Private equity fund TPG Capital became the newest player to advance the current wave of consolidation affecting the U.S. cable industry, agreeing Monday to acquire regional cable firms RCN Telecom Services and Grande Communications Networks from ABRY Partners in a pair of separate, but related transactions valued at $2.25 billion.
RCN provides broadband and video services to 289,000 customers in Northeastern and Mid-Atlantic markets that include New York, Boston, Philadelphia and Washington, DC, while Grande serves 88,000 subscribers in Dallas, Austin, Chicago and other mid-western U.S. markets. (Notably, Grande is also the first cable system operator to deploy gigabit-speed broadband network services in Austin, Texas.) Stressing that the investment (calculated at $1.6 billion for RCN and $650 million for Grande) “reflects TPG’s strategy of identifying and partnering with unique companies that are at the forefront of thriving and evolving industries,” TPG explained in a press release that it intends to combine RCN and Grande with the goal of “[challenging] incumbent telco and cable operators by focusing on providing high-quality and more reliable communications services along with better value and customer service.” RCN and Grande are both managed by Patriot Media, and TPG confirmed that Patriot “will continue to make significant investments in the network and in technology that will enable RCN and Grande to expand gigabit per second high-speed data services, creating the premier Internet experience in their markets.”
Contingent upon receipt of regulatory and other required approvals, the parties expect to consummate the transactions during the first quarter of 2017. Describing TPG as “the ideal partner to help us build on a vision of delivering the best broadband and overall customer experience,” Patriot CEO Jim Holanda, who is slated to lead the merged entity, told reporters, “we are very eager and excited about partnering with a premier investor such as TPG to take the two companies to new levels of customer satisfaction and performance.” Asserting that “high speed data has become, and will remain, the essential connection for both consumers and businesses,” TPG partner David Trujillo said, “we look forward to partnering with [RCN and Grande] to invest in this critical communications infrastructure.”