Altice USA said it has agreed to purchase Morris Broadband, a high-speed data, video and voice services provider based in North Carolina, in a deal that implies a $310 million enterprise value. The deal is expected to close in the second quarter of this year.
Morris Broadband has about 36,500 residential and business customers in western North Carolina locations like Hendersonville, Franklin, Sylva, Nebo and West Jefferson, and passes about 89,000 homes with a service penetration rate of about 35%. Altice USA already has a presence in the state with its Suddenlink Communications business. The company said after the deal is closed North Carolina will be its sixth largest state of operations.
According to Altice USA, Morris Broadband reported EBITDA of about $13 million in the fourth quarter, representing a purchase multiple of about 24 times its last quarter annualized cash flow, before synergies. Altice said the multiple shrinks to about 7.4 times cash flow once those synergies are considered.
“Morris is a perfect fit for Altice as we are accelerating our network expansion with increased investment in edge outs, upgrades of underdeveloped systems and FTTH deployment to drive customer, revenue and cash flow growth,” Alice USA CEO Dexter Goei said in a press release. “We look forward to providing our high-quality broadband, video, mobile, and news offerings to thousands of additional homes and businesses, with a great opportunity to further penetrate Morris’ existing homes passed and by expanding more into adjacent areas.”
This is the second small cable deal Altice USA has made since it purchased Service Electric Cable TV of New Jersey in July for $150 million. The company had made a joint bid with Rogers Communications for Atlantic Broadband parent Cogeco, whereby Altice would have received the U.S. cable operator for about $3.9 billion, but that deal was rejected. Since then, Altice said it would focus on smaller M&A deals to fill out its footprint.
“It has been a pleasure for the Morris Family to serve the residents of western North Carolina for the last 12 years,” said Morris Broadband chairman William “Billy” Morris III in a press release. “We are confident that Altice will continue to provide superior services to the region.”
As part of Altice USA, Morris Broadband will benefit from enhanced scale, operating efficiencies and further investment support that are at the core of the Altice business model and strategy, including accelerated new homes build. Altice USA’s commitment to innovation, best-in-class services, long-term network investments and customer service creates significant benefits and long-term value for customers, employees and shareholders.
Altice USA intends to finance the transaction with available liquidity. Moorgate Securities acted as financial advisor to Morris Broadband in connection with this transaction.
