Cable One continued to expand its footprint, agreeing to take a minority stake in Mega Broadband Investments, parent of Vyve Broadband, for $547.1 million. The deal adds about 630,000 homes in 16 states to its service territory.
The Phoenix-based operator will get a 45% stake in MBI. The deal, expected to close in the fourth quarter, includes an option for Cable One to purchase the remaining interest in MBI, beginning in 2023.
The agreement will add broadband and pay TV customers in Alabama, Arkansas, California, Colorado, Georgia, Idaho, Kansas, Louisiana, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Washington, and Wyoming. Vyve does not release customer figures.
Cable One has been an aggressive buyer of broadband assets. The MBI deal is the fifth purchase it has made of a broadband company since 2017, when it bought New Wave Communications from Chicago-based private equity firm GTCR, for $735 million.
GTCR formed Mega Broadband in 2017 and later rolled up several small cable and broadband service providers, including Vyve, Northland Communications and Eagle Communications. Those operations were combined under the Vyve Broadband name in 2019.
“This strategic investment in MBI reflects a continuation of our commitment to provide rural America with reliable high-speed internet service,” Cable One president and CEO Julie Laulis said in a press release. “MBI has developed an excellent network in geographies complementary to our existing footprint and we are excited to share in its future growth. MBI’s operating model and local-first focus mirrors our own and we are pleased to partner with MBI.”
MBI has upgraded systems and a high-capacity plant with more than 15,800 network plant miles, including more than 4,100 fiber route miles, capable of delivering Gigabit speeds across its footprint.
Vyve Broadband has focused most of its efforts on growing broadband over the past few years. That should fit in well with Cable One, which has been a pioneer in offering broadband-only service, and now has more than twice as many high-speed internet customers as it does video subscribers. In the second quarter, Cable One said it had 758,000 residential broadband subscribers, 276,000 residential video customers and 98,000 residential voice subs.
With 630,000 homes passed, the MBI deal will push Cable One’s total footprint, currently at 2.3 million homes passed, to nearly 3 million residences.
“This transaction represents the next step of MBI’s ongoing transformation, and I am excited to have the backing of Cable One alongside GTCR,” MBI CEO Phil Spencer said in a press release. “Over the last few years, our team has invested significant capital to upgrade our networks, roll out Gigabit internet service, and enhance business services across our footprint. Under our new partnership, we plan to continue making significant investments in our network, our communities and our employees.”
Kirkland & Ellis LLP acted as legal adviser and Credit Suisse acted as financial adviser to MBI. Locke Lord LLP acted as legal adviser and Truist Securities, Inc. as financial adviser to Cable One.
