COVID-19 brings silver linings and grey clouds to US internet provider
The expert, a former VP, started by expressing concern that the company’s strategy playbook established in 2011-12 “really needs to be refreshed”. The conversation then moved on to the implications of COVID-19, with an overall net negative effect anticipated by the specialist. On the positive side, demand for high-speed data (HSD) “continues to be extremely resilient, if not in higher demand than previously”. However, he explained why “data usage is going to be a problem that they’re going to have to reevaluate”.
The company’s position in terms of bad debt as a result of COVID-19 was marked as a “huge weak spot” in the Interview. Cable One has logged “substantial top-line growth” on the business services side; however, SMBs, which are being hit hard by the pandemic, represent most of that growth. Moreover, the company has reached an inflection point in terms of SMB market share, it was noted.
Another area of focus was the disruptive nature of 5G or fixed wireless access, and the level of threat these pose to cable operators. Although Cable One does not see 5G as a threat, the specialist warned that this is an oversight. He pointed to Boise, West Valley, as a market that “any investor who’s looking at Cable One needs to evaluate” because Horizon is installing towers there. The company is “missing the nuance” of the 5G movement, he said.
Overall, the Interview signalled that Cable One needs to pay greater attention to its competition, as well as HSD APRU and customer churn. “They’re going to continue with the price increases, which, again, I think is a mistake, but in general the safe haven strategy of being in rural America has saved them,” the expert said.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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