After finishing as a bridesmaid in several cable systems auctions over the past three years, Orange Broadband Holding Co. LLC, the Charlotte, N.C.-based cable investment company, is getting closer to the altar.
Orange, started by cable veteran William Schuler in 2003, agreed to purchase 43,700 subscribers in northern and southeastern Nevada, Colorado, New Mexico and Utah last week from Charter Communications Inc. for an undisclosed sum. The deal is expected to close in the third quarter.
Although neither Schuler nor Charter would disclose the price of the systems, UBS Warburg cable debt and equity analyst Aryeh Bourkoff estimated it at $1,700 to $1,900 per subscriber, or between $74 million and $83 million. Other executives in the cable investment banking community have estimated the systems sold for between $1,500 and $1,600 per subscriber, or around $70 million.
Schuler started Orange Broadband with M/C Venture Partners, Columbia Capital and Oak Investment Partners in 2003, about two years after his previous undertaking — Carolina Broadband, which had planned to build out networks in several communities in the Carolinas — folded after failing to secure debt financing.
Orange Broadband has been active in the deal market since its inception, but has finished second in several recent auctions, including Charter's sale of 240,000 subscribers in West Virginia, Virginia and Ohio, which was won by Jerry Kent's Cebridge Connections for $770 million.
“Always the bridesmaid,” Schuler said. Despite the runner-up status, he wasn't frustrated: “You control your own destiny. We wanted to wait for the right thing and we did that.”
Schuler said that the Charter systems are in good shape — most have digital and high-speed data service available — and that he is looking at introducing voice services. He added that while some of the properties are located in fairly rural areas, others are in high-growth markets.
Schuler pointed to St. George, Utah, which was named the second-fastest growing metropolitan area in the country last September by the U.S. Census Bureau.
This is the third sale of secondary market systems by Charter in the past four weeks.
Besides the Cebridge deal, Charter also announced in late February that it has agreed to sell 76,000 customers in Kentucky and Illinois to New Wave Holdings for about $126 million.
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