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TPG Explores Astound Sale: Report

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Private equity firm TPG has hired investment bankers Morgan Stanley and JP Morgan Chase to shop its overbuilder unit Astound, which includes its interests in RCN, Grande Communications and Wave Broadband, according to reports.

Reuters said Monday night that TPG hired the bankers and was looking at a valuation of the overbuilder that would top $8 billion, including debt.

TPG pieced together Astound through a pair of acquisitions over the past four years. It purchased RCN and Grande Communications in 2016 for $2.25 billion and Wave in 2018 for $2.36 billion.  All together, the properties offer pay TV, broadband and telephone service in eight states to about 1 million customers.

TPG declined comment.

The news comes as AT&T is attempting to sell a majority interest in its DirecTV satellite unit and other traditional operators are making moves to expand their broadband reach into more rural areas. 

Broadband growth has been especially robust in the COVID-19 era, and smaller operators may want to capitalize on that growth. But finding a buyer with the required financial muscle to wrestle a deal of this size could be tricky. Because many of its properties are overbuilds of incumbent providers, that would mean operators that have systems nearby like Charter, Comcast and others, would be prohibited by federal regulations from doing a deal. And while Cable One has purchased smaller operators in the past like NewWave Communications, Fidelity Communications, Clearwave  and ValueNet, this deal could be a little price for its tastes. 

Still, broadband growth has been strong and has shown little signs of slowing down. According to Leichtman Research Group, cable operators added about 1.4 million broadband customers in Q2, up from 530,000 additions in Q2 2019.