Monday, October 7, 2013

Time Warner Cable acquires DukeNet for $600M to bolster Southeast fiber footprint

Time Warner Cable (NYSE: TWC) is increasing its Southeastern fiber network and business services footprint by reaching a deal to acquire Charlotte, N.C.-based competitive provider DukeNet from Alinda Capital and Duke Energy for $600 million in cash.
Alinda Capital and Duke Energy both own a 50 percent stake in DukeNet.

By acquiring DukeNet, the cable MSO gets an 8,700-mile regional fiber-based network that currently provides services to a mix of business and wholesale customers, particularly wireless operators, in North Carolina and South Carolina, as well as five other states in the Southeast.

While TWC did not provide many details besides the purchase price, the deal is transformational for the cable MSO.

Having a deeper fiber footprint in the Carolinas and other Southeast states will enable it to pursue larger business service deals and wireless backhaul opportunities. In September, DukeNet announced that it reached over 3,500 cell sites as part of its growing fiber to the tower (FTTT) program that provides services to a number of the top wireless operators.

TWC will also enhance its business Ethernet reach. Since 2007, the cable MSO has consistently held a spot on Vertical System Group's U.S. Ethernet leaderboard, which tracks port shares sold. During the second quarter, TWC reported that business services, including Ethernet, rose 21.8 percent to $565 million.
After clearing customary closing conditions, including receipt of regulatory approvals, TWC expects to complete the purchase in Q1 2014. 

This deal also comes at a time when cable MSOs are getting more regulatory freedom to purchase CLECs as a way to grow their business and wholesale service programs.

Cable MSOs won a major victory to pursue deals like DukeNet last September when the FCC granted them forbearance from Section 652(b) of the Communications Act.

TWC is not alone in expanding business and wholesale service and network footprint through acquisitions. Fellow cable MSO Cox Communications purchased Tulsa, Okla.-based CLEC EasyTEL in September.

1 comment:

  1. It will be interesting to see how the expansion and consolidation impacts the telecommunication/communication, networking and content business models.

    ReplyDelete

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