Acquisition Alert: ABB Buys MetroCast, Cincinnati Bell Acquires Hawaiian Telecom, OnX

The service provider market continued to shrink today, with announcements that Cogeco Communications' subsidiary Atlantic Broadband's will acquire Harron Communications' MetroCast for $1.4 billion, while Cincinnati Bell will purchase Hawaiian Telecom for $650 million and buy OnX Enterprise Solutions for about $201 million.

With its acquisition of MetroCast Cablevision , Atlantic Broadband (ABB) will gain a larger footprint, reaching residential and enterprise customers across the eastern United States, said Richard Shea, president and CEO of ABB, during a webinar held this morning to discuss the deal.

"MetroCast is the incumbent cable provider in parts of five states. The system meshes well with our existing footprint, extending our east coast base from Maine to Florida in protected markets with extremely solid demographics and competitive environments," he said. "They have begun the transition to DOCSIS 3.1 and they are interconnected over a fiber backbone so we are well-positioned for a smooth transition to 1-gig Internet in the relatively near future."

Today, 95% of homes MetroCast passes are upgraded (via FTTH or 860 MHz). The provider operates more than 2,528 route-miles of fiber optic cable and 7,278 route miles of coaxial cable, as well as a fiber backbone network that interconnects primary head-ends and hubs, said Shea.

By integrating operations and leveraging ultra-broadband capabilities, ABB plans to increase voice, video and bundle sales to residential and enterprise customers, and add a ten-person enterprise sales team, he said.

Because ABB acquired MetroCast's Connecticut operations in 2015, the companies are accustomed to working together and quickly managed to build off that acquisition, a success it expects to duplicate with the larger deal, said Shea.

"This experience has uniquely positioned us for success with the rest of the MetroCast footprint," he said. "It is not very often you get the opportunity for a real life practice run."

In the case of Cincinnati Bell Inc. (NYSE: CBB), it will operate Hawaiian Telecom as a separate company, retaining its name, the company said in a release.

Like ABB, Cincinnati Bell expects this deal will help the service provider expand its geographic reach. It also plans to accelerate Hawaiian Telecom's fiber build and continue migrating customers to these more advanced fiber offerings from older legacy systems that do not support new digital services and bundles. Cincinnati Bell also wants to grow its enterprise networking, unified communications and data center offerings, hoping to become a top cloud integrator for voice and data, the company said.

"The implementation of our refined strategy, coupled with today's combinations, will help build two distinct businesses with the appropriate scale, structure and leadership to deliver superior operating results, while providing strategic optionality from a diversified but complementary portfolio of assets," said Leigh Fox, president and CEO of Cincinnati Bell, in a statement. "Together, Hawaiian Telcom and OnX bring Cincinnati Bell greater financial and operational scale and established market positions in new geographies."

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— Alison Diana, Editor, UBB2020. Follow us on Twitter @UBB2020 or @alisoncdiana.