Wave, RCN, Grande and enTouch have passed from one private-equity firm to another with Sunday's news that they were sold for $8.1 billion. The U.S. cable operator group, collectively known as Astound Broadband, was sold by TPG Capital and Patriot Media Management to Stonepeak Infrastructure Partners for $8.1 billion, including debt. The deal appears to be the largest private equity acquisition this year in the U.S.
As part of the deal, Stonepeak will partner with Patriot Media, which is a management team headed by cable industry veterans Steve Simmons and Jim Holanda, who currently manage Astound Broadband. Simmons, the chairman of Patriot Media, was inducted into the Cable Hall of Fame six years ago while Holanda previously worked for both Comcast and Charter prior to becoming CEO of RCN in 2010.
Sunday's announcement came two months after Reuters first reported TPG was exploring the sale of Astound, which is the nation's sixth-largest cable operator, in a deal that could fetch more than $8 billion.
In a Monday morning interview with FierceTelecom, Holanda said TPG re-financed Astound to take advantage of the strong loan market near the end of summer. The new debt structure included portability, which Holanda said allowed all of the existing the debt to be ported over to a new owner.
"I think that woke up a lot of people to the fact that the refinancing was so successful," Holanda said. "I think that helped jumpstart interest on the potential to own the asset long term, and that's when we started seeing a lot of interest."
Holanda said including portability in the sale of the assets wasn't common, but noted Abry Partners did so when it sold Atlantic Broadband to Cogeco for $1.36 billion eight years ago. TPG wanted to include the portability feature within the debt structure to preserve its options.
TPG paid $2.25 billion several years ago to buy Grande and RCN from Arby Partners and then bought Seattle-based Wave Broadband in 2018 for about $2.36 billion. In September, Astound added 22,000 customers into the fold with the conclusion of a deal to buy Houston-based enTouch Systems. Financial terms of that deal weren't disclosed.
As a whole, Astound—which competes against other cable operators such as Comcast and Charter as well as Verizon—operates in eight of the top-10 metro markets in the U.S., which gives Astound's cable operators numerous last-mile connections for their own services and for other companies that want to offer their services over those connections.
RCN, Grande, Wave and enTouch serve over one million customers with 23,000 miles of fiber across Chicago, Eastern Pennsylvania, Massachusetts, New York City, Northern California, Oregon, Texas, Washington, DC., and Washington.
Patriot Media has been managing RCN for 10 years. The management team has led the cable overbuilders, each of which operates under its own respective brand, through significant periods of growth. The deal is slated to close in the second quarter of next year once it clears customary closing approvals
What's next for Astound
Stonepeak has been an early and active investor in digital infrastructure, with multiple investments across the data center, fiber and wireless sectors.
Over the past four years, Holanda said TPG and Astound have consistently spent "hundreds of millions" on the expansion of fiber across both the commercial and residential networks, and that he expects that pace will continue, if not accelerate, with Stonepeak.
Earlier this year, CableLabs came out with its DOCSIS 4.0 specs, which Holanda said were of interest to Astound. Astound has gear in place from Casa, CommScope/Arris and Cisco.
"Given the depth of fiber that we have within our networks, obviously we are looking at what that technology will look like and what it will require," Holanda said of DOCSIS 4.0. " We'll stay very much on top of that to get that behind the portion of our network that is HFC."
RCN recently rolled out a streaming IP video service for 100% of its channel lineup and Astound expects to launch it in the Grande footprint this year and across Wave the first half of next year.
"With the strength of Stonepeak behind us, and looking at this business as an infrastructure business, this is going to allow us to continue to invest in a very strong and growing residential and commercial broadband space with industry leading customer satisfaction," Holanda said. "The ability to keep doing that is something we're very excited about, obviously."