Cable One is purchasing a 45% minority stake in Mega Broadband, parent company of Vyve Broadband, for approximately $574.1 million in cash.
In addition to the minority stake it will acquire, Cable One will have the right to purchase the remaining interests in Mega Broadband at a predetermined multiple of earnings beginning in 2023.
Mega Broadband (MBI) was formed through a series of acquisitions including Vyve Broadband, Northland Communications and the broadband assets of Eagle Communications. The company provides high-speed data, television and voice services to residential and business customers in rural markets across Alabama, Arkansas, California, Colorado, Georgia, Idaho, Kansas, Louisiana, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Washington, and Wyoming. Vyve Broadband’s network passes approximately 630,000 homes.
“This strategic investment in MBI reflects a continuation of our commitment to provide rural America with reliable high-speed internet service,” said Julie Laulis, President and CEO of Cable One, in a statement. “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.”
“This transaction represents the next step of MBI’s ongoing transformation, and I am excited to have the backing of Cable One alongside GTCR,” said Phil Spencer, CEO of MBI, in a statement. “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.”
For Cable One, the MBI deal is focused on expanding its broadband footprint, which reflects the company’s shift in priorities from video to high-speed internet and business services. Laulis said during the company’s most recent earnings call that video losses accelerated slightly in the second quarter, which reflects “a trend that we recognized and adapted to many years ago. Our strategic shift to an HSD and business services-centric model has enabled a steady transition away from the video product and is reflected in our relatively low exposure today,” according to a Seeking Alpha transcript.