Charter, Mediacom bag millions as Alabama awards $25M for broadband

Mediacom scooped up $13.4 million in grant funding from the state of Alabama, snagging the money as officials awarded funding to help extend broadband to nearly 20,000 locations there. Charter Communications also walked away from the grant round with significant winnings, which will supplement its already substantial fiber expansion plans for the state.

Mediacom’s awards span four counties, with the largest a $4.05 million grant to connect 1,756 locations in northwest Baldwin County and southwest Escambia County. It also bagged a total of $6.4 million for two different projects in Mobile County and $2.91 million for another build in Baldwin County. Mediacom also won grants from the state of Alabama in 2021 and 2020.

Charter likewise won grants across four counties. Its biggest take home was a $2.92 million award to reach 4,412 locations in Shelby County. It also got $2.45 million for a project in Tuscaloosa County, $1.02 million for Bibb County and $351,119 to connect 715 locations in Winston County.

All told, Charter won $6.74 million. The cable giant indicated in a series of press releases it plans to use fiber technology to cover all 9,813 locations for which it received funding. It plans to supplement the grants with $34.8 million of its own money to cover the project costs.  

The remainder of the state funding from the latest grant round – $4.58 million – went to Cullman Electric Cooperative to connect just over 1,300 locations across Cullman, Morgan and Winston counties.

Charter’s rural bonanza

Charter’s wins add to its already substantial tally of winnings in Alabama. In 2022 it scored nearly $7.3 million for projects in two counties and the year prior it received around $867,000 for builds in eight counties. In 2020, it got around $391,000 for work in two counties and in 2018 it got around $65,000 in grant money from the state.

Charter also won nearly $51.3 million in the Federal Communications Commission’s Rural Digital Opportunity Fund (RDOF) auction to cover 56,451 locations in the state of Alabama. The operator has said it plans to invest $175 million alongside its RDOF winnings to complete the builds in the state and a total of $4 billion over the coming years to supplement the $1.2 billion in total it won from RDOF. All of its RDOF projects – which cover more than 1 million locations – will use fiber.

In addition to its RDOF commitments and existing state wins covering around 160,000 locations as of December 2022, analysts at New Street Research last month predicted Charter will also win around $1.8 billion in funding from the Broadband Equity, Access and Deployment (BEAD) Program to cover another 1 million rural locations.

All told, New Street Research believes Charter will run fiber to a total of 2.5 million rural locations over the coming years. And despite higher build costs associated with rural areas, the analysts said they expect Charter’s efforts and the grant money will be well spent.

“Our analysis suggests that Charter creates 4-5x as much value with every dollar they invest in rural expansion than with share repurchases at current prices. They are also far better off investing in rural than buying extant cable assets,” they wrote. “The value of broadband infrastructure is highly sensitive to penetration. Assets in markets that will never have fixed competition are far more valuable than typical cable assets, even after accounting for high build costs.”