,000 IP additions offset by 25,000 digital subscriber line losses). Verizon Communications should add about 45,000 consumer wireline broadband subscribers (65,000 Fios Internet additions offset by 20,000 DSL losses), he said. Frontier Communications, which emerged from bankruptcy last year and has an aggressive fiber buildout strategy underway, should be well-positioned for growth, according to Cusick. The analyst predicted that Frontier will add 15,000 broadband customers in Q1 (46,000 fiber adds offset by 32,000 DSL losses).

Legacy video losses are expected to be about 1.5 million in Q1, down from 1.67 million in the prior year, but the improvement is more due to waning satellite TV losses. Cusick expects DirecTV/Dish to shed a collective 575,000 customers in Q1 (compared to losses of 750,000 in Q1 2021), while he predicts cable operators to lose 872,000 video subscribers, 5% worse than the prior year. 

Comcast’s video losses are expected to rise to 435,000 from 404,000 in the prior year, mainly because of a price increase that took effect in January. Charter’s video losses are expected to be slightly better in the quarter -- 150,000 compared to 156,000 in Q1 2021 -- reflecting slowing move activity. For the full year, legacy video losses are expected to be 5.3 million, better than the 5.8 million shed in 2021. 

Virtual multichannel video programming distributors (vMVPDs) such as Hulu Plus Live TV, YouTube TV and Sling TV are expected to add about 23,000 customers in Q1 (better than a loss of 92,000 subscribers in Q1 2021). For the year, vMVPDs should add about 1.4 million video customers, about even with the prior year. ▪️

The spike in fiber construction projects — Altice USA, Comcast, Charter Communications, Frontier Communications and a handful of smaller operators all have plans to build out and expand their plant across the country over the next five years — has created a bit of a dilemma for providers. While there is money (federal grants totaling more than $65 billion have been earmarked for broadband expansion, especially in rural areas), desire (expanding footprints mean more chances to grow customers) and need (about 43% of U.S. homes have access to fiber broadband), shortages of equipment and skilled workers could throw a wrench in what many expect to be the biggest fiber buildout in the past 20 years.

For AmeriCrew, a company founded in August by former U.S. Army officer and long-time telecom executive Kelley Dunne to help fellow veterans train and establish careers in the telecommunications, clean energy and managed services industries, the worker shortage is real, and not just for people who know how to splice fiber.

“Everyone is building at once,” Dunne said. “In the process, the skill sets are converging as well. You need skilled labor out in the workforce, not to mention electricians and higher skilled laborers. I think we’re heading into the largest workforce shortage our nation has ever seen.”

He's not alone in that fear.

A ‘Huge Issue’

“Labor is a huge issue right now,” Jeff Heyner, Dell’Oro Group VP, broadband access and home networking, said. “It’s a big concern, especially for those projects that are subsidized through RDOF [Rural Digital Opportunity Fund] and the other U.S. government or state government grants. The concern there is, can they finish these projects within the time frame allotted before they have to go back and say they need an extension?”

Federal and state broadband funding programs usually have milestones and deadlines that awardees must meet in order for them to continue receiving money. For those that can’t meet those deadlines, they usually have to file for extensions to the respective government agencies, which at best means a ton of additional paperwork and at worst means giving the money back. 

Heyner said that the deficits aren’t only in the employee ranks. Supply chain issues are delaying projects as well. 

“There is still a lot of backlog of projects and it’s not like they’re slowing down any strategic initiatives they have,” Heyner said. “The projects just keep coming and they’re gated by supplies. It’s really difficult to get ahold of fiber itself, conduit, and once everything is installed, the CPE necessary to connect the subscriber. There are certainly labor shortages as well, all across the board when it comes to any technicians or outside plant folks.”

Fiber Broadband Association VP, research and workforce development Deborah Kish said her organization began hearing from its service-provider members about two years ago that they had to turn down jobs and couldn’t get installs done because they didn’t have the skilled workforce. 

“That’s kind of indicative of the telecom industry,” Kish said. “We have a lot of people who have been in the industry for 30 or 40 years, so there are a lot of people aging out. It’s a matter of how do you attract fresh, new people to do these jobs.” 

FBA, she said, launched a 144-hour fiber optic technician training course on March 29 teaching fiber theory, types of fiber, splicing , outside plant installation, FTTH installation, testing and troubleshooting. The course is about half in the classroom, half in the field, and students will emerge from the course as an advanced entry-level fiber-optic technician.

Kish said there are other training programs, from independent associations, community colleges and other educational institutions across the country, but it still might not fill the need.  

She added that the industry expects to build 1.6 million miles of fiber over the next five years. She estimated that potential job creation is in the tens of thousands to hundreds of thousands over the next several years.  

“Yes, it [the worker shortage] will delay projects,” Kish said. “That’s why it’s the right time to do this.”

Eleven of the top telecom trade associations, including the Competitive Carriers Association, the Fiber Broadband Association, INCOMPAS,  NTCA–The Rural Broadband Association, the Wireless Infrastructure Association (WIA) and CTIA, wrote Congress in February 2021 claiming that the industry will need an additional 850,000 man-years of trained fiber technician labor over a five year period to keep up with demand. In comparison, the group said the industry employed about 672,000 technicians, and to meet the short-term labor requirements will have to find and quickly train at least 250,000 new technicians.  

That same year South Dakota Republican Sen. John Thune reintroduced his Telecommunications Skilled Workforce Act bill, U.S.  which would establish a Federal Communications Commission-led interagency working group to develop recommendations for workforce needs and to empower the GAO to conduct a study to determine the specific number of workers required to fill the gap.

The bill was first introduced in February 2020 but appears to have little traction at the moment. 

“When you look at the industry as a whole, there’s simply not enough people,” CCG Consulting president Doug Dawson said, adding that the number of installations is already at record levels and continues to grow. “Somebody is going to get shorted somewhere along the line. It could be that everybody gets shorted.”

At the same time, there are groups who say there is no worker shortage at all. The Communications Workers of America, the union representing more than 150,000 wireless and wireline telecom workers, has said repeatedly that there is no shortage of workers. What has been lacking, according to the union, are decent wages as companies lay off telecom workers. 

In his February testimony before Congress, Communications Workers of America president Christopher Shelton said companies claiming a shortage of skilled workers are really lamenting a lack of non-union employees. 

“AT&T and other telecom companies have laid off tens of thousands of workers in the past few years, including thousands of well-trained construction technicians, while non-union contractor companies claim they can’t find qualified workers,” Shelton said, adding that if there truly was a deficit, wages would increase. Instead, he cited an Economic Policy Institute study that showed that wage growth has slowed over the past 40 years.

“The lowest-paid 10% of workers in telecom actually saw their wages decline by 12% in real terms since the 1970s, driven by outsourcing and the loss of union representation,”  Shelton continued. “When wireless infrastructure companies and their lobbyists start talking about workforce shortages, ask them for proof.”

Size Matters

But as big players like AT&T have the size and the muscle to bring in fiber workers, the pool is still small, meaning if one company attracts a crew, another company is left without.

Dawson, a 45-year veteran of the telecom industry, said the labor shortage depends on who and where you are. For mega-companies like AT&T and Verizon, which have nearly unlimited resources and can attract workers from around the country or train workers on their own, the ability to build a workforce isn’t as hard as it is for a small telco in a rural area.

So AT&T, Verizon and other mega-players may have a leg up on the rest of the industry in attracting work crews, “but that means 20 other smaller companies just got really screwed,” Dawson said.

The road for smaller operators is much rougher, adding that skilled workers can jump from company to company on fiber builds, landing where the pay is best. For many that means bigger companies. 

He used a small fiber project in Oregon, in a town with about 20,000 residents, that he has consulted for about two years as an example.

“During the construction process, every Monday they would make bets about how many construction crews wouldn’t show up,” Dawson said. “Because at that same time Verizon was building a tremendous amount of fiber throughout Washington and Oregon, and they would simply steal away the crews by offering them a higher rate. They weren’t at the bottom of the chain — they were building a $20 million project — but they still had a tremendous struggle trying to keep work crews. If you’re a little city with a $1 million grant, good luck.”

A Loss of Institutional Knowledge 

Dawson agreed that layoffs after the last fiber bubble burst 20 years ago have added to the paucity of fiber technicians. Between 2001 and 2005, AT&T alone reduced its workforce from 215,088 to 162,000 employees, according to the company’s 10-K annual reports. What resulted is that today, many fiber line workers are either baby boomers or Generation Z, meaning they are either about to retire or they’re too young to have much experience. And when those baby boomers retire, they take a lot of the provider’s institutional knowledge with them.

And the projects aren’t last-mile fiber builds alone, Dawson added. Independent companies like Zayo are building massive long-haul networks, cable companies continue to build fiber as they cut their nodes down, wireless service providers are all building 5G networks — which have a huge fiber component — as well as Dish Network, which as part of federal requirements for its spectrum purchases needs to build its 5G to 70% of the country by next June.  

While the available pool of workers is likely to migrate to those bigger projects, smaller companies are having to decide whether roll the dice and hope they can attract enough workers, or build projects with existing staff. Dawson pointed to one client — a municipality in Arkansas — which is doing the latter, but added it will quadruple the time it takes to build the network from one year to four years. 

“Everyone can’t build what they’re announcing, it’s impossible,” Dawson said. “Between materials, engineers, fiber splicers, there are places that are going to run into bottlenecks.” 

It’s Not Just a Job… 

While there are staffing agencies, contractors and subcontractors galore to provide skilled workers for fiber builds, training a fiber tech from scratch can take anywhere from several months to several years. And Dawson said it can take two-to-three years of being on the job before a fiber technician is up to snuff, Dawson said. 

"It's a true apprenticeship program, they're fairly worthless in the beginning," Dawson said. "Just knowing how to safely climb poles and all that, you don't learn in a day."

Workers are well-compensated for their efforts. Fiber-optic technicians make an average of $65,000 per year, according to Glassdoor.com, but depending on the location and the employer, can earn $80,000 or more annually. 

While that is enough to attract a wide range of workers from all walks of life, AmeriCrew's Dunne said he believes veterans are especially geared toward fiber work because of their focus on teamwork and getting the job done.  

For the veterans — Dunne said there are about 100 people in AmeriCrew's fiber program — the attraction is the ability to work wherever they want, to not to be tied to a desk and to build a career. 

“Sitting in a cubicle all day staring at a screen is not a job they are going to resonate towards,” he said.

If You Build It

Even the big guys have had to deal with periodic labor shortages. Almost every major telecom company has announced plans to boost its fiber diet, with AT&T predicting to extend its fiber network to 3.5 million additional homes this year, 4 million in 2023 and 30 million by 2025. Altice USA said earlier this year that it will accelerate its fiber buildout plans, extending its network to 6.5 million homes by 2025. Verizon has completed the core fiber buildout for more than 50% of its markets, so any further construction will be success-based 

Frontier Communications, which emerged from bankruptcy in April 2020, has put forth an aggressive buildout strategy, planning to pass 10 million homes with state-of-the-art technology by 2025.

Frontier chief network officer Veronica Bloodworth said at a recent industry conference that her biggest challenges in building out that network are twofold — labor and equipment.

“We have a much more diverse supply chain of labor partners than we even had nine months ago,” Bloodworth said at the conference. “I have a lot of confidence in our suppliers to meet their commitments. I feel very confident in our ability to meet our commitments. But the supply chain is much tighter than it was before.”

AT&T ran into some supply chain and staffing issues in 2021 around the fiber build — it finished the year adding about 2.6 million homes instead of the 3 million it had earlier predicted — but said that it believes it has solved any problems associated with network construction. 

At the Deutsche Bank Media, Internet & Telecom conference on March 14, AT&T chief financial officer Pascal Desroches said AT&T is in a good spot in its buildout plans. 

“Look, we’re not immune to supply chain issues, but we have first priority on supplies, we are in great position on access to labor relative to others, and what we’re seeing is while there were issues in the summer of last year those issues have been largely resolved and we exited 2021 with good momentum,” Desroches said at the conference. “That continues in 2022, so we feel really good about our ability to deliver 3.5 to 4 million new locations this year.”

But even though big players like AT&T have the size and the muscle to bring in fiber workers, the pool is still small. That means if one company attracts a crew, another is left without.

Smaller Providers Lead the Charge

Other smaller, more rural telecom companies also have aggressive buildout plans, like Shenandoah Telecommunications, which expects to pass 300,000 homes with fiber this year, and TDS Telecom, which plans to nearly double its total service addresses from 1.4 million to 2.2 million over the next five years, mainly through fiber expansion.

At the New Street Research virtual Fiber to the Future conference on March 29, TDS Telecom CEO Jim Butman said that currently, his company passes about 400,000 homes and businesses with fiber. He pledged to grow that to 1.3 million addresses in five years, adding that most of that growth will occur within TDS Telecom’s existing footprint.

“We want to protect what we’ve got in the ILEC first,” Butman said at the conference, adding that those plans don’t include efforts that could be funded through federal programs. With federal funding help, TDS could add another 100,000 to 150,000 homes to its fiber network.

Shentel had about 300,000 broadband passings at the end of 2021 — 200,000 through incumbent cable, 75,000 via its Glo Fiber offering in overbuilder markets and 30,000 through the federal Broadband Equity, Access and Deployment (BEAD) program. At the New Street Research conference, Shentel chief operating officer Edward McKay said the telecom company plans to double its Glo Fiber passings this year, growing to more than 450,000 passings by the end of 2026. 

“In total, we will grow broadband passings from 300,000 to 700,000-plus over the next five years, driven almost entirely by fiber-to-the-home expansion,” McKay said. 

And while competitors have opted to expand into more rural markets using fixed wireless technology, fueled by federal money, McKay said Shentel scrapped its fixed wireless program after it saw the amount of federal money that was pouring into its markets.

“We believe with the funding that is out there today, that will justify building fiber to the vast majority of the homes that we previously targeted for our BEAD fixed wireless,” McKay said. “We’re actually going after some of that funding ourselves.”

In the meantime, the number of wireline projects keeps growing. Earlier this month, Shentel’s Glo Fiber announced plans to expand its fiber network in Lancaster, Pennsylvania;  MetroNet announced plans to build a $130 million fiber network in Colorado Springs, Colorado; and Consolidated Communications said it will build a fiber network in Maine reaching 150,000 homes by the end of the year. 

In addition to building fiber networks for wireline high-speed Internet service, 5G wireless networks have a huge fiber component. 5G service requires a lot more towers than its predecessor technology: 5G cells have a range of about 1,000 feet, compared to 10 miles for 4G cells. 5G cells must also be connected to each other via fiber, which means a lot more fiber needs to be built. 

Dawson added that once the construction is completed, the work shortage could shift again. He said that companies will have to hire permanent fiber technicians for every 2,000 to 3,000 passings to maintain the network. 

“People will tell you there’s no shortage of them [permanent techs] right now,“ he said. ”There will be when there are 10 million more fiber passings.” ■ 

Months after it reported a full year of broadband subscriber losses — the only major cable operator to do so — Altice USA continues to step up efforts to win back customers with a new campaign entitled “Let’s Reconnect,” and pledging to rebrand its Suddenlink Communications markets to Optimum later this year.

The new campaign comes after Altice USA lost about 3,000 broadband customers in 2021,  a year where although overall high-speed Internet customer growth slowed down, it was at least positive for the rest of the sector. Altice USA is in a bit of a unique competitive situation — about one-third of its footprint is within Verizon Fios territory, which has been very aggressive in winning broadband subscribers. As a result, Altice USA said it would accelerate the buildout of its fiber network and push hard to bring new services and functionality to customers. 

The rebranding and “Let’s Reconnect” campaigns are just another step in that process. Altice has already rebranded its wireless service as Optimum Mobile, and said Suddenlink subscribers in the West and Mid-Atlantic states would be receiving service under a new name in the future. That future, apparently, is now. 

“As part of Let’s Reconnect, we’re making changes to ensure that we are delivering the very best service and experience to our customers and keeping them at the center of everything that we do,” Altice said in a statement. “This means more speed and reliability through our fiber network and mobile service, 24/7 customer support online and over the phone, the opening of more retail stores across the country and so much more.”

In a letter to customers, Altice USA executive VP of consumer services Matt Marino pointed to increased internet speeds as the fiber buildout progresses; easy to understand pricing and surprise-free billing; better service through the hire of thousands of local employees and the opening of 70 new retail locations; and an increased commitment to its communities, through company donations to public schools and organizations.

“We heard you and we know it’s time to reconnect,” Marino wrote in the letter. “Though keeping you connected to what you love has always been our number one goal, we understand that we haven’t always gotten it right. So, we’re working hard to make important changes as a recommitment to you.”

Whether this will be enough to put a dent in subscriber losses remains to be seen.

Still, Altice USA is making an effort to right the ship. In addition to the fiber acceleration, the company has expanded its MVNO agreement with T-Mobile for its Optimum Mobile service, launched Optimum Stream, a 4K-capable Android TV device for free to its 1 Gigabit-per-second broadband customers, and made some management changes.  

Altice stock went into a tailspin in February after it announced plans to step up the fiber build and accelerate its edge-out program to expand its addressable footprint. Shares fell as much as 22% on February 17,ending the day down 18% to $11.83 per share from $14.40 each the day before. Since then, the stock hasn’t regained much of that ground — it closed at $12.70 each on April 4. 

In a research note in February, MoffettNathanson senior analyst Craig Moffett noted that Altice’s plans to speed up the fiber deployment and accelerate edge-outs to increase their addressable market are good signs. But Moffett added that it can no longer be assured that the company will be a grower in the long term.

“At the heart of the problem is broadband,” Moffett wrote. “Altice’s broadband subscriber growth has slowed to a stop.” 

It appears that with the new campaign, Altice is hoping to turn that perception around. ■

Comcast said this week that it will spend nearly $33 million to extend its network in two communities in Oregon and Utah, a move that is expected to bring about 23,000 additional homes and businesses under the Xfinity service umbrella.

In Utah, Comcast said it will expand service to more than 18,000 homes and businesses in Eagle Mountain City over the next four years. The cost of the project will be about $22 million and will not use any public funds.  

“Giving our residents another choice for cable and internet services improves the quality of life for our residents,” Eagle Mountain City mayor Tom Westmoreland said in a press release. “We look forward to welcoming Comcast into our community.”

Service  is expected to become available to parts of the community beginning in early 2023 and will include cable, mobile and broadband services. Broadband speeds will range from its $9.95 per month Internet Essentials offering to its ultra-high speed 1 Gigabit per second service.  

Businesses in the area also will be able to take advantage of Comcast Ethernet, internet, advanced voice and video services, WiFi and managed enterprise solutions as a result of the expansion. 

"We are committed to supporting Utah’s growth plans by building infrastructure and bringing high-speed broadband to meet the state’s next-generation capacity needs,” Comcast Mountain West region VP, Network Engineering Bryan Thomas said in a press release. “Our fiber expansion in Eagle Mountain is the latest example of the significant investments we've already made in the state. Since 2019, we’ve invested $881 million in technology and infrastructure capital expenditures, taxes and fees, employee wages and benefits, and charitable giving.”

In Oregon, Comcast said it plans to expand its network to about 5,000 homes and businesses in Silverton. The $10.6 million project will allow residents to access Xfinity residential and commercial services.

Comcast said over the past three years it has invested more than $500 million in Oregon to improve the network, support the community, and ensure residents, students and businesses remain connected to the internet during the pandemic. The Silverton expansion is part of a broader plan to bring Comcast’s network to more Oregonians.

“Comcast operates with the fundamental belief that connecting people to the power of broadband technology can be life changing,” regional senior VP of Comcast Oregon/SW Washington David Tashjian said in a press release. “That’s why we are committed to bridging the digital divide for Oregon/SW Washington residents – not only with our network expansions and investments, but also with our lnternet Essentials program, which brings fast, affordable internet to those who need it most.”

He added the moves are strategic and that the company is “exploring expansions into additional communities adjacent to our footprint.”

Construction is slated to begin in the early spring with building the fiber backbone. Some customers will be able to connect to services in late 2022, with completion of the network throughout Silverton in 2023.

“I know there’s a lot of interest in Comcast,” Silverton Mayor Kyle Palmer said in a press release. “As a mayor, I want to have more choices, and I want residents to have better choices, and I want to have fewer people bugging me all the time saying they’re upset at their service.”

Last year Comcast said it would commit $1 billion over ten years in continued support of digital equity, including its Lift Zones initiative, which has established WiFi-connected spaces in 25 community centers around Oregon/SW Washington for students and adults.

Comcast Oregon/SW Washington has more than 1,000 employees who serve more than one million residential and business customers throughout the state.  ■ 

 A day after expressing at least some optimism that Altice USA, after a disappointing Q4, might have a little gas left in the tank to drive its way out of its most recent hole, influential media analyst Craig Moffett has changed course on the stock, downgrading his outlook to “neutral,” and slashing his 12-month price target on shares to $15 from $33 previously.

Altice USA stock fell more than 20% and hit a new 52-week low on Thursday — $11.12 per share — before closing at $11.83 down 17.8%. With Wednesday’s falloff, the shares are down nearly 27% since the beginning of the year. 

The company lost about 2,000 broadband subscribers in Q4 — and shed 3,000 for the year — slightly better than analysts’ consensus expectations and spurring some optimism that it could have been worse. Altice CEO Dexter Goei also outlined a plan to accelerate its fiber buildout and reverse the downward trend.  Many analysts took the bait, and Moffett wrote Wednesday that Altice USA could probably be fixed, but it wouldn’t be easy and it would take some time. By Friday morning, after the stock cratered, his attitude changed.

Moffett isn’t the only analyst to downgrade the stock, but his mea culpa comes at a time when the cable sector itself is under pressure from slowing growth in broadband and rising competition from streaming video and telco companies.  

Also: Altice USA Streaming-Obsessed, Broadband-Only Customers Are Averaging More Than Half  a Terabyte of Usage Each Month 

“Wrong. Wrong story. Wrong time. Wrong call (on our part) to have stuck around too long,” Moffett wrote Friday. “Just … wrong. There’s a time for highly levered fix-it stories. This isn’t that time.”

Altice shares were down about 2% in pre-market trading Friday to $11.59 each. 

In his Thursday note, Moffett wrote that Altice has been in a similar situation in a previous life as Cablevision Systems, in 2013. At that time, the company was faced with industry-leading customer penetration rates for its service, which made growth difficult. While the rest of the market thought Cablevision was on its last legs, -- including Moffett — Altice swooped in and paid top dollar for the asset, claiming it could right the ship with a more stringent cost structure. That worked for a while, but now, the company is faced with a familiar dilemma. 

“Altice is now entering what is likely to be a multiyear ‘fix-it’ phase,” Moffett wrote. “At a time of rising interest rates and falling risk appetites, a company with badly battered near-term growth prospects, and with a higher warranted WACC [Weighted Average Cost of Capital], Altice USA looks far less compelling than it had. We grossly overestimated the market’s willingness to underwrite their turnaround.”

Also: Broadband Slowdown Forces Analyst to Go Negative on Cable Sector 

Moffett still believes that Altice USA can be fixed -- he was especially hopeful about Suddenlink’s prospects -- but he noted it’s probably going to take longer than most thought. Where he was most wrong, he added, is in expecting the market to ignore the near-term challenges and look toward longer-term growth.

“Without a catalyst — such as a take-private that we once viewed as a reason to own the stock (that didn’t work out so well) — we have much lower expectations for a near term rebound to what we still believe is a materially higher warranted value,” Moffett wrote. 

He’s now forecasting that Altice will have no real broadband growth in 2022 (about 9,000 new customers), and will add 34,000 high-speed data customers in 2023.He doesn’t expect growth to approach 219 levels (75,000 additions) until 2025 (72,000). 

“Their steps to expand their footprint through edge-outs and, where available, government deployment subsidies, are welcome,” Moffett wrote. “But they will take time. We project no real broadband unit growth for 2022, and only modest growth in 2023.”  ■ 

ImOn Communications, a fiber-to-the-premises telecom services provider based in Cedar Rapids, Iowa,  said Thursday that it has agreed to be purchased by a unit within Goldman Sachs Assets Management, a deal that it says will help fund its expansion into surrounding areas. Terms were not disclosed.

ImOn was founded in 2007 as a single-market cable provider and today owns and operates a 2,000-mile FTTP platform that reaches more than 60,000 homes and businesses, providing advanced broadband services, digital TV, high-speed Internet, and phone services to customers in Cedar Rapids, Marion, Hiawatha, Iowa City, and Dubuque, Iowa.  

“The ImOn team is thrilled to be working with Goldman Sachs,” ImOn founder and CEO Patrice Carroll said in a press release. “Goldman Sachs shares our values and supports ImOn’s vision. They will be a great partner to help us implement our ambitious growth plans.”

Goldman Sachs Asset Management has long been a supporter of infrastructure companies, with past investments in CityFibre, UK’s largest independent Full Fiber infrastructure platform, and Global Compute, a global data center platform.

"Increasing usage and reliance on broadband connectivity by households and businesses create a highly attractive growth opportunity for ImOn to deploy FTTP infrastructure,” Leonard Seevers, a Partner leading digital infrastructure investing within Goldman Sachs Asset Management, said in a press release. “We are incredibly excited to partner with Patrice and the rest of the ImOn management team, and to be ImOn’s strategic and capital partner as it executes this next phase of growth.”

The transaction is expected to close in the first half of 2022 and is subject to obtaining customary regulatory approvals. 

ImOn was advised by Bank Street Group, Shuttleworth & Ingersoll, and Morgan Lewis & Bockius. Goldman Sachs Asset Management was advised by TD Securities and Simpson Thacher & Bartlett. TD Securities also served as Lead Arranger on the debt financing for the transaction.

Altice USA shares fell more than 20% on Thursday, hitting a new 52-week low of $11.26 per share in early trading on February 17, as investors were spooked by disappointing Q4 broadband subscriber results and expected hikes in capital expenditures to finance an accelerated fiber network build. 

Altice USA said after market close on Wednesday that it lost about 2,000 broadband subscribers in Q4 and shed 3,000 for the year, results that shouldn’t have come as much of a surprise to investors -- management has been hinting at possible losses for months. But coupled with plans to accelerate its fiber network buildout to cover 6.5 million homes by 2025, and the expected hike in capex that would go hand in hand with that plan, investors decided they had had enough. 

Altice stock was down nearly 22% ($3.14 per share) to $11.26 each on Thursday morning, shattering its previous 52-week nadir of $12.87 per share. The shares closed February 17 at $11.83 each, down $2.57 each or 18%. 

Also: Analyst Makes Case for Altice USA to Go Private 

In a research note, MoffettNathanson senior analyst Craig Moffett wrote that Altice’s Q4 results offered few surprises, but that the bigger picture looks bleak. According to Moffett, Altice isn’t growing broadband subscribers, ARPU for the segment was down sequentially for the first time, wireless growth is well below peers, margins are under pressure, the company went against its past history by declining to provide guidance for the future, and they stopped buying back their own shares. 

“Altice investors will have to decide whether these trends can be turned around with higher footprint growth and faster fiber investment,” Moffett wrote. “And Cable investors more broadly will need to decide whether these trends are unique to Altice or a broader harbinger of things to come.”

He added that he believes that Altice’s problems can be fixed and appear to be unique to the company, but it won’t be easy. 

Altice said Wednesday that it would accelerate the fiber buildout to 6.5 million homes by 2025, a goal that Wells Fargo Securities media analyst Steven Cahall said represents about 65% of Altice’s footprint, adding that currently fiber reaches only about 13% of its homes passed.  

Also: Did Altice USA Cut Costs Too Much? 

The company said in Q3 that it will spend about $1.7 billion to $1.8 billion in capex in 2022, up from $1.2 billion in 2021. That represents about 18% of revenue at a time when peers like Comcast and Charter are extending their networks but keeping capital intensity low at 11% and 14.1%, respectively. 

“Now, Altice’s elevated capex may reflect too many years of under-investment in favor of cash deployment to shareholders, but it's nonetheless looking at competitive intensity today and choosing to skip DOCSIS 4.0 entirely and jump right into fiber,” Cahall wrote, adding that investors should wonder if the rest of the cable industry will need to do the same. 

In a research note Thursday, Barclays Group media analyst Kannan Venkateshwar wrote that while the rest of the cable industry is experiencing a slowdown in broadband subscriber growth, Altice is the only major operator showing negative growth metrics. Adding to the concern is that past efforts to return value to shareholders via leveraged share buybacks has driven up its debt-to-cash flow ratio to 5.4 times, giving it little wiggle room “to deal with competitive or idiosyncratic factors.”

“Just a couple of storms or a bit more competition in the company’s footprint could make the balance sheet a much bigger focus than it already is,” Venkateshwar continued. “Therefore, it is likely to be tough to change the narrative on the stock anytime soon unless the company turns around subscriber performance.”

It appears that Altice is convinced that building more fiber, offering higher speeds and better quality will be enough to get the broadband growth engine back on track. In a conference call with analysts to discuss Q4 results, Altice USA CEO Dexter Goei said that most of the broadband losses were in areas where it competed against Verizon Fios, and that the company was beginning to see improvement in those markets in Q4. 

On the call, Goei said Verizon Fios wasn’t being as “hypercompetitive” as it was during most of 2021 and has raised its pricing on data.  

Prior to February 17, Altice shares were down about 11% for the year, and Goei said management is focused on beefing up the stock price, adding it is a big reason for doubling down on the fiber build. 

“Because it is clear in our minds that investing in the infrastructure and upgrading it significantly is going to drive a tremendous amount of value and growth for this business,” Goei said, adding that success will be determined by how well the company is able to execute that plan.  

“We just have to continue to execute here and this is a big year of execution,” he continued. “We feel good about our initiatives that we started in the second half of last year. And we feel good about 2022 in terms of executing our operational goals."

Moffett added that while longer term guidance for lower capital intensity and higher margins could be more reassuring to some investors, more important is what will happen over the next year.

“Unfortunately, the near term outlook is cloudy at best,” Moffett wrote.

But the analyst continued that Altice has been down this road before, in its previous life as Cablevision Systems. Back in 2013, Cablevision was considered to be on its last legs, with most of its value already depleted and its industry-leading service penetration rates making the growth prospects grim. But when Altice bought Cablevision in 2016, it showed that by fixing its cost structure, there was more gold to be mined, extending its growth runway by pairing it with an asset Altice had purchased just months before -- Suddenlink Communications.

And though Suddenlink seems to be showing signs of difficulty, Moffett believes they are mostly self-inflicted. And though the fiber buildout and implementing a more rational cost structure isn’t exactly new -- Comcast and Charter are making similar moves --  it probably is the best path to follow. 

“They are on their way to becoming a more conventional cable company, albeit one with an FTTH strategy rather than a DOCSIS based strategy,” Moffett wrote. “We’ll never love the legacy Cablevision footprint, but the blended asset mix at Altice is still capable of growing, even if at a slower pace than peers.” ■

Altice USA said it will accelerate its fiber-to-the-home buildout efforts, planning to pass 6.5 million homes by 2025 with the state-of-the-art network, after a year where it saw broadband customer additions creep into negative territory.

Altice USA lost about 2,000 broadband customers in Q4 and shed 3,000 for the full year, not including numbers from its most recent acquisition, Morris Broadband.  If Morris Broadband subscribers are included, Altice USA said it would have added 27,000 broadband customers for the full year.

The broadband slide helped drive revenue down 0.6% in the quarter to $2.52 billion, while adjusted EBITDA fell 5.9% to $1.1 billion. For the full year, revenue rose 2% to $10.1 billion and adjusted EBITDA was relatively flat (up 0.3%) at $4.43 billion.

Altice USA stock fell about 3.5% in after-hours trading Wednesday to $13.59 per share. So far this year, the stock is down about 16%.

The company has struggled with broadband subscriber metrics over the past few quarters as it has competed with aggressive promotions from Verizon’s Fios product, losing about 13,000 customers in Q3. Late last year it announced a change in its strategic direction, speeding up fiber deployment, shifting several management positions and planning to rebrand the company under the Optimum name. 

Also: Did Altice USA Cut Costs Too Much?

"We are pleased to conclude 2021 having made progress on our growth strategies by accelerating the enhancements of our network, product and customer experience,” CEO Dexter Goei said in a press release. “We see customer trends improving as we continue the expansion of our sales distribution channels and recently launched our planned competitive converged internet and mobile offerings. Today we also announce a new plan to bring 100% fiber broadband, delivering multi-gig speeds, to more than two thirds of our entire footprint over the next four years, reaching a total of 6.5 million FTTH passings by the end of 2025. We are confident in our strategy and that our focus on these key initiatives will drive long-term sustainable growth and value.” 

Altice had said earlier it had to scale back its fiber rollout in order to adhere to pandemic related protocols. Now that many of those restrictions are being lifted, it can step up its efforts to build out the network. 

Also: Analyst Makes Case for Altice USA to Go Private 

Altice USA said the new fiber expansion should allow it to cover about two-thirds of its total footprint in the next four years and will include about 2.5 million additional passings in its Suddenlink markets and 4 million in its Optimum locations. Altice began building out its fiber network in the Optimum footprint mainly in New York, New Jersey and Connecticut several years ago and currently passes about 1.2 million homes with fiber in those areas. In its Suddenlink markets, construction is expected to begin this year in six communities in Texas -- Abilene, Amarillo, Bryan-College Station, Lubbock, San Angelo, and Tyler -- expanding later into parts of Arizona, California, Louisiana, Missouri, North Carolina, New Mexico, Oklahoma, and West Virginia.

“Altice USA is proud to announce plans to invest further in our fiber deployment strategy by accelerating the build of a 100% fiber broadband network capable of delivering multi-gig speeds across our Optimum and Suddenlink footprint,” Goei said in a press release. “Fiber is the future and given the progress we have made at Optimum with our fiber expansion, we’re excited to build on that success and break ground later this year at Suddenlink to bring our advanced network to more customers and communities.” ■ 

Telcos like T-Mobile and Verizon could double their fixed wireless subscriber additions in 2023, according to Wells Fargo Securities media analyst Steven Cahall, who predicts that as competition between cable and telco service providers to extend their broadband reach into more rural markets heats up, capital intensity will rise too.

T-Mobile and Verizon have made the most headway on the 5G fixed wireless front, adding about 300,000 locations combined in Q4 2021. As mid-band network coverage improves, 5G fixed wireless offerings from those two companies are expected to scale and Cahall expects their 2022 estimated net additions of 1 million to 1.5 million to double to 2 million to 3 million in 2023.

“While T-Mobile has successfully been winning share in urban and suburban areas to date, we think the rural area remains the most feasible for broader fixed wireless adoption, with excess network capacity and more favorable competitive dynamics,” Cahall wrote.

Also: Verizon Recasts Jim Carrey as the Cable Guy for Super Bowl Fixed Wireless Ad 

But reaching those rural areas will cost money, and both sides seem to be willing to pony up whatever is necessary.   

In his research note, Cahall wrote that T-Mobile, Verizon and AT&T have already boosted spending on fiber and fixed wireless this year -- he estimated telcos will spend about $9 billion to connect 8 million new subscribers to fiber in 2022 and will add 9 million to 10 million new premises per year. AT&T, he wrote, appears positioned to add about 3.5 million new fiber locations in 2022 (up from 2.6 million in 2021). 

Also: Verizon Expands Fios and 5G FWA Promo to Include the Disney Bundle 

For cable operators, capital intensity (capital expenditures as a percentage of sales), on the downward trend over the past few years as network buildout projects have been completed, will be on the way up beginning in 2022. Cahall estimates that Altice USA will see the biggest jump in capital intensity (from 12.8% in 2021 to 17.8% in 2022), followed by Charter (from 14.4% in 2021 to 16% in 2022) and Comcast (from 10.8% in 2021 to 11% in 2022).

Cable operators are expected to continue to deploy fiber, extending their reach deeper into rural markets. But Cahall added that they may have to tick up spending as telcos continue to encroach on the space and gain share, particularly through 5G fixed wireless broadband. 

Also: Analyst Says Telcos Better Positioned to Chip Away at Cable’s Broadband Lead 

“[W]e think connectivity markets have the makings of an arms race, so availability and speed improvements from cable/fiber/5G will lead to more higher-speed use cases (e.g. 8K video) that begets more connectivity competition that begets more capex,” Cahall wrote. “We thus think investors should not assume any capex holidays for Cable (as % of sales).”

Cahall sees fiber networks serving the heaviest broadband users -- those that work/school from home, are heavy streaming video users and/or gamers -- in rural markets. Lighter broadband users would gravitate to lower cost, lower speed fixed wireless offerings, he wrote.  

Also: Fixed and Dilated

Those lighter broadband users also tend to be older, tend to be more likely to subscribe to traditional pay TV and don't require ultra-high speeds for their data. Cahall pointed to Social Security Administration data that showed there are about 60 million U.S. residents over the age of 65, likely representing about 40 million homes that over-index on linear pay TV and under-index on heavy data download and upload requirements. 

“As fixed wireless technology improves, we think that base of lower data consumption homes will become ripe customers for 5G with a wireless phone plan bundle,” Cahall wrote. “These cohorts may not seem like the obvious ‘early adopter’ set, but if 5G is inferior to fiber and DOCSIS 4.0 then it's exactly the sort of homes telco's 5G proponents like Verizon and T-Mobile may target. This is yet another medium-term risk to cable net adds and earnings.”

While most of the industry is bracing for a slowdown in cable broadband subscriber additions, Cahall estimated that cable operators should see their high-speed data customer growth moderate from an average of 4.6% between 2017 and 2019 to 2.6% between 2020 and 2025. At the same time, he predicted fiber and wireless broadband customer growth would increase by 13.9% and 19% from 2020 to 2025. As a result, cable broadband market share should drop from 65% in 2020 to 63% in 2025, while fiber would grow from 12% to 21% and wireless would more than double from 5% to 11% in the same time period. 

“In short, the threat of fiber/fixed wireless is real, and its impact should only intensify as time advances,” Cahall wrote. ■

Frontier Communications stock got a lift Monday after J.P. Morgan media and telecom analyst Phil Cusick initiated coverage on the company with an “overweight” rating and a $40 per share year-end price target, pointing to his belief that its fiber network push could lead to big upside.

Frontier emerged from bankruptcy in April 2021 and since then has begun an aggressive push to build its fiber network out to more than 10 million homes by the end of 2025. In his report, Cusick wrote that the company had already built fiber to about 3.8 million homes in its footprint. 

Cusick estimated that Frontier could grow its broadband subscribers by 32% to about 3.6 million by 2025, but also noted it won’t be easy. 

“We are encouraged by Frontier’s reinvigorated focus to rapidly deploy fiber and improved capital structure post-bankruptcy, but acknowledge building and selling fiber in an increasingly competitive broadband ecosystem remains a key risk,” he wrote.

As a result, Frontier stock was up as much as 10% on Monday ($2.57 each) to $28.61 per share, before closing at $28.17, up 8.8%. The stock was down slightly (0.5% in early trading February 8 to $28.03 each.

But Cusick sees huge potential in Frontier’s predominantly rural market, which has been severely underserved by fiber and is the focus of federal programs to boost broadband availability. While Frontier has offered fiber in the past to some of its customers, most of its high-speed subscribers have received service via copper-wire based digital subscriber line (DSL) offerings. It is Frontier’s intention to replace DSL with fiber throughout its footprint.

That replacement strategy should lead to deeper penetration of service and lower cost over time. Historically, Frontier’s penetration rates for DSL were low because of slower speeds. With fiber, those take rates are expected to climb, Cusick wrote, adding that the pandemic has accelerated consumer need for broadband at reliable speeds. 

Also: Analyst Says Telcos Better Positioned to Chip Away at Cable’s Broadband Lead 

In his note, Cusick wrote that Frontier’s main competition is cable, but believes over time the telco could achieve broadband penetration rates in the mid-to-high teens percentages in the first two years, and more than 40% over time. 

But Frontier’s ultimate broadband penetration could be even higher, given that other telcos that have expanded their fiber networks have reported rates as high as 30%.

“At the same time, we could see improved trends within Frontier’s base fiber cohort as Frontier improves go-to-market and promotional strategies,” Cusick wrote.

The big question is what will Frontier do with its markets outside of the 10-million base after 2025. Cusick estimates that there are about 5 million homes outside of the initial buildout, many in remote areas where it is cost-prohibitive to extend fiber. The analyst said the company could either build out those areas with the help of federal funding, or sell them to a third party. 

“Both are possible, as the prospect of Federal support could increase the value of the properties,” Cusick wrote, adding that Frontier management is likely to outline its plans for those areas by mid-year. He estimated those markets would be worth about $2 billion if the company decides to sell. ■

Months after obtaining several franchise agreements in New Hampshire and West Virginia that allowed it to overbuild Comcast markets in those states, Atlantic Broadband said Tuesday that it will invest $82 million to extend its fiber network into communities and businesses in those areas it doesn’t currently serve.

The effort will affect about 70,000 homes and businesses in several communities  throughout New Hampshire and West Virginia already served by Comcast. In a press release, ABB said it has obtained or is in the process of obtaining franchise agreements in Concord, Dover, Somersworth, Durham and Madbury, New Hampshire; and in Westover, Morgantown, Granville and Star City, West Virginia.   

Overbuilding cable systems is nothing new, and several small operators have obtained franchises to compete with large and medium-sized cable  companies over the years. Comcast obtained a franchise to provide service in nearby Rochester, New Hampshire in 2017, a market that was already served by ABB’s MetroCast Cable, and both companies have appeared to flourish. 

Also: Greener Pastures

“We are grateful to the communities that have received our franchise applications with such enthusiasm, as consumers in these locations will soon have a new choice in providers,” ABB president Frank van der Post said in a press release.  “We look forward to serving these communities by delivering superfast internet, cloud-based TV, and a phenomenal customer experience as we pursue our high-growth plans.”

ABB said the first customer activations are expected in early 2022 and that it will notify local residents as construction is completed throughout the year in each area. The company said once the fiber builds are complete, residential and business customers will receive ultra-high speed internet service, a “WiFi Your Way” managed WiFi service that expands coverage throughout the home; an IPTV video service; unlimited wireline phone service, and business class communications with internet speeds of up to 10 Gigabits per second, hosted voice, 4G Backup, and advanced fiber services.

In the city of Somersworth, which approved ABB’s franchise in June, city economic development manager Robin Comstock said the “community benefits when there are good choices of providers and services. The state-of-the-art fiber infrastructure will provide a new option for residential and business members of our community, help drive economic vitality and keep us ahead of the technological curve.”

Atlantic Broadband is part of Canadian telecom service provider Cogeco Communications, and in September snapped up WideOpenWest properties in Cleveland and Columbus, Ohio that added about 690,000 homes-passed to its footprint for about $1.125 billion. ■

 Just weeks after Charter Communications slashed prices for its Spectrum Mobile offering to $29.99 per month, chairman and CEO Tom Rutledge said charges for wireless cable offerings could drop further as the cost to provide service continues to decline.

“I think the mobile opportunity is very similar to the wireline opportunity that existed 15 years ago,” Rutledge said at the virtual/in-person Liberty Media Investor Day in New York. “Look at what happened there — we had a high-priced wireline phone service — in the metro area here, it was about $72 a month. That product now is less than $15 a month. And the biggest wireline phone companies in America are Comcast and Charter. So, I think the opportunity in mobile is similar. It’s got its own complexities, but the opportunity is there to create value for consumers. Consumers actually save money and we make money. That’s a pretty attractive business model that is available to us. And yeah, I think it leads toward convergence.” 

Charter introduced its $29.99 price point — for a minimum of two lines each — in October, a big discount from its previous charge of $45 per month, per line. That price reduction came on the heels of Comcast introducing a $30 per line service (for a minimum of four lines) which took effect in April. 

In a research note, Bernstein media analyst Peter Supino wrote that Rutledge’s comments provided “a muscular reminder of Charter’s ambitions and competitive advantages.” 

“Charter will sell wireless as aggressively as necessary to ensure that it achieves growth of customers and EBITDA per customer,” Supino added.

Also: Analyst Says It’s Time to Take Cable Wireless Seriously

Liberty Media chairman John Malone said that while convergence of fixed and wireless assets is common in Europe, where Liberty, a major Charter shareholder, has substantial holdings, it hasn’t yet taken hold in the U.S. While European companies have made bigger strides in deploying fiber networks compared to their U.S. counterparts, Malone stressed that every company and every market is different. 

“I’d start by reminding everybody that Europe is largely converged, the broadband companies are also wireless companies,” Malone said at the Investor Day. “That’s been true in every market we’re still operating in. In terms of technology, existing network structure, the nature of technological upgrade, the pressure from competition, etc. Every market is different.”

Malone added that in the U.K. for example, Liberty overbuilt itself with fiber, initially to capture more B2B business and because it was relatively cheap to build. The U.K., he said, also is relatively underbuilt — there isn’t a lot of fiber capacity and areas will be built out as opportunities present themselves. In the U.S., Malone said the biggest area for growth could be in boosting upstream capacity. 

“That may be more of a political reality than a business reality in the near term,” Malone said.  “And the cable industry contemplated that, and does have the capability of vastly expanding the upstream capacity.”

Malone said outside of the U.S., there has been a movement toward collectively building networks.

“In some places there is only one fiber backbone network that will be built and everyone will share and use it. So the models vary and in each location it depends on capital efficiency, the current state of play, cooperation between multiple players. It’s not uncommon. For instance in the U.K. there are four meaningful cell phone providers but only two networks, and those four competitors share  those two 2 nets as a matter of capital efficiency.”

Liberty CEO Greg Maffei added that the path U.S. cable companies have taken by upgrading using DOCSIS and other technologies to boost capacity and efficiency gives them some leeway before having to decide whether to go deeper into fiber expansion.     

“It’s a long ride for U.S. cable,” Maffei said. ■ 

Altice USA said it lost about 13,000 residential broadband customers in Q3, better than the 15,000-to-20,000 losses its CEO said were expected more than a month ago, and vowed to reverse those losses through accelerated footprint expansion, new products, fiber upgrades and additional investment in mobile and converged offerings. 

Altice USA CEO Dexter Goei warned that broadband subscribers could go negative in Q3 to the tune of between 15,000 and 20,000 customers at the Goldman Sachs Communacopia conference on Sept. 23. That news drove the stock down by as much as 16% that day and sank the sector as fears that the anticipated broadband growth slowdown could accelerate.

Despite the broadband decline, total revenue for the company was up 5.8% in the period to $2.57 billion and adjusted EBITDA rose 3.4% to $1.16 billion. 

In a press release, Goei said that the near-term focus is to return to broadband growth and boost investment in its residential business.

“Today we are announcing strategic measures to enhance the company’s product portfolio and customer experience, including footprint expansion, fiber and network upgrades, as well as investments in simplified and converged offerings that support consumer needs, and a rapid expansion of sales distribution channels,” Goei said in a press release. “I am optimistic that by advancing these key initiatives we will drive long term sustainable growth and value for all of our stakeholders.”

The initiative seemed to cheer investors, who drove up Altice USA shares by more than 8% in after-market trading Nov. 4 to $17.75 each. 

Back in September, Goei said the expected broadband decline was due to lower than expected gross additions, the result of an “underwhelming” back-to-school period. But the CEO was hopeful that new efforts launched at the beginning of September, like increasing the speeds of its Altice Advantage Internet product to 50 Megabits per second (a 65% boost), renaming it Optimum Advantage and keeping its price point at $14.99 per month, will boost subscriber rolls. In July, Altice said it would rebrand its Altice Mobile product as Optimum Mobile, the first step in aligning all of its brands under the Optimum name. 

Altice has been deep in its fiber-to-the-home network upgrade for the past few years, but had to scale back during the pandemic to adhere to protocols. Now that those restrictions are easing, the company said it plans to step up its fiber rollout to pass 1.5 million homes with fiber-to-the-home capability by the end of the year -- up from 1.26 million passings in Q3 -- and to 2.5 million FTTH passings by the end of 2022. That includes completing the vast majority of its Connecticut territory by the end of 2022 and targeting 100,000 homes for fiber upgrades within Suddenlink’s footprint next year.  

Existing hybrid-fiber-coax (HFC) areas inside the Suddenlink footprint also will see speed increases from the old maximum of 150 Megabits per second to 400 Mbps and 1 Gigabit per second. 

“We’re on track to deliver over 300,000 upgraded homes by the end of this year, at the higher end of what we were targeting, and we’ve already commenced additional upgrades which we will complete next year,” Goei said on the call.

In a research note, MoffettNathanson principal and senior analyst Craig Moffett wrote that Altice’s new strategic direction is in part a repudiation of its old method of deep cost cuts, minimal capex spending and healthy price increases, which the company previously dubbed “The Altice Way.” 

The new direction seems to make Altice more of a conventional cable company, which the analysts saw as good news. 

“[T]hey are conceding that they have underspent on capex, and, having done so, full fiber replacement, especially in competitive areas, is the best strategy,” Moffett wrote.

The company said it also will expand investment in its sales distribution channels to pre-pandemic levels. Door-to-door salesforce headcount, which slipped to 241 in Q3 after being as high as 518 in 2018, is expected to rise to between 400 and 500 by the end of next year. Retail locations, which fell to 87 in 2020 during the height of the pandemic, are expected to rise to between 150 and 170 locations by the end of 2022.  

Altice said that most of the broadband losses came in Optimum markets where it competes against Verizon’s Fios products. Broadband customer growth was consistent with 2018 and 2019 levels within its Suddenlink footprint. 

On a conference call Thursday to discuss Q3 results, Goei said that Verizon Fios has benefited from having a “mobile strategy, product and mindshare which is significantly higher than ours across the board,” which should change now that Altice USA’s MVNO partner is T-Mobile instead of Sprint. And the CEO believes the expansion of the fiber buildout will also make a competitive difference. 

“We think that building fiber puts us in a superior network position relative to them,” Goei said of Fios. “...They need to fix their fiber-to-coax termination if they want to go to higher speeds. We’re going to be 10-Gig ready effectively by the second half of next year across our fiber footprint and have a longer runway with product advantage and mindshare. We’re repositioning ourselves to be able to duke it out on an equal, if not better, product portfolio going forward.”

As far as boosting broadband subscribers, Goei said on the call that lower churn has driven less competition for gross customer additions, which has impacted gross additions in general. And though there was some softness in the back-to-school market, he believes that segment is beginning to come back. 

“Yes, we had a peculiar 2021 back-to-school,” Goei said on the call, adding that after visiting some college campuses “it looks like [things are] back to normal.”

Cable One said it is contributing fiber assets from two company units — Clearwave Communications and Hargray Acquisitions Holdings — in a joint venture that will be financed in part by unaffiliated third parties that may accelerate the fiber rollout in portions of its footprint.

According to a document filed with the Securities and Exchange Commission on Nov. 3, Cable One said the fiber assets contributed to the JV represent about 3% of its consolidated revenue for the second quarter ended June 30. The company said the JV is “intended to accelerate deployment of fiber internet to residents and businesses in the relevant markets, as well as to provide connectivity to unserved and underserved areas in such markets.”

Cable One purchased Clearwave Communications, a facilities-based service provider with a fiber network in Southern Illinois, in 2018. It bought the remaining 85% interest in Hargray it didn't already own in May for about $2.2 billion. Unnamed unaffiliated third parties would contribute cash to the JV, Cable One said.  

While terms of the JV are still subject to negotiation and none of the parties have entered into any definitive agreements, some analysts are cheering the arrangement as it is expected to speed Cable One's fiber deployment. 

In a research note Thursday, Wells Fargo Securities media analyst Steven Cahall wrote that the JV would allow the company to deploy fiber in parts of its footprint “in a more capital-efficient way.”

Cable One has been aggressively building out its fiber network over the past few years, and has spent millions of dollars so far in 2021 pushing fiber into rural communities like Natchez, Mississippi and Vidalia, Louisiana; Victoria, Texas; Rio Rancho, New Mexico; and Belle Chasse, Louisiana.

While cable operators grapple with the slowdown of broadband subscriber additions expected in the third quarter and beyond, Bernstein media analyst Peter Supino said that telcos, long the butt of jokes about the sluggish speeds and poor service inherent in their core digital subscriber line service, have streamlined operations and are positioning themselves to take back significant market share. 

In a research note, Supino pointed to AT&T’s spinoff of DirecTV, Frontier Communications’ emergence from bankruptcy, Lumen’s (formerly Century Communications’) sale of about 7 million passings to Apollo Global Management and T-Mobile’s successful integration of Sprint, and how those moves have freed up their respective balance sheets to invest in fiber-to-the-home networks and technology to bring faster, more reliable broadband to residential customers. Tack on investment in C-band spectrum by AT&T, Verizon, and T-Mobile to extend fixed wireless broadband to harder to reach areas, and the outlook for telco service looks a lot better than it has in the past. 

“During 2021, each of AT&T, Verizon, Frontier, Lumen, and T-Mobile, in different ways, became a more viable contender for residential broadband subscribers,” Supino wrote, adding that he expects telco fiber-to-the-home (FTTH) broadband passings to rise 50% from 51.1 million in 2021 to 77.1 million homes by 2025.     

AT&T is expected to lead the pack, with 1.8 million FTTH passings by 2025, up from 411,000 this year, according to Supino. Total FTTH penetration from the four telcos is expected rise from -0.7% in 2021 to 3.1% by 2025, the analyst wrote.

Cable companies have dominated the broadband business for more than a decade, accounting for the lion’s share of additions by offering  higher speeds and better quality compared to telcos’ inferior DSL service. But as cable operators have warned that the record-setting growth pace of the past few years will slow down in the third quarter, AT&T and others have committed to building out their fiber networks and lowering prices to capture share. 

Also Read: How Slow Will the Broadband Slowdown Be?  

Last month, Comcast said broadband customer additions would be slower than expected in the third quarter. On Sept. 23, Altice USA CEO Dexter Goei warned that his cable company expected to lose between 15,000 and 20,000 broadband customers in Q3, and could possibly end the year with flat net additions. 

Also Read: Broadband Slowdown Forces Analyst o Go Negative on Cable Sector 

That sent cable stocks into a tailspin, with Altice USA losing about 28% of its share value in two weeks. Other stocks like Comcast, Charter and Cable One, were down less dramatically, but the shift caused a few analysts to rethink their outlooks on the stocks. 

Altice USA fell another 3% on Oct. 12 (it closed at $17.63 down 49 cents each) after Deutsche Bank analyst Bryan Kraft lowered his rating on the stock to “Hold” from “Buy,” and reduced his price target to $22 per share from $40 each. 

Also Read: Broadband Slowdown Forces Analyst to Go Negative on Cable Sector 

That downgrade came a day after Raymond James analyst Frank Louthan downgraded the cable sector, saying operators could lose as many as 11 million broadband customers in the next four years. In his note, Louthan wrote that telcos could make “a significant change to the communications landscape that is set to shift the balance of power that has favored the cable companies for the past 20 years,” according to Bloomberg. 

Barclays Group media analyst Kannan Venkateshwar believes that telcos have more short-term visibility than cable due to new device launches, tailwinds from the EBB program and successes bundling streaming and wireline broadband offerings.

“We also believe that the industry in some ways is seeing more stable promotional activity than last year because of the structure of promotions,” Venkateshwar wrote. “In addition, T-Mobile’s focus on higher end pricing plans and ARPA growth should also provide some stability to the competitive environment near-term. Telecom companies also appear to be getting better at bundling wireline and wireless as organization structures are better aligned.”

AT&T has struck a deal with Frontier Communications to expand its fiber network offerings to enterprise customers while adding fiber capacity from the smaller carrier that will help it boost its 5G mobile network.

AT&T, which is in the process of offloading the media assets it spent billions of dollars accumulating over the past five years, has said it is refocusing its efforts toward its fiber network and 5G offerings. The telecom giant already plans to reach about 2.5 million incremental customer locations with fiber by the end of this year and 30 million locations by the end of 2025. The Frontier deal apparently will help to close the "last mile" gap for many of these customer locations -- AT&T said that across the country, more than nine million business customer locations are within 1,000 feet of its fiber network. 

Frontier, which emerged from Chapter 11 bankruptcy protection earlier this year, has embarked on an aggressive fiber buildout -- dubbed Build Gigabit America -- and plans to make fiber available to 600,000 locations by the end of 2021, expanding to pass around 10 million locations by the end of 2025.

"We're bringing together two complementary networks to benefit business customers that require fiber-optic connectivity," said Mike Shippey, Frontier executive VP of business and wholesale, in a press release. "As part of this deal, we'll use our expanding fiber network to provide AT&T high-speed connections for large enterprise customers and the expansion of its 5G mobile network across our markets."

The agreement, AT&T said, will enable the telecom giant to reach additional locations more quickly through the Frontier fiber network, and together the two companies will bring high-speed connectivity to enterprise customers within Frontier's 25-state footprint.

"With Frontier building out its own fiber network where we are not building, we'll be able to work together to provide large business customers with the high-speed, low-latency data connectivity they need to grow and thrive," said Scott Mair, AT&T network engineering and operations president, in a press release. "As demand for broadband connectivity grows, we will be able to plug and play into Frontier's network to support businesses and help grow our 5G mobility network for consumers."

Cox Communications said it has completed its purchase of the commercial services segment of Charlotte, North Carolina-based fiber infrastructure provider Segra. Terms of the deal were not disclosed, but some published reports estimated it was worth about $3 billion. 

Segra serves commercial enterprise and carrier customers in nine states in the Mid-Atlantic and Southeast regions of the country. Cox first announced the deal in April. 

Although Cox did not disclose the price, the company said the deal was one of the largest in its history and supports an ongoing focus on strategic infrastructure investments and continued commitment to the business services market. Bloomberg said back in April that it could be worth more than $3 billion, including assumed debt. 

“Cox has invested more than $15 billion in its communities through infrastructure upgrades in the last decade and acquiring Segra's commercial services business underscores our commitment to continue to make big bets in the business services space,” said Cox incoming president Mark Greatrex in a press release. “An expanded geographical presence, greater network capacity and more services will be an immediate benefit for customers of both companies and will better enable us to meet the significant demand for our solutions.”

Segra's existing management team will continue to lead the Segra enterprise and carrier organization following the acquisition, will retain the Segra brand and operate as a standalone business within the Cox family of companies.

“Segra’s primary focus will continue to be on serving our customers,” Segra CEO  Timothy Biltz said in a press release. “Our dedicated team of employees is our most important resource. Through them, we deliver a superior customer experience and demonstrate the value of our state-of-the-art fiber infrastructure. We’ll continue to invest in our employees and our world-class network in order to exceed our customer’s expectations. Joining Cox strengthens our ability to meet the growing demand for our products and services, which are mission critical to our customers. The Segra and Cox teams have been working diligently together to plan for a successful day one and beyond.”

 Shares of Lumen Technologies, formerly CenturyLink, fell as much as 13% Wednesday, a day after it said it had agreed to sell a large chunk of its incumbent local exchange (ILEC) business to private equity firm Apollo Global Management in a deal valued at $7.5 billion.

Lumen shares were trading as low as $11.09 each early on Wednesday (Aug. 4), down 13% ($1.66 per share). The stock closed at $11.62 each (down 8.9%, or $1.13 per share) on Aug. 4. 

On Aug. 3, after the market close, Lumen said it had agreed to sell its ILEC assets in 20 states to Apollo, a move that came about a week after it said it would sell its Latin American business to another private equity firm -- Stonepeak Infrastructure Partners -- for $2.7 billion. 

CenturyLink rebranded as Lumen Technologies last year, the first step in preparing the company for what it called The Fourth Industrial Revolution. With the Apollo deal, Lumen sheds local telephone and copper-based broadband businesses with about 6 million customers to focus more intensely on its large enterprise and residential broadband customers, and invest in expanding its fiber network in its remaining 16 states of operation.  

According to Lumen, the properties being sold to Apollo include about 200,000 fiber-enabled units, 7 million addressable locations, 1.3 million broadband subscribers and 59,000 fiber customers. 

After the deal closes, Lumen will have 21 million enabled units, 2.4 million fiber enabled units, 3.4 million broadband subscribers and 687,000 fiber subscribers.   

In a research note, Evercore ISI Group cable, telecom and satellite analyst James Ratcliffe said the moves appear to be an effort by Lumen management to “dramatically reorient the company” by shedding declining high cash flow businesses, sharply increase capital spending and change how it returns capital to its shareholders by reducing or possibly eliminating its stock dividend in favor of share repurchases.  

“We see the moves as an attempt to restructure the company into the kind of fiber infrastructure business being rewarded with high multiples by both public and private market investors,” Ratcliffe wrote. “Given the uncertainty about the company’s strategy, and the disruption of the business and the shareholder base likely to result from this strategic reorientation, we’re staying on the sidelines, and retaining our ‘Underperform’ rating.” 

While Lumen didn’t officially reduce or eliminate the dividend, CEO Jeff Storey said on a conference call to discuss the transaction that the new strategy will put pressure on the dividend.

“[W]ith these transactions, the profile of our business is changing and will change rapidly going forward as we lean into investing for growth and continuing to rationalize the portfolio,” Storey said on the call. “I do realize that will put pressure on our dividend after we close these transactions and the further we get into our investment program.”

That was enough for Ratcliffe, who said at least a reduction is likely after the deal closes.

“We interpret this to mean that the dividend is likely to be materially reduced or eliminated, but that management aren’t taking that step yet, in the absence of certainty that the proposed transactions will be completed,” Ratcliffe wrote. 

While that would be enough to explain the volatility in the stock, Lumen’s sluggish Q2 results added to the pressure. Revenue of $4.9 billion during the quarter came in 2% below Ratcliffe’s estimates and cash flow of $2.1 billion was slightly below the analyst’s forecasts. However, free cash flow was nearly 30% above Evercore predictions, mainly because capital expenditures of $646 million were far below estimates of $899 million.

Apollo intends to invest heavily in the networks to upgrade them to fiber-optic technology. The new unit will be run by former Verizon Communications executives Bob Mudge, Chris Creager and Tom Maguire, who helped create that phone company’s Fios broadband business. 

“This transaction is an important step in our continued efforts to transform Lumen and drive future growth for our company,” Storey said in a press release, pointing out the strong valuation of the deal (5.5 times cash flow). “Apollo Funds will receive a great business with a strong customer base, dedicated employees, and a platform for future growth.” 

The transaction is expected to close in the second half of 2022.

"The team at Lumen has built a great business and we see an incredible opportunity to provide leading edge, fiber-to-the-home broadband technology to millions of its business and residential customers,” Apollo private equity partner Aaron Sobel said in a press release. “Our investment will help accelerate the upgrade to fiber optic technologies, and we are excited to have such a high-caliber management team ready to bring faster and more reliable internet service to many rural markets traditionally underserved by broadband providers.”

Citi, Goldman Sachs, Bank of America, and Morgan Stanley served as financial advisors to Lumen in the transaction and Jones Walker served as legal counsel. Advisors to the Apollo Funds include Mizuho, LionTree, Barclays and Credit Suisse as financial advisors; Altman Solon as telecommunications, media and technology consultant; and Paul, Weiss, Rifkind, Wharton & Garrison LLP as lead legal counsel, together with Jenner & Block LLP and Morgan Lewis & Bockius LLP as regulatory counsel. 

Privately-held Schurz Communications said it has purchased Ohio-based New Knoxville Telephone Co. (NK Telco), a fiber provider that operates in the west central portion of that state. 

The deal will mark Schurz’s sixth broadband purchase in about 10 years, beginning with its 2012 purchase of Orbitel Communications. 

Terms of the deal were not disclosed. The transaction is expected to close in the fourth quarter. 

“Schurz remains dedicated to connecting communities through access to information and empowering engagement, and we are proud to bring NK Telco into our portfolio,” Schurz CEO Todd Schurz said in a press release. “We have deep experience with broadband businesses and look forward to supporting NK Telco’s growth and expansion in Ohio. The company aligns with our ongoing mission of uniting people through communications services.”

NKTelco has been in business since 1905 and offers data, voice and video services to residential and business customers in communities located throughout West Central Ohio, including New Knoxville, New Bremen, Minster, Fort Loramie, Botkins, Anna, Maria Stein, Chickasaw, Osgood, Russia, Jackson Center, Sidney, Piqua and Versailles. Its current management team will continue to lead the business under the NKTelco brand.

“Schurz has a long history of supporting broadband companies and we are fortunate to be part of its family of businesses,” NK Telco general manager Preston Meyer, said in a press release. “With this support, NK Telco will be able to accelerate plans of expanding its regional fiber network. In addition, we plan to announce Gigabit speeds and more cloud based offerings while continuing to deliver our superior customer service. We appreciate the expanded opportunities that being part of the Schurz family brings for our employees. Ultimately our partnership supports our investment in our local communities and increases our ability to pursue growth and expansion opportunities.”

Also as part of the transaction, Schurz will become owners of NK Telco’s 4.5% investment in Com Net, an Ohio-based communications company, which will enable greater connectivity throughout the state.

Stifel served as financial advisor and FGKS Law served as legal advisor to NK Telco. Barnes & Thornburg served as legal advisor to Schurz.

Grande Communications, a division of Astound Broadband, said Tuesday that it has purchased Harris Broadband, provider of internet, voice and television services to about 6,000 customers in Central Texas.

The deal, terms of which were not disclosed, will fill out Grande’s Texas footprint, which includes Dallas, Austin, San Antonio, San Marcos, Corpus Christi, Waco, Temple, Houston and Midland/Odessa. In addition to about 6,000 customers in Brownwood and Early, Texas, , the deal will add 12,500 homes-passed and 150 miles of fiber plant to Grande’s operations in the state. The deal is expected to close later this year.

“We expect to combine Harris Broadband’s localized expertise and leadership with our broader network and resources to provide more services to more customers throughout Central Texas and beyond,” Astound Broadband and Grande Communications CEO Jim Holanda said in a press release. “We will leverage best practices from our family of companies to build upon Harris’s long track record of success in providing advanced broadband services.”

The deal comes weeks after Astound agreed to buy systems in Anne Arundel, Maryland; Chicago and Evansville, Indiana systems from overbuilder WideOpenWest for $661 million. 

Also Read: WOW Deal Will Double RCN’s Chicago Footprint, Astound CEO Says 

“We’re excited to become a part of the Grande Communications family,” said Harris Broadband president Philip Harris in a press release. “This transaction provides us with access to nationally recognized technical expertise, highly regarded operational management systems and processes, and unparalleled financial acumen to further the expansion of Harris Broadband. Moreover, this transaction is great for not only customers we currently serve, but surrounding communities in and around Brownwood and Early.”

Houlihan Lokey served as Harris’s financial advisor on the sale process. Seyfarth Shaw LP served as Grande’s legal adviser on the deal.  

Frontier Communications said it will expand its fiber-optic network to an additional 280,000 consumers in Connecticut  in 2021, the initial phase in what it says is a multi-year expansion effort.

The moves come about three months after Frontier successfully emerged from Chapter 11 bankruptcy with a cleaner balance sheet and plans to capitalize on broadband demand in its service territories. In its reorganization plan, Frontier recognized the lack of fiber-based broadband in many of its markets, pledging to bridge that gap by investing as much as $1.4 billion in its network. 

As part of the state approval process of that restructuring plan, in February Frontier agreed to expand its Connecticut fiber network to about 100,000 homes over four years. The most recent expansion plans appear to build on that pledge substantially. 

Frontier said it will offer 1 Gigabit per second speeds in the state, as well as offer more simplified service offerings. The company said that means no annual commitments or data caps, waived activation fees (an $85 savings), and a three-year price guarantee on monthly charges for Gig service. Frontier also offers a free $100 Visa Card or Ring Video Doorbell with Gig service and contract buyouts are available.   

“This infrastructure investment stems from Frontier’s belief that access to high-speed broadband is critical to building a digital society, enhancing community inclusion, and helping the environment,” Frontier Connecticut senior vice president Julie Murtagh said in a press release. “I am confident communities will see Frontier in a new way once they experience the power of fiber-optic technology.”

Frontier said the communities where the fiber expansion is currently underway include: Andover, Ansonia, Bethel, Bloomfield, Bolton, Branford, Bridgeport, Bristol, Cheshire, Coventry, Danbury, Derby, East Haven, Enfield, Farmington, Hamden, Hartford, Hebron, Manchester, Marion, Meriden, Middletown, Middletown , Milford, New Britain, New Haven, New London, Newington, North Haven, Norwalk, Norwich, Plainville, Plantsville, Quaker Hill, Rockfall, Shelton, Southington, Stamford, Trumbull, Uncasville, Vernon, Rockville, Wallingford, Waterford, West Hartford, West Haven, Wethersfield, and Woodbridge.

Altice USA is moving forward with plans to push its fiber network to the edges of its traditional footprint, adding at an industry conference that it is on target to add about 150,000 homes this year and expects more to come. 

Altice USA chief financial officer Michael Grau said at the virtual Credit Suisse Communication Conference Tuesday that most of the company’s edge-out program is concentrated in Texas, but other markets are expected to follow.

Other cable operators have been expanding their fiber footprint for years, with Comcast and Charter adding about 1 million homes passed to its territory each year over the past few years.

Also Read: Fringe Benefits

At the Credit Suisse conference, Grau said that Altice hasn’t done its budgeting for next year yet, but that a target of 175,000 to 200,000 additional homes via edge-out “probably makes sense in 2022.”

Currently, he said the edge-out efforts are heavily concentrated in Texas, particularly in the Dallas, North Austin and west Texas markets. Grau added Altice USA has systems in three of the top five markets for new household formation in the country, and that future edge-out efforts will focus on those areas, as well as in North Carolina, where in April it purchased Morris Broadband for about $310 million. 

“There’s really ample opportunity between our different footprints to really accelerate new builds at very very attractive economics,” Grau said.

Altice USA also is working hard to upgrade its Suddenlink network. Grau said there are between 600,000 and 700,000 homes within its Suddenlink footprint that still offer speeds under 100 Megabits per second, some as low as 25 Mbps to 30 Mbps. 

“Not coincidentally, customer penetration is significantly lower than what we’re seeing in the remainder of the western footprint,” Grau said, adding that the plan is to bring those areas back up to speed, estimating that  Altice USA could upgrade about 300,000 of those homes this year.    

After a year winding through the bankruptcy courts, Frontier Communications said it expects to emerge from Chapter 11 protection on April 30.

Frontier filed for bankruptcy protection on April 15, 2020. Earlier this month it said it had received all the necessary approvals for its reorganization plan,  which includes swapping about $10.2 billion in debt for equity, and investing about $1.4 billion to build out its fiber network. 

Frontier added that its new common stock will begin trading on the NASDAQ exchange on May 4, under the symbol “FYBR.” 

“Frontier is ready to set a new course as a revitalized public company. Through the restructuring process, the company has stabilized its business and recapitalized its balance sheet, while making significant progress on the early stages of implementing our initial fiber expansion plan,” said John Stratton, incoming Executive Chairman of the Board. “Frontier’s success with the Fiber-to-the-Home pilot program, which upgraded more than 60,000 locations from copper to fiber optic service in 2020, is just one example of the important work already underway. Frontier’s future is bright. I’m eager to work closely with our new Board, our CEO Nick Jeffery, and the rest of the leadership team to build the new Frontier.” 

The company said it will hold a conference call, which will be webcast, on April 30 (Friday) at 10 a.m. ET to discuss the path forward and Q1 results.

The new eight-member board of directors will be led by Stratton and Jeffery, who joined Frontier in December after serving as CEO of British wireless company Vodafone UK.  The remaining six independent board members are: Astra Capital founding partner and 2B Partners CEO Kevin Beebe; Coca Cola SVP and chief people officer Lisa Chang; former Liberty Media SVP, deputy general counsel and corporate secretary Pamela Coe; former Vodafone chief technology officer and current senior advisor to Bridge Growth Partners Stephen Pusey; former NFL chief operating officer and current senior advisor to the infrastructure division of Brookfield Asset Management Maryann Turcke; and Kaiser Foundation (Kaiser Permanente) SVP and chief digital officer Pratabkumar “Prat” Vemana.

“The future of Frontier is an innovative, modern technology company, poised to deliver next-generation fiber-rich infrastructure for our customers and communities,” Jeffery said in a press release. “Upon emergence, we will have the capital structure and resources to establish Frontier as a digital leader with top-tier talent and an entrepreneurial, high-performance culture. I want to express my appreciation to all our stakeholders who have enabled this process. Our team looks forward to beginning our next phase of long-term growth and value creation across the business.”

Cox Communications said Tuesday that it has agreed to purchase the commercial enterprise and carrier business of fiber company Segra from private equity company EQT Infrastructure. Terms of the deal were not disclosed, although some published reports put the value of the deal at around $3 billion.

Segra, based in Charlotte, North Carolina, is one of the largest privately held infrastructure providers in the country. As part of the deal, EQT will retain Segra’s residential and small-to-medium sized business segment in Virginia and North Carolina. Cox will acquire Segra’s commercial services segment, which serves commercial enterprise and carrier customers in nine states in the Mid-Atlantic and Southeast. 

“Cox is focused on buying and investing where it makes sense, and we believe that the demand for broadband infrastructure will continue to grow, making fiber an attractive area for long-term investment,” said Cox president and CEO Pat Esser in a press release. “Acquiring Segra’s commercial services business is another key milestone in our pursuit of strategic infrastructure to ensure that we're providing the best products and services to our customers.”

Blomberg first reported Monday that Cox and EQT were in talks concerning Segra, estimating that the deal, including assumed debt, would be worth about $3 billion. 

This is the latest in a string of fiber network infrastructure investments Cox has made over the years, including EasyTel,  EdgeConneX, InSite Wireless, StackPath, Unite Private Networks and ViaWest. Once the deal is closed, the enterprise and carrier unit will retain the Segra name and its existing management team, operating as a standalone business within the Cox family of companies. 

“Our relationship with Cox will allow Segra to leverage expert resources, capabilities and strategic insights in order to scale up operations and accelerate long-term growth,” Segra CEO Timothy Biltz said in a press release. “Cox and Segra are equally devoted to the communities we serve. We will be even more strongly positioned to meet growing demand from carrier and enterprise customers for high-bandwidth fiber-infrastructure solutions. I would also like to thank EQT for its continued guidance and invaluable support as we worked to grow the business over the last nearly four years.”

Bank Street Group LLC and Goldman Sachs and Co. LLC acted as financial advisors and Simpson Thacher & Bartlett LLP acted as legal advisor to Segra in connection with the transaction.

Fitch Ratings said debt ratings for Cox Enterprises and Cox Communications would not be affected by the transaction. Cox Enterprises has ample cash on hand after selling a majority stake in its TV and radio stations to Apollo Global Management in 2019, Fitch noted, and Cox Communications was expected to "continue to invest in strategic growth opportunities through its Cox Business segment." The deal enables Cox to exploit its fiber infrastructure and "address the overall growing demand for high capacity fiber in the commercial enterprise and carrier segment. It also allows CCI to continue its efforts to expand its addressable market footprint both organically and inorganically," Fitch said in a statement.

Frontier Communications, about a year after filing for Chapter 11 protection, received the final state approval of its reorganization plan, which the company said sets it on a path toward emerging from bankruptcy in “the coming weeks.”

Frontier filed for Chapter 11 protection on April 15, 2020. The company had worked out a restructuring plan that would exchange about $10.2 billion in debt for equity, and funnel about $1.4 billion toward building out fiber networks throughout its service territory.  On April 15, 2021, the company received the final approval of its plan from the California Public Utilities Commission, which it said was the last hurdle in the bankruptcy process. 

“Having already received all other required state and federal approvals, the Company expects to successfully emerge from Chapter 11 in the coming weeks,” Frontier said in a press release. 

Frontier stock, currently trading on the over-the-counter “pink sheets,” was priced at about 29 cents per share in early trading April 19, down about 5%. Once the company emerges from bankruptcy, it plans to return to trading on the full Nasdaq Exchange under the new trading symbol FYBR, which MoffettNathanson telecom analyst Nick Del Deo said in a note to clients “may be a bit corny, but it leaves no uncertainty regarding management’s focus.” 

According to the California PUC’s proposed decision to approve the reorganization in March,  Frontier would have to invest about $1.75 billion in its fiber network in the state over the next four years, including expanding broadband availability in unserved or underserved communities. As part of that condition, Frontier would build out fiber to 350,000 customer locations by Dec. 31, 2026, of which 150,000 locations must be in areas where Frontier has lower rates of return. 

As it nears the bankruptcy exit, Del Deo, who initiated coverage of the stock on April 19, added that he believes with new management, more manageable leverage and funds earmarked for an aggressive fiber buildout, Frontier could overcome the hurdles of the past. Frontier named former Vodafone UK CEO Nick Jeffery as its CEO in December. 

The analyst added that the company has identified millions of homes in its footprint that could be upgraded to fiber at attractive returns, “which would put the business on a sustainable path and potentially create billions of dollars in value.”

But he cautioned that although Frontier will emerge with substantially lower debt -- about $7 billion -- only about one-third of its total revenue comes from fiber services, with more than half coming from its struggling commercial unit. 

“A successful transformation would likely bring Frontier to revenue stability or modest growth, but not make it a star,” Del Deo wrote.

Just four months after finalizing a deal to take a minority equity stake in cable operator Hargray Communications, Cable One said it will buy the remaining interest in the company in a transaction that values the operator at $2.2 billion. 

In October, Cable One closed a deal where it swapped its systems in Anniston, Alabama for a 15% equity stake in Hargray. The most recent deal, a mix of cash, equity and debt financing, is expected to be completed by the second quarter. In a press release, Cable One said the deal will give it an expanded presence in the Southeastern market -- Hargray operates in 14 locations across Alabama, Florida, Georgia and South Carolina -- and allows it to tap into Hargray’s fiber expertise.  

“We look forward to further partnering with Hargray to extend our presence in the Southeast through Hargray’s fast-growing markets, like-minded strategy, and commitment to providing fast and reliable internet service to rural markets,” Cable One CEO Julie Laulis said in a press release. “This transaction will also serve as a potential platform for future organic and inorganic growth in the region as we look to continue to expand our footprint.”

According to Cable One, Hargray generated about $128 million in annualized Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA, a measure of cash flow) on an annualized basis for the quarter ended Dec. 31. Cable One said it expects to realize about $45 million in annual run-rate synergies within three years of the close of the deal. 

Cable One has been an aggressive buyer of properties over the past few years. In October it said it would buy Mega Broadband Investments, parent of Vyve Broadband, for about $547.1 million.  The most recent deal would be its sixth transaction since 2017, when it purchased New Wave Communications for $735 million.  

Related: Cable One to Launch IPTV Offering

“Cable One and Hargray have remarkably similar cultures, starting with each company’s focus on delighting its customers," said Hargray chairman and CEO Michael Gottdenker in a press release. "Having led Hargray for nearly 14 years, and having gotten to know Cable One well over the past few years, I am excited about this transaction and am confident that our colleagues, customers, and communities will continue to thrive under Cable One’s ownership.”

Hargray is owned by the Pritzker Organization, the merchant bank for the Tom Pritzker family. Tom Pritzker is also executive chairman of Hyatt Hotels Corp. Other investors in Hargray include Stephens Capital Partners, Redwood Capital Investments, WaveDivision Capital, and management.

The purchase price represents a multiple of about 17.2 times Hargrave’s annualized EBITDA, and 12.7 times cash flow assuming the synergies are realized immediately. 

Cable One said it plans to finance the transaction with a combination of cash, its revolving credit facility and the issuance of new equity. The company said it has received a $900 million bridge loan from J.P. Morgan and Credit Suisse to finance a portion of the deal. 

Cable One intends to finance the transaction with a combination of existing cash resources, revolving credit facility capacity, and proceeds from new indebtedness and/or equity capital. Cable One has received $900 million of definitive bridge loan commitments from J.P. Morgan and Credit Suisse to finance a portion of the purchase price.

Credit Suisse acted as lead financial advisor to Cable One, and J.P. Morgan also acted as financial advisor to Cable One. Cravath, Swaine & Moore LLP acted as legal advisor to Cable One on this transaction.

Wave Broadband, a unit of Astound Broadband, said it has completed the purchase of commercial fiber services provider Digital West, a move that should expand its offerings throughout California’s Central Coast region. Terms of the deal were not disclosed.   

In a press release, Wave Broadband said all existing Digital West services, products, and customer support will continue without interruption and that Digital West will operate within the Wave region as part of Wave Business Solutions. The companies plan to commit resources toward enhancing products, services and value for Digital West customers in the future.   

Digital West is based in San Luis Obispo, California, and serves commercial clients, including carriers, small businesses, and medium-to-large enterprise clients.

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“The Central Coast is home to a fast-growing and dynamic business community, one which we believe can benefit significantly from the combined services and capabilities our companies provide,” Astound Broadband CEO Jim Holanda said in a press release. “Our resources will enable Digital West’s talented local team to connect area business customers over our combined network to more locations in California and across the country, leveraging our technology and capital to broaden Digital West’s service offerings and accelerate their growth.”  

Astound was purchased by Stonepeak Infrastructure Partners in November in a deal valued at about $8.1 billion. The company includes RCN Corp., Grande Communications, Wave and EnTouch Communications and has about 1 million customers in Northern California; Oregon; Washington; Chicago; Eastern Pennsylvania; Massachusetts; New York City, Washington, D.C.; and Texas.  

“During the past two decades, Digital West’s team has established a strong local heritage of providing exceptional broadband and connectivity services for thousands of businesses of all sizes, at every stage of growth, in a wide variety of industries,” said Tim Williams, Digital West founder and CEO. “With our new partners, we look forward to accelerating our growth, adding new offerings, and continuing to provide the high levels of service that business customers have come to expect from Digital West.” 

Frontier Communications said it has named Vodafone UK CEO Nick Jeffery as its new CEO. Jeffery will replace Bernie Han, who will step down March 1.

Frontier filed for Chapter 11 protection in April  and has been winding through a restructuring process for months. Its reorganization plan was approved by the U.S. Bankruptcy Court in August and the company said that it has received regulatory approval in 12 states for its restructuring plan. It expects to emerge from Chapter 11 in early 2021.

After Jeffery takes the helm, Han, who joined Frontier in December 2019 from Dish Network, will step down, but will remain a member of the company’s board of directors and will assist in the CEO transition. Jeffery will join the board of directors after the company emerges from Chapter 11.  

“There is still important work to do in unlocking Frontier’s full potential, and I am excited to facilitate the transition and pass the CEO baton to someone with Nick’s outstanding track record,” Han said in a press release. “I want to again thank the entire Frontier team for their support as we see the chapter 11 process through to completion.”

Jeffery was selected after an extensive internal and external search for a new CEO. He has about 30 years of experience, most recently at Vodafone UK, where he helped engineer a turnaround at the British wireless and wireline operator. According to Frontier, during Jeffery’s tenure at Vodafone UK, the unit of Vodafone PLC grew revenue and market share, improved customer service, reduced churn and increased customer and employee satisfaction. Prior to his tenure at Vodafone UK, where he spent eight years, the last four as CEO, Jeffery spent more than a decade at Cable & Wireless, where he led the UK and international markets business units.

In a press release, Robert Schriesheim, chairman of the finance committee of Frontier’s board of directors, said that in addition to Jeffery becoming CEO, John Stratton will become Frontier’s executive chairman after it emerges from Chapter 11. 

“We are now at a point of natural evolution in our transformation and, following a rigorous process, the search committee concluded that Nick is the right CEO to lead Frontier through its next phase of investment and profitable growth,” Schriesheim said in the release. “On behalf of the Finance Committee and Board, I want to thank Bernie for his leadership in executing Frontier’s operational turnaround while managing the unprecedented challenges of the COVID-19 pandemic. Bernie has demonstrated his world-class skills as a CEO operator, managing large-scale complexity with a relentless focus on driving performance and emphasizing accountability. His contributions have helped to reposition Frontier as a stronger, more resilient business, and we appreciate his willingness to guide the CEO transition and remain on the Board through transition.”

Frontier said it is making progress in executing its reorganization plan, including recapitalizing the balance sheet, which upon emergence, will include reducing its debt by about $11 billion and its annual interest expense by about $1 billion. The company also plans to re-focus its efforts to become a fiber-based broadband service provider, and has had five straight quarters of consumer broadband subscriber growth.

“Frontier owns a unique set of assets and maintains a competitive market position,” Jeffery said in the release. “My immediate focus will be on serving our customers as we enhance the network through investments in our existing footprint and in adjacent markets while building operational excellence across the organization. I am committed to delivering world-class customer service. I look forward to speaking and meeting with our employees while working with Bernie, the Board and leadership team to ensure a seamless transition.”

Altice USA said it has completed the sale of a 49.99% interest in its Lightpath fiber enterprise business to Morgan Stanley Infrastructure Partners, in a deal with an implied enterprise value of $3.2 billion. Altice USA will retain a 50.01% interest in Lightpath and maintain control of the company.

Altice USA first announced the Morgan Stanley deal in July. It had been looking for a buyer for the Lightpath division for more than a year. 

“We are pleased to have closed this transaction and partner with Morgan Stanley Infrastructure Partners to support ongoing and new growth initiatives, improve operational performance and provide strategic and financial flexibility for Lightpath,” Altice USA CEO Dexter Goei said in a press release. “This partnership enables us to focus on distinct opportunities for value creation and long-term growth for Lightpath while continuing to provide best-in-class products and services to enterprise customers.”

When it first announced the deal, Altice USA said it represented a 14.6 times multiple to its 2019 adjusted EBITDA, and that it would receive total gross cash proceeds of $2.3 billion from the sale and related financing activity (about $1.1 billion after tax and initial debt repayment). 

Goldman Sachs & Co. LLC acted as financial advisor to Altice USA. Shearman & Sterling LLP, Mayer Brown LLP and Ropes & Gray LLP served as legal advisors to Altice USA. Evercore acted as financial advisor and Simpson Thacher & Bartlett LLP served as legal advisor to Morgan Stanley Infrastructure Partners.

Gary Bolton has been named the new president of the Fiber Broadband Association (FBA).

FBA represents fiber optic network infrastructure vendors and providers, including Corning, Nokia, Google and Verizon FiOS.

Bolton, who had been VP of global marketing and government affairs at ADTRAN, will come aboard Nov. 2. He succeeds Lisa youngers, who is exiting for a private industry job.

“This is an exciting and challenging time for our members, the Association, and the industry as COVID-19 has laid bare the profound importance of connectivity for all of us," said FBA board chair Katie Espeseth. We’re lucky to have found a leader with Gary’s deep understanding of our industry who can take the helm at this important juncture.”

Bolton is no stranger to FBA, having chaired its audit and finance committees. 

Altice USA said Tuesday it has reached an agreement to sell a 49.99% interest in its Lightpath business telecom unit to Morgan Stanley Infrastructure Partners in a deal with an implied enterprise value of $3.2 billion. 

Altice USA has been shopping the Lightpath unit for more than a year. The fiber-based enterprise business services company offers telecom services to medium and large-sized businesses in the New York metropolitan area. Lightpath customers include health care, financial, education, legal and professional services companies, as well as the public sector and communication providers and local exchange carriers. 

Altice USA was in talks last July to sell a minority stake in Lightpath to New York private equity firm Stonepeak Infrastructure Partners, but those negotiations broke down.  It is unclear when Morgan Stanley stepped in, but Altice USA said it expects the deal to close in the fourth quarter.

Morgan Stanley Infrastructure Partners was founded in 2006 and has made 30 investments across three global funds with more than $13 billion of capital commitments. Its investors include some of the largest pension, sovereign wealth and insurance companies in the world.

Altice USA said the sale represents a 14.6 times multiple to its 2019 adjusted earnings before interest taxes depreciation and amortization (EBITDA). As part of the deal, Altice USA will receive total gross cash proceeds of $2.3 billion from the sale and related financing activity (about $1.1 billion after tax and initial debt repayment). Altice USA also will retain a 50.01% interest in Lightpath and maintain control of the company.

Altice USA said that as a strategic investor, MSIP will help support ongoing and new growth initiatives at Lightpath, improve the unit’s operational performance and provide strategic and financial flexibility.

“Lightpath is an expansive and best-in-class enterprise fiber communications business with tremendous long-term potential,” Altice USA CEO Dexter Goei said in a press release. “Bringing in a strategic investor allows Altice USA to focus on operating our core businesses while infusing the capital needed to grow Lightpath and maximize shareholder value. We are pleased to partner with MSIP, a leading investor in telecommunications infrastructure with deep operational and management expertise, to propel Lightpath and unlock its future potential.”

Goldman Sachs & Co. LLC acted as financial advisor to Altice USA. Shearman & Sterling LLP, Mayer Brown LLP and Ropes & Gray LLP served as legal advisors to Altice USA. Evercore acted as financial advisor and Simpson Thacher & Bartlett LLP served as legal advisor to Morgan Stanley Infrastructure Partners.

Even as BroadbandNow was releasing a National Broadband Map comparing speeds, the Fiber Broadband Association said it is introducing a Broadband Experience Index which it argues is better. 

The fiber association said its new index gives consumers "a more comprehensive and reliable methodology for comparing broadband services in real-world applications rather than only measuring broadband based on speeds,"  one in which fiber to the home comes out on top.

The index includes data on reliability, bandwidth, and latency in addition to downstream and upstream speeds. To come up with those factors for its metric, the association says it polled over 2,000 broadband customers who get broadband from a variety of sources, including fiber optic and coaxial cable, wireless, satellite, and DSL. 

Association president Lisa Youngers said the index determined that fiber provided "best in class" service in terms of both reliability and speed. 

The association included the new index in replay comments to the FCC this week on its proposed funding of rural broadband buildouts to make the case for favoring fiber for its better performance and greater consumer satisfaction. 

The Nationwide hunger for bigger and better broadband is leading to a major consolidation of fiber-optic networks across the country, as private-equity players, telcos and cable operators scramble to feed the need for speed.

For cable operators, the decision to build or buy fiber capacity is a tricky one, weighing the cost and time associated with digging trenches and laying fiber lines against purchasing an existing network and integrating it into their own operations. But as customer demand for higher and higher speeds grows and the number of available network operators starts to dwindle, many companies are taking the second option, buying up regional carriers to beef up their offerings and driving take-out multiples skyward.

Over the past seven years, the fiber business has changed dramatically from an industry dotted with dozens of smaller players with limited access to capital to one dominated by a core of about nine well-financed, highly motivated companies looking to increase their holdings as quickly and as robustly as they can.

Driving most of that consolidation is the perception that fiber — those sheathed glass filaments that deliver blindingly fast internet speeds via pulses of light — is more in demand than ever.

Gigabit Rollouts, Commercial Pushes

Over the past five years, broadband has overtaken video as the top revenue producer at nearly every U.S. cable company. And just as quickly, broadband speeds have quadrupled in the past five years from an average of 25 Megabits per second to more than 100 Mbps. Today, many operators are increasingly making available 1 Gigabit-per-second services, which require fiber to go deeper into the network. Add to the mix the evolving commercial-services business — where fiber connections for enterprise clients are the rule — and the advent of 5G wireless services, which use small cells that need to be connected via fiber lines, and demand is expected to balloon.

Crown Castle International, a communications services provider with 70,000 route miles of fiber, 65,000 small cells and more than 40,000 towers across the country, also believes that 5G will present a big opportunity for fiber companies.

“[W]e believe the network infrastructure needed to support 5G will dramatically increase the demand for our tower and fiber assets over time,” Crown Castle CEO Jay Brown said on the company’s April 18 first-quarter earnings conference call. “It is truly an exciting time in our industry. And in many ways, it reminds me of several other points in time over the past two decades as we are currently benefiting from the significant ongoing investment in today’s networks while also looking forward with great anticipation of what lies ahead.

“How exactly the investment in 5G ultimately transforms the way we live and work is yet to be determined,” Brown continued. “But if past is prologue, I suspect most are underestimating the magnitude of the change and the corresponding opportunity for us.”

According to Deloitte, there will be a need for $130 billion to $150 billion in fiber infrastructure investment by 2022 to support broadband competition, rural coverage and wireless densification.

Much of the traffic currently traveling over broadband lines is video and, per Deloitte, streaming video and augmented and virtual reality will continue to put a strain on existing infrastructure. The researcher estimated traffic would rise at an estimated compound annual growth rate (CAGR) of 181% through 2020. Add to that the expected massive increase in devices in the home — research house Gartner has estimated that affluent homes could have as many as 500 connected devices by 2022 — and WiFi and cellular networks could be pressured nearly to the breaking point.

“Without sufficient fiber networks, innovation in new use cases, new applications and new devices will likely be stifled,” Deloitte wrote. “Deep fiber deployment is the crux of the new capacity required, including fiber to the home/business and fiber backhaul to support wireless densification.”

Rising Demand, Without 5G

CoBank, which provides loans, leases and other financial services to agribusiness and rural infrastructure in all 50 states, predicts that new network architectures and applications will increase data traffic by 65% over the next three years. And that doesn’t even account for 5G, the ultra-high-speed wireless data technology that is expected to usher in the era of the Internet of Things (IoT) and autonomous vehicles, which requires extensive fiber connections between its network of transmitters.

All of this has led to a near feeding frenzy over fiber by large infrastructure funds, private-equity investors and strategic buyers. Since 2014, private-equity players such as Crown Castle, Zayo and EQT Infrastructure have bought up small fiber providers, connecting their networks to offer regional service.

Seeing an untapped opportunity, other financial players were attracted to the business:

● Macquarie Infrastructure Partners, in conjunction with Uniti Group, announced plans to acquire Bluebird Network;
● EQT took a majority stake in Spirit Communications, connecting it with an earlier acquisition, Lumos Networks, for a fiber network between Pittsburgh and Atlanta;
● And Paris-based Antin Infrastructure Partners bought FirstLight Fiber, a Northeast provider of fiber-optic data, internet, data center and cloud services to enterprise and carrier customers.

Now the consolidators are consolidating. Earlier this month Zayo Group, one of the largest players in the fiber industry with more than 130,000 U.S. route miles of fiber, agreed to be purchased by Stockholm, Sweden-based EQT Infrastructure and Digital Colony for $14.3 billion in cash.

CoBank expects the frenzy to slow down a bit as national fiber network firms have been swallowed up by larger entities. But that could open the door further for smaller deals between regional local-exchange carriers (RLECs) and cable operators, CoBank lead communications economist Jeff Johnston said in an interview.

“As far as any meaningful deals are concerned, the reality is there are just not a lot of assets out there left to be acquired by infrastructure funds or the likes of [RCN parent] TPG that look at rolling up a lot of these regional cable operators,” Johnston said. “It’s our opinion where we could potentially see as a next step in this whole consolidation wave is the much smaller regional RLECs and cable companies that have built out fiber footprints can become attractive take-out candidates for some of these investors, as they seem to have an insatiable demand for fiber right now.”

Already, small cable operators have had their eyes on regional fiber companies. In April, Cable One agreed to purchase Fidelity Communications for $529.5 million in cash, and in November it purchased Clearwave Communications for $358.8 million. Both companies have differences — Fidelity provides residential video and broadband service to more than 100,000 homes and 20,000 businesses, while Clearwave offers regional fiber service in Southern Illinois — and similarities, as both have extensive fiber networks. Fidelity derives more than half of its revenue from broadband and has a 1,600 route-mile fiber network.

Cable One chairman and CEO Julia Laulis said the Missouri-based Fidelity fills in gaps in the cable operator’s coverage. “Fidelity, if you think about a doughnut, there’s sort of a hole in the middle of us, they’re in Missouri, Illinois, they’re in Texas, Louisiana and Oklahoma,” Laulis said on the cable firm’s first-quarter analyst call. “So they are just like in all-around Cable One markets.”

Clearwave, which has 2,400 route miles of dense fiber, gives Cable One additional capacity and the ability to offer more robust business services. In Cable One’s Q4 earnings call, Laulis touted Clearwave’s fiber network, its proximity to Cable One markets and its lineup of enterprise customers.“There’s a lot to be excited about with Clearwave,” she said.

Said Johnston: “I definitely think that we’ll continue to see the small regional deals that we have seen so far, whether it’s just a diversification play, scale or just owning an asset that is appreciating in value. Those or some of the drivers that are behind what we are seeing now.”

Cable One isn’t the only cable operator with its sights on fiber:

● In October, midsized operator Atlantic Broadband bought South Florida fiber company FiberLight for an undisclosed sum, adding 350 route miles of fiber to its network in that state.
● In January, Vast Broadband bought NTS Communications, adding 2,700 route miles to its fiber network in Texas and Louisiana.
● And in March, Schurz Communications purchased Vermont municipal fiber carrier Burlington Telecom for $30.8 million.

“It is probably safe to assume we’ll see more,” senior Kagan research analyst Tony Lenoir said.

One of those buyers could be Atlantic Broadband. “We do both [build and buy]. I think we will be more aggressive on buying now,” ABB vice president of business sales Gerardo Garza said in an interview, adding that with a purchase, the operator gets the added benefit of an existing revenue stream and an embedded customer base.

Already, he said the FiberLight purchase is paying off in additional customers and capabilities.

“Now we are a player in the entire South Florida market, which is one of the biggest markets in the U.S.,” Garza said, adding that the deal put ABB closer to several thousand more customers and opened the door to serve larger enterprises.

Future deals are likely to carry higher price tags. According to Johnston, fiber valuations for private deals have increased by more than 30% over the past 18 months, with most deals priced at cash-flow multiples in the high teens and low 20s.

Cable Ops Buying Already

For cable operators, fiber builds have been an integral part of their business for years. Comcast, Charter, Altice USA, Cox Communications and even midsized cable companies like Mediacom Communications have pumped huge amounts of capital to fiber their networks.

Cox made a strategic investment in Unite Private Networks (UPN), a Kansas City, Missouri-based fiber network and services provider to hospitals, schools, governments, carriers, data centers and enterprise business customers, in 2016. Cox president Pat Esser identified fiber infrastructure as an attractive long-term investment. While Cox hasn’t made a big fiber buy since — it did buy Level 3’s metro fiber assets in Albuquerque, New Mexico last year — it still considers infrastructure a good business.

“We haven’t purchased additional fiber companies since our strategic investment in UPN, but we think there is great value in infrastructure companies,” Cox spokesman Todd Smith said. “They also create additional opportunities for us to serve commercial customers.” Smith said Cox has a significant stake in another infrastructure company, InSite Wireless, and has teamed with them to deploy some distributed antenna systems for Cox Business customers.

One example: the Las Vegas Convention Center, which contains the equivalent of 14 cell towers to complement its 2,100 WiFi access points.

Altice USA also is speculated to be considering selling off its business fiber unit Lightpath, which caters mainly to large enterprise customers. Lightpath generates about $200 million in cash flow per year, according to some analysts reports, and could attract a price of about $3 billion.

Building out a fiber network is still a viable choice for many. Altice USA is expected to cross the finish line in its five-year fiber-to-the-home project for its New York metro footprint in the next few years and has already deployed the service in select areas. For smaller operators, though, cost and time to market can be prohibitive.

Altice CEO Dexter Goei said recently the FTTH rollout is underway, with 2 million homes designed, 1 million passed and 600,000 ready for service by year-end, with plans to ramp up.

According to Deloitte, building fiber can cost between $600 and $1,800 per home passed in urban and suburban areas, not including customer premises equipment.

That’s a considerable departure from the estimated $300-to-$500-per-home-passed average buildout cost for coax and hybrid fiber coaxial networks. But that may not be the biggest obstacle. Building networks takes time. And time, in the world of competitive broadband and soon-to-be-coming 5G services, is of the essence.

Atlantic Broadband said it has completed the purchase of FiberLight LLC’s South Florida fiber network, a deal that will significantly increase the cable operator’s high-speed fiber footprint in the state.

Atlantic Broadband first announced the FiberLight deal in January. The deal, adds 350 fiber route miles to the cable company’s existing South Florida network, roughly doubling its footprint in that part of the state while increasing its ability to serve data center customers in that are by about 30%.

Related: A Small Op That Pulled Off a Big Task 

“As the region grows and more businesses enter, we are excited that we can now offer this expanded fiber network,” Atlantic Broadband CEO Rich Shea said in a statement. “Through this strategic partnership, we are giving businesses the ability to innovate, grow and contribute to the region’s economic growth - a commitment that we’ve made to South Florida and all the geographies we operate in.”

The latest deal comes on the heels of a series of transactions over the past few years, including the purchase of MetroCast Cable Systems in January, which enabled Atlantic Broadband to offer a diverse footprint extending up the East Coast from Florida to Maine. 

Fiber-based ISP GigaMonster, a specialist in providing gigabit-speed broadband services to the MDU market, announced that it has secured a $45 million investment from Post Road Group.

The Atlanta-based company also announced a merger with Portland, Ore. MDU specialist Fibersphere Communications.

Related: GigaMonster Takes a Bite Out of ISPs

“The $45 million in new capital provides us with the fuel to expand even faster through both future acquisitions and organic growth,” said Bill Dodd, chairman and CEO of GigaMonster, in a statement. “It also allows us to further enhance our standard-setting product offerings as the industry undergoes rapid change. The combination of GigaMonster and Fibersphere significantly increases our West Coast presence and was in perfect alignment with our vision to be the absolute best multifamily internet solution in the market.”

Launching in 2015, GigaMonster has acquired a significant market share in the multi-unit dwelling market, connecting building to its metro fiber rings—a mix of its own dark fiber and fiber acquired from other companies. It has now reached more than 25 markets nationwide with its Scary Fast 1-gig service.

The company did not release an financial specifics on the acquisition of fiber-to-the-home specialist Fibersphere, which was founded in 2002 and is also focused on the MDU market.

“Big cable consistently ranks at the bottom of the worst customer service industry in the country," said Craig Weaver, GigaMonster's customer experience director, in an interview with Multichannel News back in 2016. "As a result, being the best provider as compared to cable is not a worthy goal. We strive to deliver an experience on par with the likes of Amazon and Apple, where customers are the center of our universe and not a necessary evil as they are viewed by our competitors. We are clearly not your parents' Internet service, something we can all be grateful for."

Cable One reported an 11.4% year over year uptick in second quarter revenue to $268.4 million, driven by its surging residential data and business services operations.

Residential high-speed internet revenue increased by 18.3% to $122.4 million, even with the user base only growing by 1.2% to 592,234 customers. Julie Laulis, CEO of the Phoenix, Ariz.-based operator, attributed the revenue growth to customers responding to price cuts on higher-speed tiers.

For example, with 200 Mbps tier priced at $65 a month (around 32 cents per Mbps), a number of Cable One customers saw the value in jumping from the 100 Mbps tier, which is priced at $55 (55 cents per meg).

Related: Cable One Prepping 1-Gig Rollout in NewWave Systems

“Customers are making a call on value,” Laulis told investment analysts during Thursday’s earnings call. “When we reduce the prices on faster tiers, ARPU goes cup because the selling goes up.”

Revenue from business services, meanwhile, increased by 18.4% to $38.4 million, with the customer base increasing by 8.3% year over year. With the mid-sized cable company offering products like the 2 Gbps Piranha Fiber, Laulis declared Cable One a “disrupter” in the business services market.

Cable One actually saw a 3.1% revenue increase in residential video to $87.4 million, with its video base shrinking by 11.4% year over year to 323,514.

Speaking to Cable One’s value as an acquisition target, MoffettNathanson analyst Craig Moffett noted that the company has “already lost so many of its video subscribers that, for those worried about video cord-cutting, it has been de-risked

“And the fact that they don’t make any money on video de-risks them still further,” he added.

The company reported a 57.2% jump in net income to $43.8 million.

Notably, Cable One’s financials are skewed a bit by the still-digesting 2017 New Wave acquisition. Only two months of New Wave data are included in the comparable 2017 second quarter.

Related: Cable One Touts Gigabit Deployment Milestone

The skew isn’t massive—with New Wave factored out, for example, net income increased by 57.1% to $40.5 million.

Thursday’s earnings call marked the last public appearance for retiring Cable One CEO Kevin Coyle. Former WOW chief executive Stephen Cochran will officially take over for Coyle on Aug. 13.