Cable Maintains Upper Hand in Broadband Race

Led by Charter and Comcast, cable MSOs continue to rack up broadband subscribers while pursuing targeted M&A to enhance network footprint and penetration.

  • cable MSOs

 In the broadband race, cable operators continue to have a clear lead over telcos, offering up to 1 Gbps and above speeds over their existing hybrid fiber coax (HFC) networks.  

The top cable companies added about 4.82 million subscribers in 2020 – compared with about 3.145 million net adds in 2019 – and the most in any year since 2006.

According to Leicthman Research Group (LRG), cable had a 69 percent market share, which was far wider than the 31 percent for telcos at the end of 2020.

Cable’s lead is not just an urban and suburban phenomenon.

Pivot Group’s 6th Annual Rural Video and Broadband Industry Study found that cable broadband penetration leads all access technologies in rural America at 39 percent.

Take a look at the table below to get a feel of how the largest cable operators performed in broadband during the fourth quarter. 

Cable Operator  Total Subs Subs added Broadband Revenues
Comcast 30.1M 538K $5.4B
Charter 29M 216K $4.86B
Cox  5.4M 50K not reported
Altice USA  4.4M -4000 $942M
Mediacom 1.4M 13K $250M
Cable One 857K -8000 $176M
WOW!  813K 4K $157M
Atlantic Broadband  504K 12K not reported

Comcast, Charter Maintain Lead

Leading the pack in the broadband race for cable were Charter and Comcast.

Charter’s 2.215 million net broadband additions in 2020 were more than any company added in a year since 2006. Subscriber adds for the fourth quarter were lower than those in the fourth quarter of 2019, due to what the cable MSO said was lower sales activity caused by adding 1.9 million residential Internet customers in the prior three quarters as well as lower market churn, resulting in fewer selling opportunities in the fourth quarter.

Thomas Rutledge, CEO of Charter, told investors during the company’s fourth-quarter earnings call that it has plenty of runway to expand broadband growth in 2021.

“We believe our long-term broadband penetration and market position has actually been enhanced,” he said.

Likewise, Comcast added 538,000 net new broadband customers and delivered adjusted EBITDA growth of more than 12 percent. For the year, Comcast added 2 million new high-speed internet customer net customers.

Brian Roberts, CEO and chairman of Comcast, told investors during the telco’s fourth-quarter earnings call that he sees room to grab more subscribers.

“Since we have only penetrated 50 percent of our footprint, there remains plenty of opportunity for future growth,” he said. 

Not far behind Charter and Comcast is Cox. Though the cable MSO is now private, it still added more than 200,000 subscribers in the year to end with a total of 5.38 million subscribers.

Cable M&A Picks Up

In the fourth quarter, targeted mergers and acquisitions were a key factor for Tier-2 cable operators.

One of the most ambitious moves came from Altice USA. In September, the cable MSO made a failed $3.6 billion bid for Atlantic Broadband – part of a larger $7.8 billion joint acquisition with Roger Communications for Canadian telecom conglomerate Cogeco. Later, Cogeco’s controlling shareholder rejected another $8.4 billion bid ($3.9 billion for Atlantic Broadband).

However, Altice USA was successful in acquiring Morris Broadband. The Morris acquisition expanded Altice USA’s footprint in North Carolina with an additional 35,500 customers. It already has a presence there with its Suddenlink business. Following this acquisition, North Carolina will represent the sixth largest state for Altice USA out of the 21 states where it operates in terms of number of residential customers.

“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,” said Dexter Goei, CEO of Altice USA, in a release announcing the acquisition.

Cable One was no less active on the M&A front. The cable MSO, which offers broadband connectivity through its Sparklight brand to 900,000 residential and business customers in more than 21 states, struck a deal to acquire the remaining 85 percent of Hargray Communications. Cable One was already a minority investor in Hargray, having secured a 15 percent stake in the company last October, which allowed Hargray to expand into Alabama. 

Julie Laulis, president and CEO of Cable One, said the acquisition of Hargray will enable the cable MSO to create a foundation to extend its network to accommodate more residential and business subscribers.

“This transaction will also serve as a potential platform for future organic and inorganic growth in the region as we look to continue to expand our footprint,” she said.

Cable One’s acquisition of Hargray was a part of a series of deals it has made over the past year to enhance its fiber and cable holdings. In 2020, Cable One acquired Valu-Net, an all-fiber ISP, for $38.9 million in cash. The company also acquired a 45 percent ownership of Mega Broadband, which owns Vyve Broadband, last September. And it has invested in two fixed wireless ISPs, Wisper Internet and NextLink.

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