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2026.10.05 | TB | Media | Cable One Subscriber Retention

原标题：Cable One – Can It Retain Subscribers as Mega Broadband Deal is Set to Close?

#media

Third Bridge · 2026-10-05

Analyst-led • 1 Oct 2026

Companies: CHTR US, CABO US, CMCSA US, TMUS US, VZ US, T US

Joel Braun (JB) Chief CX Officer at Palmetto Rural Telephone Cooperative Inc

John Conca (JC) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

JC [00:00:05]: Welcome to Third Bridge's Interview entitled Cable One – Can It Retain Subscribers as Mega Broadband Deal is Set to Close? My name is John Conca, and I will be facilitating today's Interview with Mr Joel Braun, former General Manager, Residential Sales and Operations of South Carolina at Hargray Communications, which was purchased by Cable One.

Before we start today's Interview, please state either I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

JB [00:00:34]: I agree.

JC [00:00:35]: Would you mind giving us a brief introduction to yourself and your background?

JB [00:00:42]: I joined Hargray in South Carolina in 2013 in a variety of roles on the really sales and leadership side. Was purchased by Cable One as a Hargray asset and was General Manager, as you said, in South Carolina markets for 3-4 years. I left about 2.5 years ago, went to another entity that has some overlap with what is now operating as Sparklight in South Carolina markets. My background is largely in telecom. That's a high level.

Questions

00:01:20] What has changed for Cable One over the last six months? What should we be paying attention to going forwards?

JB [00:01:42]: Six months ago, the situation was a little bit better than it is today. Because of where I live, where I pay most attention to, I have a lens on what's going on in the South Carolina markets because I live there, I compete there. I have friends there, both with and without… In and out of the company. What I've seen is a tremendous increase in competition on the fibre overbuild side in the South Carolina market. Really three brand-new competitors coming to town, all hiring, public information. It's out there meeting with communities, some of which has been posted publicly, etc, trying to take market share away. That's because of the coax infrastructure, and people are looking ahead to new technologies, everybody wants fibre, all right? Then those that don't are typically the low-end people that are okay moving to fixed wireless or even Starlink, which we may get into later. There's a group of people in the middle that are complacent, and probably okay with what they get, but the competition is extreme. As we know, the Hargray pricing… Excuse me, the Cable One pricing model shows an ARPU that's higher than the average in the market and across other markets, too. There's pricing pressure. When you don't meet the price and you have coax and someone's coming in with a lower-priced fibre service, it's tough to keep customers. That's what we're seeing.

00:03:15] You mentioned that more competitors have popped up. That's not necessarily new. A lot of this can be explained by South Carolina being one of the faster-growing states in the US, if not the fastest, in terms of population. How do these new overbuilders keep popping up? It's not becoming any cheaper to build fibre.

JB [00:03:49]: A couple of different things come to mind when I say that. Some are backed by very large investment firms, and they're coming up into the Southeast region as a whole. Is it okay to mention the names of some of them or not?

JC [00:04:06]: Yes, of course.

JB [00:04:07]: Yes. LiveOak Fiber, as an example, they are… They're based in Florida. They've come up through into Georgia. They're in Savannah. Savannah is really close to the South Carolina footprint of Cable One. They've gone up north a little bit to Charleston, South Carolina. It's just a natural progression of where they're building. Then you've got some other boutique providers who are maybe not facilities-based, but they're buying 10Gbit or 100Gbit circuits from Sparklight or Spectrum or someone, and then they're putting cabinets in or at least they're planning to do that and then building fibre in these communities. The reason they can afford to do it theoretically, at least the way I think about it because my company has done some of that, too, is that there are a lot of gated communities within the South Carolina footprint for which Sparklight is the exclusive provider. If you can go in and try to get commitment levels up to X, whatever your business model is, you can get a return on that investment, even though the investment is expensive.

You're talking fibre instead of coax and you're talking about a company that has largely struggled to maintain that coax and has very much struggled to keep up with repair issues and customer service in general. It's not that difficult of a sell. Keep in mind that a lot of these communities have been exclusive to the forerunner to Cable One when Hargray was there for 20 or 30 years. These shiny, bright, new objects are getting a lot of attention from the residents in these communities.

00:05:41] You mentioned that some competitors are not necessarily facilities-based in terms of buying a circuit from Sparklight in some cases. At a certain point, we've seen the intensifying competitive environment. At what point might the company decide to get out of that business? The penetration metrics are 5% lower than those six months ago. Should it stop doing that any more and focus only on the residential business, which is its bread and butter?

JB [00:06:25]: Yes, it would. I'm not quite sure how they navigate around that, but there's typically been what they call a firewall between the wholesale organisation and the retail organisation. If someone's on the wholesale side is getting a request for a 10Gbit circuit or 100Gbit circuit, their charter is to go sell it. Now maybe they end up doing something around that so that those boutique providers don't buy the circuit. If they don't buy it from them, they could go to another competitor who could build it for them and get them right to the gate. Sometimes it's either take the money or get nothing, potentially, if you lose the community. I don't know what goes into those discussions. I agree with you. It's, you're shooting yourself in the foot a bit if you're giving access to someone to come in and take your business. There are other options, though. There's not just Sparklight.

00:07:22] You mentioned that LiveOak Fiber naturally progressed and added passings up from Florida. How should we be thinking about the overbuilding environment for pure fibre networks, which are also facing the same competitive pressures? It's helpful to be fibre instead of coax. How does this keep happening? Is it because they're actually winning business, and therefore, they now have the money to spend on more passings? How should we be thinking about the long-term runway of this continued fibre build-out environment?

JB [00:08:21]: Yes, I don't know how long it's sustainable or even if it's sustainable now, to be truthful. What I've seen is, at least in LiveOak's case, they announced that they're going to come in, public information, press releases all over. That they're going to come in and overbuild 10,000 homes. You're right, they could spend money on 10,000 homes, and I don't know what they're paying per passing, but let's say it's USD 3,000, I don't know, USD 2,000, USD 3,000, USD 4,000 and get nothing. They're not de-risking their investment at all. Maybe if they put their hand on the fire, they'll learn their lesson. They're trialling it in small areas to see if it works. It has worked in other areas from what I've seen. They're a pretty good operator and the pricing is competitive. Not everybody has the appetite to do that. Others that I'm aware of that are entering these markets, we're de-risking everything on the front end by getting commitments. That way, at least you know you're going to get a return. Some of these folks have deep pockets, and they don't need to do that.

Just for context, besides LiveOak, you've got Hotwire, you've got IQ Fiber, but Comcast is in part of these markets. Spectrum is in part of these markets and Brightspeed is in part of these markets along with Sparklight, the question that I continue to wrap my head around is, when is there going to be a consolidation because there's not enough business. Now it's not all overlap across those seven providers and my company is an eighth one. There is some good overlap. It's, there's not enough business out there to sustain that. I don't know. I'm scratching my head. The ones with the deep pockets may be the ones that survive. It's irrational to some degree.

00:10:04] South Carolina is in the middle in terms of population density in the US, especially in the regions where Cable One has its footprint. How many players can these markets support in the long term? Fixed wireless is not going anywhere, at least for now, because T-Mobile, AT&T, Verizon and everyone else has the money to keep that going, especially at a low cost. I don't think Starlink is going anywhere after all the money it has put into its satellite constellation. Apart from these two cases, how many players can those markets support?

JB [00:11:04]: If you look across the broader Cable One, where they're heavily rural and so the density isn't really there. That's different. In the South Carolina markets, they're a little bit more urban, not quite, but the population is much higher. They're growing. I don't know if the number is three or four… Two or three, I'm not sure. There's so many… South Carolina is one of the fastest-growing states in the country in terms of percentage and actually has the fastest-growing city in the country in terms of percentage. I know that for sure. That will probably allow for more providers to be able to offer service. You get to the point where you have more than two or three terrestrial, it's… That's enough because I agree with you completely. My background is in wireless, and there's no way that Verizon, T-Mobile and AT&T are going to get out of this business. The one I'm really worried about, you didn't even mention is Project Leo with Amazon. Starlink, we are starting to see Starlink cut into our business a little bit. I know from just reading about what they're doing in markets in the states of Mississippi and Alabama, as an example, both of which Sparklight operates in, in pockets, different cities there.

They are really doing quite well. Targeted commercial hiring, local pricing promotions, really capitalising on the fact that there's gaps in coverage. It's very rural and it's difficult to build there. Now that said, a lot of the BEAD money went to those places, too. Now you've got these cable markets from Cable One who are facing the folks who got money from the government to go build fibre networks and you've got the satellite providers and the wireless providers. There's too many providers. I don't know what that looks like. When I was in the wireless business, we started with two, went up to eight where I was at, and then it was down to three or four about five years later. That's where we'll end up, but I don't know how soon.

00:13:20] There are a million different ways to get broadband in every spot. How do you think about coax in that world? You're getting the speeds there for the most part when you do plant upgrades to DOCSIS [Data Over Cable Service Interface Specification] 3.0 or 4.0. That has been the pitch for a while, at least in terms of download speeds. That's been the pitch not just for Cable One, but for players such as Charter Communications or Comcast. Is there a space for coax in a world where there will inevitably be some level of consolidation?

JB [00:14:21]: I don't think there is. That's just me personally, and I'll elaborate on that. First, you talked about upgrading to the next version of DOCSIS, whatever that is, 4… It takes money to do that. It takes resources to do that. That has not been done in the Cable One markets yet. If we're talking specifically about Cable One, that's a challenge. On the broader scale, when we think about how people use the internet these days, while the upload didn't used to be important, you got a lot of people working from home and they're using video conferencing. You've got a lot of people doing a lot of… Whether it's gaming or whether it's sending files around… The upload, for lack… Easier way to say it, is much more important than it ever used to be. It is not difficult to sit in front of someone who's considering their options and talk to them about future technologies, where the world is going and convince them they need fibre if they didn't already think so. With all the AI stuff going on, smart home technology, on and on and on, people want the best technology available today. You can point holes in the coax, especially when it's been in the ground for 30 years.

That said, too, the other piece of that is where I don't think cable really plays well is customers that only need e-mail and they're not doing a whole lot, wireless is just fine for them. I hear that all the time and where there's capacity on the towers, it works fine. It's cheap. It accomplishes their needs. Cable is in a no-man's land, the middle tier, again, it might work for them, but if something comes along that's cheaper and potentially better, that's a tough one.

00:16:14] If there's a world where no market is fit for cable, how should we be thinking about the behemoths such as Charter and Comcast? Obviously, they're already going through some level of consolidation – for example, Charter's merger with Cox. Do you think those companies are not going to go away quietly? Might they have to rip up their plant and trench fibres or run them aerially?

JB [00:17:00]: It's a great question. When I look at what they're reporting, they're shedding cable broadband subscribers pretty heavily, too. Both Charter and Spectrum lost quite a bit. They can say it's because of this, that or the other, but it's happening regardless. Most of the fibre providers are reporting broadband growth… Subscriber growth. I don't know where they go, but because they have such diverse businesses, Charter and Comcast are knee-deep in the mobile world. They have content. They have other things they could be doing. What I do know is when they overbuild or they go into new areas, which they have the deep pockets to do, they are building fibre in a lot of those areas. I don't know if they go back over time and build fibre. I don't think they overbuild themselves. What they could do, they certainly have the resources to do is at least get to the latest version of coax and maybe get to multi-gig speeds with maybe not symmetrical speeds, but much, much higher upload speed. With their marketing resource and their ability to price aggressively, they could probably outrun it because they have the scope and scale to do that. The mid- to smaller cable providers don't. I'm not even in a Comcast market, and I get marketing stuff from them all the time. I just think they can outrun it because they can invest in it. In the short term, they're getting wiped out. They're losing customers at a pretty rapid pace, too.

00:18:37] We've seen some level of consolidation in the cable market, with Charter buying Cox. There's obviously going to be speculation of Charter and Comcast coming together after Comcast finally spinning off NBCUniversal. Is there a world where players such as Cable One might become part of that consolidation where they're potentially acquired by Comcast? Looking at the stack of who has the most passings, Cable One is no longer that far. It's in the middle of getting hollowed out, with that consolidation already happening. Is there a world where Cable One will not be left behind?

JB [00:19:57]: Yes. When I've been thinking about this for the past few years or so, I always thought, especially after Charter and Cox got together, I always thought that Cable One would make a nice acquisition for Comcast because of the fact that there's very little overlap in the 24 states. There were a handful of markets where Comcast had a presence that Cable One did, one being in South Carolina. I always thought that made perfect sense to fill in some of the holes as Comcast seeks to keep up with or grow past Charter and Spectrum. I don't know if that… The debt load that Cable One has might scare some potential acquirers away. Now Comcast has deep pockets, so maybe it wouldn't scare them away. I don't think there's a world where Cable One continues to operate like this in the next few years. I don't think they can.

Their market capitalisation with all the debt they have coming due and their free cash flow and the market capitalisation, they just don't… I don't know how they turn it around. If someone can swallow their debt load, then they're a good acquisition target, especially when you look at their stock price, which I don't know if you look at it today, but just for context, again, because I look at this all the time, public information, but when they bought Hargray, the stock price was around USD 2,100, about five years ago. When I looked this morning, it was below USD 11. I don't know what other outcome you might expect, but the balance sheet problem is not an easy one to solve for.

00:21:41] I’ve read sell-side research that suggests it would ascribe no equity value to the Cable One-Mega Broadband deal. Is it reasonable that there's very little equity value in the company right now to begin with? How should we be thinking about Cable One's acquisition of Mega Broadband? People are calling it a sunk-cost deal. Is that how you're looking at it?

JB [00:22:37]: I would say it this way. I don't know as much about Mega Broadband in terms of where they operate. I know a little bit about them. It might add value in terms of extending their market presence. Whatever the number is, USD 480m that they're taking on in debt is more harmful than the accretive value of the acquisition. If they're going to operate in those markets, that's going to require more investment because those are cable markets predominantly too, and you've got to maintain those networks. If you don't have the money to do that, are you setting yourselves up to actually incur far more expense than you can generate a return on. I don't know that… I would say this, if they had to make the decision today vs when they had to make it, it would be a different decision. I don't know that. That's just my gut.

00:23:36] ​Cable One has had a pretty bloated balance sheet for a while, where the company is unable to service customers. Could you walk me through that dynamic? I'm sure a lot of that has to do with capital allocation.

JB [00:24:33]: Yes, I'd be happy to, and I do have first-hand knowledge of that. They are very cost-conscious at times. Rightfully so, they don't want to spend money unnecessarily, although I come up with many times they did. If they lose a body, someone leaves or whatever, it's hard to replace them. It takes a long time to replace them. What has happened as they've lost people because there are people that see that the workload is going up, but there are a fewer people around, which puts more pressure on the ones that are there. People are leaving. They're not backfilling them. What they're doing is creating a bigger problem because now they have one less technician in the market to deal with troubles. Now instead of someone calling in and getting a technician out there in two days or three days or four days, it's five days or six days or seven days. There are options now. I don't think they're focused on the right things in that respect, and I don't think they ever were. It was acceptable to just let customers wait. They had their eye on different things.

I always thought that was problematic. It's actually one of the reasons I ended up leaving is because the customer was not at the centre of what they were trying to do. When you look on the ground, when you lose good people or you overtax them to the point where they leave and you don't fill them with people or you don't backfill those roles, you're just making your own situation worse. That's the reality of it. There are teams that had double-digit people that are down to three or four people. It's tough to keep up with that.

00:26:31] We talked about some of the structural issues. Do you see them being a needle mover in some of the subscriber trends that Cable One faced? Some of the markets are not what they used to be. 60% of the company's passings have a gig competitor or a gig-capable competitor. Could that have made a meaningful difference in some of the subscriber trends?

JB [00:27:10]: If they were better able to…

JC [00:27:11]: Being a little more customer-centric.

JB [00:27:14]: Yes, there's no doubt in my mind because I don't think people really want to leave, but when you can't take care of them and they have other options, they will leave. If you take care of them, they're going to stay for the most part, unless there's some compelling reason to switch. They're not taking care of customers, and that's been an ongoing problem for the last five years, and that's why they're in the situation they're in, in my opinion. I would also say they have a strategic issue in that, you've got local operations folks, but you have no local sales. They run a centralised sales. It's never made sense to me. You got someone coming from South Carolina to go sell in Mississippi. Things like that when sales are local. In my opinion, I just think that there's no strong sales strategy there, and there's no service strategy. You put those together and you get a company who's really struggling, which is where we're at.

00:28:26] Starlink is taking 2% share of the US broadband right now. Do you think that's a fair track across Cable One's footprint? Do you think Starlink has taken roughly 2% of Cable One's share? Is it a little bit lower than that? You said that Amazon is coming. How might it exacerbate that? Has Amazon already taken some share from Starlink? Satellite internet is at least a competitive, cheap solution. How should we be thinking about it in the context of Cable One vs Starlink?

JB [00:29:35]: What I'm seeing in markets I'm in is that Starlink is doing more and more. I don't know this intuitively, but I would bet that in the rural markets, and again, I read up on this stuff all the time, but Cable One is a little bit more exposed in the smaller markets. Starlink is easy. I know they've done some price increases here and there, but they still have some good promotional offers and because of Elon Musk and everything he's doing with SpaceX and how much he's in the news, you can't really avoid it. There's potential for them to take more share in the rural markets. Even in areas where there's fibre because, again, not everybody needs fibre, the power users may… People may want it, but if they realise they don't need it and they can get 250Mbps or whatever from Starlink, it's pretty compelling.

00:30:35] S&P's latest reporting mentioned a 35% or 33.5% penetration for Cable One, projecting that it'll go down to 28% by 2028. Who might be taking the company's market share in the immediate term? Maybe we can bring up Amazon here as well. While fibre is growing and cable is declining, the former is not growing significantly. 95% of all adds are typically broadband adds or fixed wireless. Obviously, Starlink is becoming part of that conversation as well. If the losses continue, where do you think it can go?

JB [00:32:03]: I think it's being spread around. I don't know. I can tell you that for the markets that I am familiar with because of the number of providers, each of them is getting a little piece, Starlink is getting their piece, but I think T-Mobile and Verizon are doing quite well as well. AT&T less so, at least where I'm at, but I don't know that that's going to be the fixed wireless and satellite will play a role. I don't think that's the overwhelming place that people are going to go to. There could be if maybe Cable One can retain some of those subscribers as well if they come up with a coherent strategy, but these markets that they used to be in used to have DSL competitors, and they were cable and so they were superior. Now there might be three or four other fibre providers.

Maybe none of them are getting rich off of it, but I think each of them are taking a little bit. That's all I can say. They don't really compete much with Spectrum or Comcast. That's fortunate because those two, as I said earlier, have the deepest pockets and can lower the price the most and market the best. I think it's just being piece-parted out, but I think Starlink will continue to take a little bit more share in their markets, especially when I look at Mississippi and Alabama, and they have a small market in Louisiana. These are not big markets, places in Texas, but yes, I'm not really sure. I just know that there are more options than there ever have been.

00:33:34] I've seen ARPU estimates of around USD 60 per month for Charter or Comcast. Cable One is very reluctant to lower its ARPU, sitting at USD 80 for residential broadband in Q2 2026. The company is expecting it to remain flat or stable. When do you see the inflection? It seems almost impossible that it can maintain ARPU for much longer at a USD 80 per month clip. How should we be thinking about pricing?

JB [00:34:48]: I think it's a seesaw and that if they keep pricing at USD 80, then I think their acquisition will be low and their retention will be low or churn will be higher. I think you got to take the one side of the seesaw and push it down a little bit so that you can grow your acquisition and grow your retention. I think something is going to have to give. What they're doing now isn't working. They've talked about mobile being their, I don't know, I won't say saving grace, but being a key part of the strategy to improve retention. Clearly, based on this year's results, while the mobile product might be getting an award for innovation, I saw at Cablefax or something, it's clearly not having the impact they expected or maybe things would be worse without it is another way to look at it, but I think something is going to have to give. If they want to keep the price the same, I think they're going to continue to shed subscribers faster than ever.

People on the outside looking in, they don't have anything to offer. They can tout whatever they want in terms of more reliable, better service, but at the end of the day, they get in with price and then they prove themselves and then maybe they can raise their price, but when you're on the outside looking in, you come in with a lower price, and it's compelling for people who think USD 80 is too high and they can't get someone to fix their stuff when it breaks.

00:36:20] Cable One's 49% adjusted EBITDA margin is pretty good. Obviously, that has a lot to do with keeping the pricing high. Do you see a clear inflection in terms of when the other shoe has to drop? Is it by the end of 2026? The company only lost 17,000 subscribers in Q2 2026, with 15,000 per quarter being the consensus estimate for the next two quarters. If that estimate holds true, do you think Cable One might hold on to its USD 80 ARPU?

JB [00:37:29]: I think they're going to try that. If it works, then they'll keep doing it. If not, there's going to be a point at which they have to course correct. I think they're going to try it, but I just don't know if they'll be successful doing it. Again, there's more options than ever before in all of their markets. If they can keep that, great, we'll see, but I would expect them to try to keep that. I just don't know that it will work.

JC [00:37:59]: You would expect it to accelerate past that in terms of broadband losses. 17,000 is probably the best it's going to be for a little bit.

JB [00:38:14]: That's what I think. I think about it in simple terms, okay, what's their value proposition? Okay. We're higher priced. We're coax, not fibre, okay, maybe that's okay for some customers, but we're struggling to maintain and our service model is broken. How do we justify the higher price again? When people think about that, not everybody is having bad service with them, too. In fairness, they offer probably if it's a bell-shaped curve, the majority of it is in the middle and there's good service, but it's the stuff on the outside you have to worry about. I think they have to refine their value proposition in order to maintain that ARPU, and I don't think they have from what I've seen.

JC [00:38:58]: Is that even possible with a cable network or with coax? That sounds like I'm talking about cable TV, but is that even possible? You mentioned mobile. I haven't really gone into that yet, but even then, they're not the only ones doing that either, everybody else is going to bundle mobile, too. What is the value proposition?

JB [00:39:28]: I don't know that the value prop is all that strong. What I would say is in a coax world, they don't have the deep pockets to invest like Comcast and Charter. I think those guys maybe could outrun the fact that they're cable companies by investing and whatever with all their marketing power, with their price… If Spectrum wanted to come in, and they had done this at periods of time in the past when Hargray was there, if they wanted to come in and lowball pricing and just take share, they could afford to do it in the short term, but Cable One can't. There might be a place for coax, but I think over time, the more AI and all these new technologies come into play, I think there's less and less a place for current coax without significantly upgrading the network. If you can get to the next version of DOCSIS is fine, but I've been hearing about that for four or five years, and it hasn't happened yet. Without the ability to invest in it, I don't see it happening anytime soon, at least across Cable One's footprint.

00:40:44] Do you see mobile being a loss leader? Cable One is offering lines for USD 15 per line. The company's promotional material mentions high-speed data of five gigs for USD 25 per month and unlimited for USD 30. How do you even make money on that, hoping the retention pays for it?

JB [00:41:19]: I will say this, I think it reeks of desperation, and I say that because in the past… This was on earnings calls and all kinds of things, the prior CEO said, "We don't believe mobile makes a customer stickier. We've never seen the value of that." Of course, when things aren't working, you go, well, all right, maybe we should try it. Theoretically, it's working for Charter and Comcast, but is it… They're growing their mobile base, but it's not necessarily stemming the tide of their broadband defection. I don't know that it's an effective strategy. I've looked at it pretty closely, and I have never seen anything that suggests people are less likely to leave if they have mobile with you. Personally, I had mobile with Spectrum and I cancelled it. I don't know. I don't know that those are tied. I just don't think they knew what else to do, to be truthful.

JC [00:42:16]: It already got out of the video business, too. You had to kind of bundle something else.

JB [00:42:23]: It's very capital intensive or very expensive business because unless they're doing direct fulfilment, which I don't know that they're doing, you have to stock those handsets. Those handset models, they're expensive, (1). (2), you're competing with Verizon and T-Mobile and these billion, trillion dollar companies, whatever they are, who can run a promotion on a handset and do all these things that you can't do, get the latest and greatest and you've got this inventory you have to cover. That can be a real drain, too.

JC [00:42:56]: My understanding from what I've read is to only bring your own device right now.

JB [00:43:05]: I didn't know that. I hadn't paid too much attention to it, but at least…

JC [00:43:09]: That limits your acquisition though.

JB [00:43:12]: Yes.

00:43:13] ​What might be the best outcome for Cable One? I wouldn't say it's a hot take to be pessimistic about cable here and Cable One within that.

JB [00:43:43]: It's a good question. If Cable One can go to the capital markets and get some money to pay off their debt, and get enough money to invest in their business, maybe… I'm trying to come up with something, but realistically speaking, I don't know if there's a good outcome. I think truthfully, the best possible outcome that I see is one of two things. I don't know that they're palatable to another provider, but one would be to piece part out some of the assets in their most competitive markets and sell them off to get money to invest in their less competitive markets, so they could figure out how to maintain or grow share there. I think there'd be interest in that from some other providers or sell themselves completely, but again, with the debt load that they have, I don't know that that's attractive to anybody on the whole. I don't see a way out of this for them at this point. I think they're too far downhill to climb back up.

JC [00:45:03]: Cable One talked about potentially monetising some of its JVs, such as Clearwave and Point Broadband. The company might be closing the deal for Mega Broadband. I haven't seen the official release yet, but assuming…

JB [00:45:32]: It's coming.

00:45:32] What are your thoughts on the idea that the Cable One-Mega Broadband deal is a sunk cost and Cable One would like to get out of that if it could? It seems that the company might have to sell the Clearwave or Point Broadband JVs. Is it about cutting your losers to pay for the losses? How should we be thinking about this?

JB [00:46:22]: I think that is an outcome I hadn't thought about. I don't know how much they own of Clearwave anymore, but Clearwave is very aggressively buying other companies who are being… They essentially bought Point even though it was announced as Point buying them. Now they've announced that Visionary Broadband acquisition, which takes their footprint out west. The valuation there, depending on what they could get for their percentage ownership could very well be high enough that it helps them dig out of the hole that they're in, but then you're forgoing the future value of that whole company, but that is one potential outcome I hadn't thought about.

JC [00:47:03]: Is that further delaying the inevitable?

JB [00:47:17]: No, no. It could be. At what point do you throw bad money in after good? It's a great question. I don't know. I really don't. I just believe there's… Let me just back up a second. I've had a lot of conversations with a lot of people and customers, too, or residents in the area, and there's just not a lot of confidence in them. I don't know how you turn that around at all. I don't know that they can, but if they were to shed some of those assets and get a good return for them, when you say does it delay the inevitable, it might, but it might delay it by many years. During that time, the whole world could be different. Who knows?

00:48:16] What should we be paying attention to from a broader cable broadband industry perspective?​

JB [00:48:49]: I don't know if this will answer your question, but it is a data point that I'll give you that when you say, could they turn this around, one thing that I've done some research on, and you could pull it up yourself and maybe you have, but they're very… Their SG&A, their expense as a percent of revenue is 4x what Charter’s is and much higher than Comcast. I think that they need to streamline their management structure. There's stuff online, people post about just them being way too top-heavy. Of course, they have a headquarters in Phoenix, which is not a market they operate. There's some inefficiencies there because it's a standalone and all the expense that goes into that. I think if they were to streamline their operation, they've got a lot of money embedded in SG&A expense and executives and those types of things. They could rightsize that, put some of that money into the field where customers are and try to turn things around. I think if they went to market to customers with strong loyalty programmes, retention offers and/or focused on their underperforming assets and maintain them and upgraded them, I think it would really help them, but I don't know where that money comes from otherwise, unless they sell off an asset or cut some of their costs.

I saw something that said their SG&A was 25% of revenue. That's way high in my opinion. When you look at it comparative, like I said, it's much higher than other cable companies. Maybe they're not apples-to-apples because of the size of those other companies, but still, I think they have to look at their cost structure for sure. They may need to centralise some functions. I don't think sales is one of them, but there are other things that maybe they don't need like GMs in the field as much, maybe they can create regions instead of states and things like that. That's another way to at least try to cut some costs out and go to market.

00:50:55] You mentioned the higher SG&A cost. Almost 50% of the cost base is SG&A, but couldn't that just be attributed to scale? Do you think there's still meaningful room to work on that?

JB [00:51:26]: Yes, there's meaningful room to work on it in my opinion. It's public information, what they're paying their executive team. I know what some of those people do. I would just say there's opportunity for them to make tough decisions to invest more money back in the markets.

JC [00:51:49]: We're not talking necessarily about lowering that cost base. It's more about better allocating the funds in your mind. Are the margins still strong to that point?

JB [00:52:03]: Yes. I think you could have a compelling message to your customers if you said, hey, we're going to upgrade your network or we're doing maintenance to make sure… Whatever it is, I don't know. The messaging, that's not something I can really pull off the top of my head, but let customers know we're investing in you. We appreciate your loyalty. Whatever it is, and I know they do some of that, but they do it more around sizzle and no substance. The rubber meets the road on how does the network work? Does it work for me when I need it to work for me? That's just my two cents, from what I see. Because again, it's no secret, but the reason there's so many competitors entering the market, at least in South Carolina, is because their network is so bad. People post… I could go on… I'm not sure if you're familiar with the Nextdoor site where people post stuff. I could go on that right now, and I bet you, I could pull up 20 listings in the last three days of people complaining about how poor their service was. Then they can't get a technician out there. I mean, granted, that may be the vocal minority, but nonetheless, people see that stuff and it festers.

JC [00:53:20]: We're going back to the coax vs fibre conversations. Is that just the nature of the network, or is it because of so much underinvestment for years? You mentioned a lot of stuff has been around for 30 years.

JB [00:53:36]: Yes, I think it's a combination of both, but I would say this that the assets they bought in South Carolina were not maintained well. They were undermaintained when Cable One bought Hargray's assets. My opinion, I don't know who would agree or disagree, but I'll just say they way overpaid for those assets, way overpaid for them.

00:54:01] Even if Cable One rightsizes some of the SG&A, will upgrading the plant across the footprint be reasonable? The company has a cost base of USD 180m. There are a lot of different geographies to do this over. Someone who is pro-Cable One might say, "There are probably other networks that are better maintained." Do you even see that as a realistic possibility?

JB [00:54:50]: Do you see them maintaining the network as…

JC [00:54:54]: Just upgrading the plant as best as it can.

JB [00:54:57]: I don't think they can do it right now because of their financial condition, but I think if they can figure a way around that, if I was them, I would scale back my discretionary capital outlays, except for where there's customer retention issues and higher competition. I would really try to work on maintaining and retaining those customers, first and foremost, but the other side of that coin is if there's that much competition there, are we spending money that we're not going to get a return on, but if you don't try, then you seal your fate. I don't see it happening right now because I don't think… First of all, I don't think they have the human resource anymore. They've lost a lot of good people, and there's more getting ready to leave. They're trying to shed employees right now to cut costs. The other thing is the capital outlay they require. They're in no man's land in the way I see it right now.

00:56:00] We've talked a little bit about the no man's land. Obviously, investors are starting to get worried, specifically those in debt. The debt pricing is down to USD 0.58 on the dollar for some of Cable One's instruments. Do you view this primarily as a balance sheet issue, or is it just an asset issue? Even if the company gets the balance sheet right, is it just going to slow down the freezing of the melting ice cube? If it had a better balance sheet, it'd be able to invest in the network. Does it go beyond having to service that debt? Are there any serious issues with how the business is run?

JB [00:57:06]: I'm not there anymore, so I don't know as much about the day-to-day by any means. I had serious issues with the way the business was run in the past. I think if they did have a better balance sheet, there are markets where they have a good name. They were the local company long before anybody else was there. I think they could do okay in those markets. The ones that are more rural where they were the cable company competing with the DSL provider. Until BEAD money came into play and then maybe fixed wireless, there really wasn't competition. I think those still exist. There is more competition, but still not like there are in the South Carolina markets as an example.

I think they could repair themselves in some of those markets, but it's in the markets where these other providers are investing heavily, where if you figure that we said a market can support three or four providers, and they've got five or six or seven, that genie is not going back in the bottle there. At least in the short term, those providers are there, and there's not a whole lot you can do about it anymore. You let them come in because you didn't take care of your customer base. It's hard to go back on that, but not all the markets are like that. There's only three competitors or maybe three in fixed wireless. I think they can repair themselves in those markets if they put a good strategy together because they have a decent name in some of those markets.

00:58:34] Let's say there's some level of consolidation and many fibre overbuilders get rolled up into one of the big players. Cable One is a cash-flowing business. If we're going to expect consolidation and eventually get to a point where there's less competition, can the company maintain some level of market share where it can survive until the competitive environment dissipates? Or do you see that being unlikely, given the trends with subscribers?

JB [00:59:43]: I think in some of their smaller markets, they could ride it out potentially. I don't know about in all markets where there's much heavier competition. I think they have potential to be wiped out fully in those markets, but where there's less competition where they have a good name, they're kind of a legacy provider that's been around for a while. I think they could potentially ride it out, but that may mean they have to sell off some of the other markets to raise money to invest back in the business in those other markets. I think they got too big for themselves really and didn't know what they were buying, and that's really what's harmed them to some degree.

JC [01:00:23]: Thank you so much for your time and your commentary today. I think that's a great place to end it. Thank you so much for joining me.

JB [01:00:27]: All right. Thank you.

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