Time Warner Cable acquires DukeNet for $600M to bolster Southeast fiber footprint

Time Warner Cable (NYSE: TWC) is increasing its Southeastern fiber network and business services footprint by reaching a deal to acquire Charlotte, N.C.-based competitive provider DukeNet from Alinda Capital and Duke Energy for $600 million in cash.

Alinda Capital and Duke Energy both own a 50 percent stake in DukeNet.

By acquiring DukeNet, the cable MSO gets an 8,700-mile regional fiber-based network that currently provides services to a mix of business and wholesale customers, particularly wireless operators, in North Carolina and South Carolina, as well as five other states in the Southeast.

While TWC did not provide many details besides the purchase price, the deal is transformational for the cable MSO.

Having a deeper fiber footprint in the Carolinas and other Southeast states will enable it to pursue larger business service deals and wireless backhaul opportunities. In September, DukeNet announced that it reached over 3,500 cell sites as part of its growing fiber to the tower (FTTT) program that provides services to a number of the top wireless operators.

TWC will also enhance its business Ethernet reach. Since 2007, the cable MSO has consistently held a spot on Vertical System Group's U.S. Ethernet leaderboard, which tracks port shares sold. During the second quarter, TWC reported that business services, including Ethernet, rose 21.8 percent to $565 million.

Eric Mangan, a spokesman for Time Warner Cable, told FierceTelecom that the DukeNet acquisition will enhance its wireless backhaul capabilities, particularly in the Carolinas.

Already, Time Warner Cable is seeing momentum build in its own wireless backhaul business. During the second quarter, the cable MSO completed the build out to 10,000 cell towers.

"DukeNet's primary customer segment so we see continued growth in that area," Mangan said.

Mangan added that another "key growth area for us at Time Warner Cable is transport services for large multi-site commercial businesses and data centers so it's another attractive quality for this deal."

After clearing customary closing conditions, including receipt of regulatory approvals, TWC expects to complete the purchase in Q1 2014.  

This deal also comes at a time when cable MSOs are getting more regulatory freedom to purchase CLECs as a way to grow their business and wholesale service programs.

Cable MSOs won a major victory to pursue deals like DukeNet last September when the FCC granted them forbearance from Section 652(b) of the Communications Act.

TWC is not alone in expanding business and wholesale service and network footprint through acquisitions. Fellow cable MSO Cox Communications purchased Tulsa, Okla.-based CLEC EasyTEL in September.

For more:
- see the release

Related articles:
DukeNet bolsters FTTT initiative with connections to 3,500 cell sites
DukeNet joins ranks of MEF 2.0 certified providers
DukeNet completes its core 100G network upgrade
Cox enhances on-net fiber reach with Tulsa-based EasyTEL acquisition

Article was updated on Oct. 8 with quotes from Time Warner Cable spokesman about the benefits of the DukeNet acquisition.