Private equity firm TPG is reportedly looking to sell off Astound – its U.S. cable operator group that includes Wave Broadband, RCN and Grande Communications – for more than $8 billion.
According to Reuters, TPG has enlisted JPMorgan and Morgan Stanley to advise on any potential sale of the businesses, which offer video and broadband services across parts of California, Chicago, Massachusetts, New York City, Oregon, Pennsylvania, Texas and Washington.
In 2016, TPG acquired RCN Telecom Services and Grande Communications in separate transactions from ABRY Partners for $1.6 billion and $650 million, respectively. One year later, TPG backed RCN’s $2.365 billion deal to combine with Wave Broadband.
At the time of the RCN and Grande transaction, TPG partner David Trujillo spoke of the growing demand for broadband and streaming content, a statement that’s become especially prescient during the coronavirus pandemic that has forced many Americans to work, attend school and entertain themselves at home.
"The way that content is distributed and consumed has evolved significantly in ways that create an overwhelming demand for affordable, high-speed cable networks. There is an unprecedented amount of diverse, creative content being produced that is extremely bandwidth intensive," said Trujillo in 2016. "Consumers are craving access to that content through various internet-connected devices in the home all at once. This places never-before-seen demands on the underlying infrastructure. High-speed data has become, and will remain, the essential connection for both consumers and businesses.”
Cable operators are continuing to see their video subscriber bases dwindle but strong broadband subscriber growth has helped to offset those losses. According to Leichtman Research Group, the top seven U.S. cable operators lost more than 500,000 pay TV subscribers in the second quarter – and that’s with Charter reporting a rare instance of video subscriber growth. However, Leichtman also found that the top eight U.S. cable operators added nearly 1.4 million broadband subscribers in the same quarter.
“With the continued impact of the coronavirus pandemic, there were more quarterly net broadband additions in 2Q 2020 than in any quarter in eight years,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, in a statement. “In the first half of 2020, there were over 2.4 million net broadband additions. This is the most net adds in the first half of any year since 2008.”