SBA Communications Acquires JAX NAP

Bank Street served as exclusive financial advisor to JAX NAP in connection with the transaction

Stamford, CT – August 4, 2020 – SBA Communications announced the acquisition of JAX NAP, owner and operator of the primary data center and carrier hotel in Jacksonville, FL, which serves as a regional colocation and interconnection hub for carrier, cloud, content and enterprise customers. Located at 421 West Church Street, the 280,000 sq. ft. building has 14 MW of power capacity and offers connectivity to more than 20 fiber network providers, including two international subsea cable systems.

"Bank Street’s deep knowledge of the rapidly evolving digital infrastructure sector and strong relationships within the data center and broader communications ecosystem allowed them to orchestrate a highly competitive process on our behalf that resulted in a successful outcome for JAX NAP's shareholders," stated Luke Leonaitis, Founder & President of JAX NAP. "We are very pleased with the outcome of this transaction and confident that SBA will be a great partner for our customers, employees and service providers going forward."

SBA Communications is a leading independent owner and operator of wireless communications infrastructure, including towers, rooftops, distributed antenna systems, small cells and data centers. SBA’s acquisition of JAX NAP is the company's second transaction in the data center sector following its acquisition of New Continuum Data Centers in 2019. SBA's data center acquisitions have been executed in connection with its Mobile Edge Computing (MEC) strategy as the company complements its edge assets with core colocation facilities in key markets.

Bank Street served as exclusive financial advisor to JAX NAP in connection with this transaction.

About Bank Street

Bank Street provides insightful and objective advice to help our corporate and institutional clients achieve their financial and strategic goals. We are a private investment banking firm primarily serving growth companies in the communications, media and technology sectors with a comprehensive array of services, including Merger & Acquisition Advisory, Debt and Equity Capital Markets, and Restructuring Solutions.

Xplornet Announces Completion of Sale to Stonepeak Infrastructure Partners

Deal will enable Xplornet to improve coverage, increase investment and accelerate its plan to deliver a national fibre, wireless and satellite network to improve broadband for rural Canadians  

WOODSTOCK, NB, June 11, 2020 /CNW/ - Xplornet Communications Inc., Canada's largest rural-focused broadband service provider, today announced the completion of its sale to Stonepeak Infrastructure Partners, whereby Stonepeak has acquired the controlling stake in Xplornet. The transaction has received all regulatory approvals and completed new financing for a fully capitalized business.    

Today's announcement empowers Xplornet to execute its plan of accelerating investment in its national hybrid fibre wireless and satellite broadband network for rural Canadians. Xplornet has fresh new capital for a strong balance sheet, a new owner with the same conviction to the company's mission as its employees, and a renewed sense of purpose on improving broadband services for rural Canadian homes and businesses.  

Stonepeak is a North American focused infrastructure firm that manages $24.4 billion USD of assets for its investors (as of May 22, 2020). The firm has a strong track record of investing in mission-critical telecommunication businesses globally. Stonepeak is committed to supporting the existing Xplornet business plan. Allison Lenehan, the Chief Executive Officer, and the current executive team will continue leading Xplornet and the company will remain headquartered in New Brunswick.

"We are thrilled to complete our sale to Stonepeak and begin the next chapter of Xplornet. Rural Canadians deserve world-class broadband and we are fixated on delivering for them. We know there is more work to do," said Allison Lenehan, President and CEO of Xplornet.

"This deal will enable Xplornet to expand coverage, increase investment, and accelerate improvements to our broadband network. For our customers, this means unprecedented speeds, unlimited data plans, and 5G services at affordable prices. Rural Canadians deserve access to the same quality of broadband as in urban Canada. It is time to go faster," said Lenehan.

Brian McMullen, Senior Managing Director and head of Stonepeak's communications and digital infrastructure business added: "We are delighted to partner with Allison and the Xplornet team to build upon the premier broadband provider they have established. In an increasingly digital society, we believe there is an opportunity to deliver faster speeds and greater coverage, supporting the ability to work from home, distance learning, more connected devices and shifting entertainment mediums. We look forward to continuing to invest in the company's network infrastructure and service capabilities to support an exceptional broadband proposition.

Today's announcement builds on the investments in fibre and 5G wireless technology already made by Xplornet throughout Canada. In 2019, Xplornet announced that it will invest $500 million over the next five years to deploy state-of-the-art hybrid fibre wireless and satellite technology in its facilities-based network in order to deliver broadband services to rural Canadians. The completion of its sale to Stonepeak is one more step in making this promise a reality.

About Xplornet Communications Inc.

Headquartered in Woodstock, New Brunswick, Xplornet Communications Inc. is one of Canada's leading broadband service providers. For over a decade, Xplornet has been providing innovative fixed and mobile broadband solutions to rural customers at work, home and play across Canada.  Today, Xplornet offers voice and data communication services through its unique hybrid fibre wireless and satellite network that connects Canadians to what matters.

About Stonepeak Infrastructure Partners

Stonepeak Infrastructure Partners (www.stonepeakpartners.com) is an infrastructure-focused private equity firm headquartered in New York that manages $24.4 billion of assets for its investors (as of May 22, 2020). Stonepeak invests in long-lived, hard-asset businesses, and projects that provide essential services to customers and seeks to actively partner with high-quality management teams, facilitate operational improvements, and provide capital for growth initiatives.

Research: It’s a Two Horse Broadband Race Between FTTP and Cable Broadband

Communications industry financial analysts at MoffettNathanson Research expect to see continued cable broadband market share gains, which have accelerated as bandwidth demand climbs during the COVID-19 pandemic. The researchers’ “equilibrium” forecast calls for DSL market share to drop to zero. And “mid-tier” telco broadband increasingly is becoming “just as obsolete,” the researchers said.

“Broadband is increasingly a two-horse race between cable and telco FTTH, where it exists,” MoffettNathanson argues in a new research note.

The COVID-19 Impact
MoffettNathanson isn’t the first research firm to note that cable made major broadband gains in the first quarter of 2020. Leichtman Research Group noted that the top cable broadband additions were up 122% over the same quarter of 2019, while the top telco broadband providers had a net loss of about 65,000 subscribers, compared to a net gain of about 20,000 in the first quarter of 2019.

Like LRG, MoffettNathanson attributes these changes to increased bandwidth demand as people spend more time at home during the COVID-19 pandemic.

“The increased level of usage was enough to convince many customers that they needed higher speeds to handle the number of simultaneous users in their home,” MoffettNathanon wrote.

The MoffettNathanson researchers also noted another dimension to the cable broadband market share gains. New household formation was quite high in the first quarter of 2020 – at least until the COVID crisis hit.

The implication of that finding is that cable’s broadband long-term gains may not be quite so impressive – and that telco losses likely would have been even worse were it not for new households ordering broadband.

Cable Broadband Market Share
MoffettNathanson defines “mid-tier” telco broadband to include fiber-to-the-node (FTTN), IP-DSLAM and VDSL technology supporting speeds as low as 10 Mbps and as high as 75 Mbps but with speeds that generally don’t exceed 25 Mbps.

“The pressures on broadband networks laid bare by the coronavirus crisis make it clear that market share will now migrate even faster in this large cohort,” the researchers argue. “As with legacy DSL, it is increasingly clear that this segment is simply not competitive anymore. Equilibrium market share in this cohort, if one looks out far enough, is 100/0.”

In the near term, the researchers expect to see cable companies take an 85% share of broadband connections in markets where they compete against mid-tier telco broadband. Even more negative for telcos, MoffettNathanson no longer sees telcos having an advantage against cable in FTTH markets. In the past, the researchers expected to see telcos gain 60% of broadband connections in markets where they had deployed FTTH but that projection was later reduced to 50/50. And according to today’s note, the researchers don’t envision that changing any time soon.

“It is . . . no longer sensible to argue that fiber has a technological advantage over cable,” the researchers argue. “With the coming advent of DOCSIS 4.0 (likely to be called ‘10G’), cable operators will be able to deliver 10 Gbps symmetrically. One has to look out well beyond 4K video to full virtual reality, and perhaps even holography, for applications that would make a 10 Gbps service insufficient.”

Internet-Connected Video Devices are in 67% of U.S. Broadband Homes

Two-thirds of U.S. broadband households own Internet-connected video devices, according to a new report from Parks Associates.

The firm says that the devices, which include smart TVs, streaming media players, Internet-connected gaming consoles and connected PVR/DVRs, are serving for longer periods of time.

These lengthening replacement cycles are a challenge to manufacturers, who are responding with tactics including software and service offerings, exclusive hardware-content bundles and open ecosystems. This challenge and thin margins are reducing the field of competitors, the firm says.

“The connected entertainment space is moving towards a smartphone model, in which a handful of platform players control the operating system, UX, and consumer access to services and features,” Parks Associates’ Senior Analyst Kristen Hanich said in a blog post about the internet-connected video devices report. “These platform players stand to win big as consumers increasingly choose to sign up for their OTT service subscriptions through storefronts like Amazon Prime Video Channels, Apple TV Channels, or Roku Channel Premium Subscriptions.”

Hanich said that the rise of OTT services and fading of pay TV subscriptions results in fragmentation in the content services market as multiple paths to consumers are created. This, coupled with the fact that consumers now want to be able to access content when and where they are, is pushing toward open ecosystems that enable customers to get “most if not all” of what they want on any device regardless of the platform they are using.

Internet-Connected Video Devices Report
Other recent Parks research complements Hanich’s conclusions. In January, Parks found that 77% of smart TVs are connected to the Internet. This is a 62% increase since 2014. The firm also found that half of the 10,000 US households surveyed own a smart TV.

In October 2019, Parks found that homes with more than one OTT video subscription had increased 130% since 2014. In August, the firm said that monthly consumer spending on traditional pay TV had declined from $84 to $76 between 2016 and 2018.

M/C Partners Completes Investment in TowerCom

BOSTON–(BUSINESS WIRE)–M/C Partners, a Boston-based communications and technology services-focused private equity firm, announced today that it has closed on an equity investment in TowerCom, LLC, a Jacksonville, FL-based communications tower developer. M/C’s initial investment and additional future commitment will allow TowerCom to continue to execute on its robust new tower build plan on behalf of national and regional wireless carriers.

“Our exceptional team of operating partners and the strength of our go-to-market approach, coupled with this latest round of funding from M/C, positions us well to capitalize on our platform to drive our next phase of growth.”

“As wireless carriers expand their 5G footprints and nationwide coverage with mid and high band spectrum, the industry, and TowerCom, should see strong colocation prospects in the coming years,” said Rad Lovett, Chairman and Chief Executive Officer of TowerCom. “Our exceptional team of operating partners and the strength of our go-to-market approach, coupled with this latest round of funding from M/C, positions us well to capitalize on our platform to drive our next phase of growth.”

“With its experienced team, long track record of building and operating towers across the country, and strong carrier relationships, TowerCom is well-positioned to continue its recent momentum and make an even bigger impact in this space,” said Brian Clark, Managing Partner at M/C Partners. “Our investment in TowerCom gives us the unique opportunity to partner with a proven tower developer that brings visibility into a scaled portfolio of towers as carriers ramp up spending on their 5G deployments in a critical investment cycle for the wireless communications industry.”

Abhishek Rampuria, Vice President at M/C Partners, added, “Our investment in TowerCom builds on M/C’s long and successful heritage of investing in the wireless industry. The TowerCom team has built a best-in-class tower development platform and we are excited to begin this partnership and support the next chapter in the TowerCom story.”

As TowerCom’s primary financial investor, M/C Partners will contribute its extensive experience in the communications and technology services markets. M/C has been a leading investor in this sector for more than three decades, having previously invested in Lightower, Zayo, MetroPCS, Connectivity Wireless and others. Legal counsel for M/C Partners was provided by Sidley Austin LLP and Fox Rothschild LLP.

About TowerCom

TowerCom is a Jacksonville, FL-based communications tower developer executing new tower builds on behalf of carrier customers primarily in the Southeast and Southwest US. TowerCom has established itself as a major regional tower developer with deep relationships with both national and regional wireless carriers. TowerCom is responsible for the end-to-end tower development process, taking carrier input on target locations and coverage needs and then executing site acquisition, permitting / zoning, construction, and operational support. The company is led by a veteran management team that has experience in all phases of tower infrastructure development, deployment and management. For more information, visit www.towercomenterprises.com.

About M/C Partners

Based in Boston, M/C Partners is a private equity firm focused on small and mid-sized businesses in the communications and technology services sectors. For more than three decades M/C Partners has invested $2.2 billion of capital in over 130 companies, leveraging its deep industry expertise to understand long-term secular trends and identify growth opportunities. The firm is currently investing its eighth fund, partnering with promising companies and empowering strong leaders to accelerate growth, optimize operations, and build long-term value. For more information, visit www.mcpartners.com.

Only 25% of Census Blocks Have Competition for 100 Mbps Broadband (INCOMPAS report)

Only one-quarter of developed U.S. census blocks have two or more providers of 100 Mbps broadband, according to a broadband competition report from INCOMPAS – and according to the competitive carrier association, competition is even less than that finding would suggest because the finding is based on Form 477 data collected by the FCC.

Virtually everyone agrees that the Form 477 data overstates broadband availability. In this case, an entire census block would be considered to have 100 Mbps broadband, even if only a single location in the census block can get service at that speed.

The finding is one of a range of data points that INCOMPAS uses to back up its assertion that “the fixed BIAS [broadband internet access service] market, as well as the business data services marketplace, remain highly concentrated” in certain geographic areas.

Other key INCOMPAS findings about the BIAS market:

• 31% of developed census blocks have no provider offering service at 100 Mbps speeds

• 41% of developed census blocks have only one such provider

• Only 5% of census blocks have three or more providers advertising 100 Mbps service somewhere in the block

• Virtually all census blocks with gigabit service have only a single provider of service at that speed

INCOMPAS Broadband Competition Report
INCOMPAS filed the broadband competition report with the FCC in response to the Communications Marketplace Report issued by the FCC several months ago.

In comments included with its filing, INCOMPAS urged the FCC not to remove pro-competitive policies such as network unbundling and resale requirements. INCOMPAS also argued that the FCC prematurely deregulated business data services (BDS) pricing in 2017, which according to the association, has caused incumbent carriers to raise BDS prices.

According to INCOMPAS, AT&T, Verizon, Frontier and CenturyLink have raised BDS pricing and CenturyLink’s increases for special access DS1 channel terminations were as high as 150%.

Broadband speeds are too low in too many places, said Chip Pickering, CEO of INCOMPAS, in a press release about the INCOMPAS broadband competition report. In addition, he said, “prices are high and consumers are fed up with terrible customer service.”

He added that “More competition is the answer, and it’s time for the FCC to launch a competition crusade based on gigabit speed goals that create jobs and new opportunities for small business growth.”

Ascend Technologies LLC Launches to be the Premier Midwest-Based Managed Services Provider

ORGANIZATION THAT COMBINES WEST MONROE PARTNERS’ MANAGED SERVICES DIVISION AND GRATIA, INC. IS WELL POSITIONED TO PROVIDE SUPPORT FOR REMOTE WORKFORCES DURING PANDEMIC AND BEYOND.

March 30, 2020 – Chicago, Illinois

TODAY, ASCEND TECHNOLOGIES LLC, a Midwest managed services provider founded on a commitment to using innovation and technology to enable business growth, announced its launch.

The creation of Ascend Technologies (Ascend) marks the conclusion of the December 2019 acquisitions of West Monroe Partners’ Managed Services Division and Gratia, Inc by the private equity firm M/C Partners. The combined companies bring decades of managed services, cloud and infrastructure, service desk, application management and data management experience.

“We are launching Ascend as businesses are facing extraordinary change and uncertainty,” says Wayne Kiphart, CEO, Ascend. “Our teams have come together at a critical time when supporting remote-workforce team collaboration while maintaining security are more crucial than ever. Not to mention, being on call 24×7 not only to provide technical support for remote workers, but to help our clients in demanding industries redefine how to support a changing workforce. We are here to ensure operational continuity and support those on the frontlines,” continues Kiphart.

“Bringing what has developed over the last 10 years within the Managed Services practice at West Monroe and combining it with the expertise of Gratia and backing of M/C Partners, Ascend will deepen our current solutions while expanding into new innovative services creating both organic and acquisitive growth to grow with our clients,” says Mark Nelson, Chief Strategy Officer, Ascend.

The resulting new company, headquartered in Chicago, has over 100 U.S.-based technical professionals based across the Midwest and nationally.

Boston Omaha Corporation Enters its Third Line of Business with the Acquisition of AireBeam Communications

OMAHA, Neb.- Boston Omaha Corporation entered the telecommunications services business today with the acquisition of AireBeam Communications, a family-owned rural broadband fiber and fixed wireless internet service provider. For 17 years, AireBeam has served communities in southern Arizona with high-speed, fixed wireless internet service and is building an all fiber-to-the-home network in select markets.

Co-Founder and CEO Gregory Friedman said, “AireBeam, has successfully delivered high speed internet to rural communities while achieving favorable returns on our invested capital. My wife Judith and I and the entire AireBeam team are thrilled to be working with Boston Omaha as they are the right long-term partner to help us expand our fiber-to-the-home footprint.”

AireBeam operates in underserved communities throughout Arizona that need higher speed and greater internet capacity. AireBeam’s focus on engineering solutions specific for these distinctive communities has resulted in the delivery of broadband service to more than 7,000 customers.

Full financial terms of the deal were not disclosed, however, Boston Omaha acquired substantially all of the assets of the predecessor company in the deal and all employees are expected to remain with the company. Gregory Friedman is continuing as CEO while retaining a 10% initial ownership stake in the newly formed entity as he continues to guide AireBeam’s next phase of growth. The remaining 90% initial ownership stake will be owned by a wholly owned subsidiary of Boston Omaha, which intends to make significant additional capital investments to fund the company’s planned fiber-to-the-home expansion.

“Boston Omaha is excited to enter the high speed broadband business as rural communities increasingly demand more bandwidth to their homes and businesses than their current offerings can reliably provide. Within certain markets, we believe that fiber-to-the-home is a long-lived asset that fits perfectly with the long-term vision of Boston Omaha to invest in durable businesses that can earn good after-tax returns on capital,” said Boston Omaha co-CEO Adam Peterson.

Boston Omaha’s other co-CEO, Alex Rozek added, “One hundred years ago, 35% of U.S. households had electricity and today just 37% are passed by fiber. We believe that the combination of AireBeam’s rural broadband business model aligned with Boston Omaha’s strong balance sheet provides a powerful platform to bring fiber-to-the-home to additional communities and delight customers for years to come.”

Liberty Global sizing up partnerships to expand reach of Virgin Media's network

Liberty Global has plans to expand the Virgin Media network to an additional 7 to 10 million homes in the UK and is exploring a wide range of options to get it done.

While a portion of that will come from its ongoing Project Lightning fiber-to-the-premises initiative, the operator is also taking a look at potential partnerships involving investors and other network operators.

But, for now, Liberty Global isn't sharing a ton of detail about what types of partnerships it is exploring, despite recent reports that the company is already in talks with Comcast-owned Sky about a fiber joint venture and possible cable wholesale deal.

"I'm not going to get into great detail about what we might or might not be doing" with respect to potential network-facing partnerships, Mike Fries, Liberty Global's CEO, said Friday on the company's Q4 2019 earnings call. But he acknowledged that any way to expand the reach of Virgin Media's network in the UK would create a "very positive outcome."

"We're examining all options," Fries said, noting that it's part of a longer-term strategy at Liberty Global and not something that will be solved Q1 2020. "We would be interested in not just financial partners but also network operators who are interested in the same opportunities."

But Liberty Global is not interested in sacrificing free cash flow to make this happen, mirroring the financial strategy it's employing today for Project Lightning. That FTTP-based project added 505,000 premises passed in 2019, ending the year with 2.1 million premises passed, 454,000 customers and about £236 million ($307.79 million) in revenues.

"While we're not willing to sacrifice free cash flow to do that [network expansion] on-balance sheet… we would certainly entertain ideas [and] ways of achieving that off-balance sheet that could accelerate the reach of 1-gigabit speeds and the Virgin brand," Fries said.

Fries said Virgin Media is also looking into wholesale opportunities that could bring cash flow immediately to the company's bottom line, noting that 40% of the operator's network is currently being utilized. The con in that scenario is possibly cannibalizing Virgin Media's business, he added. Bloomberg reported last month that Liberty Global applied to Ofcom to pursue wholesale opportunities in the UK.

More generally, Fries noted that the UK market remains a tough one (Virgin Media lost about 110,000 revenue generating units for all of 2019), highlighted by an increasingly competitive (and promotional) broadband market alongside flattening video subscriber growth. That's being amplified by "external headwinds" over the past three years involving broadband tax increases, inflationary programming contracts and changes to mobile regulations. Those headwinds will continue into 2020 in the form of an anticipated operating cash flow reduction of about £100 million ($130.36 million).

Despite those challenges, "we are more than holding our own in this market," Fries said of the UK.

Regarding the company's video strategy, Fries noted that Liberty Global still sees pay-TV as a service "worth protecting," though the operator won't chase after less profitable, lower-end customers – essentially replicating a strategy being undertaken by major US cable operators such as Comcast and Charter Communications. As it focuses on more profitable customers, Virgin Media will soon roll out the company's new user interface, Horizon 4, on its V6 boxes (replacing TiVo), and the ongoing integration of OTT apps such as YouTube, Netflix and Amazon Prime Video.

"We are open for business when it comes to app integration," Fries said.

The Horizon 4 rollout in the UK will also mark Liberty Global's expansion of a video product that utilizes the Reference Design Kit, a preintegrated, open source software platform being managed by Comcast, Liberty Global and Charter.

"We think it will be transformational to the consumer experience in the same way X1 was for Comcast," Fries said. "The bundle matters, and video is a big part of the bundle."

Liberty Global hit its 2019 financial targets, but growth is becoming harder to come by in the wake of the company's sale of operations in Germany, Hungary, Romania and the Czech Republic to Vodafone last July.

Liberty Global Q4 2019 revenues were $2.98 billion, down 0.5%, and $11.54 billion for the full year, down 0.6%.

In the fixed services category, Liberty Global added 15,700 broadband subs in Q4, compared to a gain of 24,800 in the year-ago period. The company lost 91,300 video customers, versus a loss of 74,900 a year earlier; it also lost 52,700 voice subs, compared to a year-ago gain of 17,600.

— Jeff Baumgartner, Senior Editor, Light Reading

No More Fear and Loathing Over Video Subscriber Losses

Broadband strength keeps Wall Street bullish on pay TV sector

MIKE FARRELL

JAN 27, 2020

Pay TV providers are set to report the worst year in their history in terms of video customer losses, according to a handful of analysts. Yet, despite the losses and the increases in cord-cutting, cord-shaving and cord-nevering, those analysts are probably more optimistic about the future of the industry than they have been in years.

Comcast kicked off the fourth-quarter earnings season Jan. 23, reporting a decline of 149,000 video customers. The rest of the sector is expected to report in the coming weeks, with AT&T going on Jan. 29, Verizon Communications on Jan. 30 , Charter Communications on Jan. 31 and Altice USA on Feb. 12.

Cord-cutting has been on the rise for years: 2019 was worse than 2018, which was worse than 2017 and so on. Evercore ISI media analyst Vijay Jayant estimated cable would lose about 1.96 million video customers in 2019, up from the 1.26 million it lost in the prior year. Satellite-TV providers would see their losses more than double from 1.2 million in 2018 to 3.25 million in 2019, mainly due to heavy losses at DirecTV. Jayant estimated that DirecTV would lose about 800,000 video customers in Q4, down from the 1.1 million it lost in Q3.

Video Losses Aren’t Troubling

“Interestingly, complacency doesn’t seem to be an issue with respect to video,” Craig Moffett, MoffettNathanson principal and senior analyst, said in a note to clients. “There, cable investors seem to be keenly aware of the downside to estimates. It’s just that they (appropriately) don’t seem to care very much.

“The age of worrying about video subscriber losses finally seems to be behind us,” Moffett added. “Good riddance.”

But the fourth quarter, like the quarters behind it, will be characterized by broadband growth. Jayant estimated that cable operators will continue on their path of accounting for more than 100% of overall domestic broadband growth, adding 832,000 customers in Q4 compared to the addition of 612,000 in the same period last year.

“Cable’s clear speed advantage in roughly half the U.S. is driving continued strong share performance,” Jayant wrote. Jayant’s optimism for the sector is shown in his “outperform” ratings on Comcast and Charter (the top-rated stock in his coverage universe). Evercore ISI analyst James Ratcliffe has an “outperform” rating on Altice USA.

The slowdown affecting over-the-top providers also is expected to continue. Jayant predicted that virtual multichannel video programming distributors (vMVPDs) like SlingTV, AT&T TV Now and Hulu with Live TV would gain about 804,000 customers in 2018, less than half of the 2.3 million additions the sector enjoyed in 2018.

For the full year, Jayant estimates, pay TV subscribers (including OTT, cable, satellite and telco) will have declined by about 5.4 million, more than three times the 1.5 million the sector lost in 2018.

On the flip side, total cable, telco and satellite broadband subscriber additions are expected to reach 2.8 million in 2019, up 12% from the 2.5 million additions in 2018. Cable broadband adds are expected to be 3.1 million in 2019 (up nearly 15% from 2.7 million in 2018) while telcos are expected to lose 402,000 broadband customers, an increase over the 342,000 the sector lost in the prior year.

Mobile Share on the Rise

On the wireless front, Jayant wrote that while telcos Verizon and AT&T still dominate, cable managed to take some share in 2019, driven by higher net additions at Charter and the launch of Altice USA’s aggressive offering late in Q3.

Jayant predicted that the postpaid wireless base, including cable operator customers, increased by about 2.2 million in Q4, a rise of 160,000 subscribers year-over-year and 560,000 sequentially. He believes cable operators (mainly Comcast, Charter and Altice USA) captured about 25% of postpaid net additions in Q4 2019, up from 17% in the prior year.

Wireless, primarily a retention tool for other cable services, is starting to break out of that box as subscribers rise. Charter added a surprising 276,000 wireless customers in Q3 (most analysts had expected a gain of about 230,000) and Jayant sees the momentum continuing into Q4, with 263,000 additions. Overall, he estimates Charter will add about 923,000 wireless lines in 2019 (up from 134,000 in 2018) and 1.04 million in 2020. He sees Altice USA stepping on the wireless accelerator in Q4, adding about 80,000 wireless customers in 2019, rising to 550,000 additions in 2020.

Wireless growth is expected to return to Comcast after a bit of a slowdown. Jayant predicted the largest U.S. cable company will add about 778,000 wireless customers in 2019 (down from 855,000 in 2018), rising to 909,000 additions in 2020.