Apartment Providers Consolidate

Jefferies & Co. telecom analyst David Brenner slapped a “buy” rating on Multiband Corp. last week, after the provider of video, voice and high-speed Internet service to multiple-dwelling units landed a deal to acquire rights of entry in about 2,300 homes in Los Angeles. Brenner wrote in his report that the deal, coupled with several others by such operators, hint at further consolidation in the space.

Brenner pointed to DirecTV Group Inc.’s joint venture, DirecPath, buying a small operator in Atlanta; several BellSouth Corp. deals between DirecTV master-system operators in various territories and Verizon Communications Inc. (via Verizon Enhanced Communities) progressing in multiple-dwelling unit initiatives, too.

Brenner said those deals appear to validate Multiband’s strategy and could make the Minneapolis-based company an attractive buyout target. He is also encouraged by advances in technology which make it easier for companies like Multiband to compete with cable operators in MDUs such as apartment complexes.

“The MDU space is certainly getting hotter as technology and partnerships make taking share of MDU subscribers from incumbent cable operators more likely,” Brenner wrote. “We continue to like Multiband’s position in the space, due to its high number of rights-of-entry and its ability to provide voice and data communications on its own, and therefore retain the profitability of those services.”