DukeNet has found a buyer and it’s not one that was high on any of my lists. Time Warner Cable today announced a definitive agreement to purchase the North Carolina-based regional and metro fiber operator from its energy utility parent and Alinda Capital, which bought in a few years back.
DukeNet operates an extensive network centered on the Carolinas, but which has been lately branching out into neighboring territory to the west and south. Of all the competitive footprints out there, DukeNet has had the heaviest focus on wireless backhaul with more than 3000 towers on-net already.
For TW Cable, this will give them a much deeper fiber base in their cable markets in the region, enabling a more powerful move into the enterprise space. But it will also give them a lot of fiber outside their cable franchise turf, all of it by definition in other cable franchises’ turf which is a can of worms that cable companies have seemed averse to opening.
That’s the sort of thing that has kept me skeptical when it comes to M&A moves by cable on the metro fiber turf despite the FCC’s relaxation of the rules last year. Cox’s purchase of EasyTel out in Tulsa last month was a bit of an ideal case, as it overlapped almost entirely with an existing Cox market.
But TW just bought its way into the wider competitive metro and regional fiber market in a substantial way, and I’m now wondering if its MSO brothers have finally come ’round and broken free of the franchise box or not. If they have, then things are going to get hot quickly I think.
The purchase price was $600M, but no additional details were available.
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Categories: Cable · Mergers and Acquisitions · Metro fiber
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With Cable expanding in traditional enterprise business the value of TW Telecom has to have just inflated. They many markets on TW Cable Fiber networks ( also Comcast) on long term fiber agreements. Also Level 3 legcy Telcove asset is primrily in same situation with long term fiber agreements. It woud mke sense for TW cable to look to fold TW back into the fold
I believe that this move (increasing cable focus on enterprise revenues) was inevitable as the growth in other revenue sources plateaus. So far it has been based largely on their existing infrastructure. However to move up the food chain from SME to larger enterprise then Comcast, for example, probably needs to buy the metro fiber depth and technologies of the well established CLEC’s for an accelerated roll-out. As T and VZ focus more and more on wireless there is a huge business waiting to be won.
multiple?
10.5X or 9.6X 2014
this is just silly. TWC has more than 10,000 cell towers, thousands of enterprise customer and owns the education and healthcare vertical – this move just adds more assets.
Whatever. If they actually decide to push their brand in another’s dirt, we can be impressed. If this just enables a few of their larger accounts, then so what?
It’s interesting to see the big cable MSO’s finally flexing their financial muscles. This may bode well for TW Telecom and facility-based CLEC’s of any size that overlap an MSO’s footprint. I’d expect to see more CLEC purchases in the news soon.
Comcast is the largest Cable MSO in the US. Their revenues are bigger than the #2(TW Telecom) and the #3(Cox) combined. As of July of this year, Comcast’s revenue rose 7 percent, to $16.3 billion, from the second quarter of 2012, lifted by the continued growth of the company’s broadband Internet and business products. If these guys at Comcast start buying CLECs, there will be big changes afoot in the US telecom landscape.
You see Comcast as a buyer for TWTC? Anyone think TW cable would jump in before that would happen? Guessing they wouldn’t be lucky enough to still have a ROFR or something like that hanging around. My money says TWTC does more good to TW Cable than Comcast just because they would have more market overlap, plus TWTC still has some long term IRU’s on TWCable fiber. I cant see any other of the MSO’s being a big enough nationwide player to want to get TWTC.
…correction I meant to say that #2 is TW Cable, not TW Telecom.
I think TW Cable was the primary enginer for starting up TWTC and if any MSO buys TWTC it is TW Cable. I see Comcast with a similar desire to spread nationally, if that is thru M&A the money do go big like a Level 3 or a Zayo. I am not sure they would go piece meal with regional carrier and try and cobble it together into National foot print. When Zayp completes this massive network buildout they have ongoing they become the prime target for the big $$ big company investment.
TWCBC has been growing organically at over 25% QTR over QTR for 5 years. That ship is full sail and moving fast. They own the SMB space in all of the markets they serve. Federal contracts coming soon. More regional fiber acquisitions will help them move up market in the Enterprise space. The biggest growth they will see is when they merge with other cable operators who also have tons of metro fiber/coax. BUYING Cox, Charter or Suddenlink would be a major blow to T and VZ in the Enterprise landline space. The problem with the CLECs is that they really don’t have a lot of metro fiber. But, picking up TWTC, L3 or XO would help secure a national backbone and land a bunch of ENT customers. CLECs predominantly lease metro loop lines from Bell, and be dang sure TWCBC would convert those loops to their own fiber in the markets they serve today. Hence, they need to merge with a couple other Cable Cos first to secure the metro assets. Triple punch to the face of Bell. Keep your eyes open. TWCBC is years ahead of any other cable co when it comes to national WAN services.
Agree but TWC does have a national backbone. Also more than 300k fiber route miles. Tw tlecom is a great aqusition but way too expensive. M&As must happen for the MSOs.