Time Warner Cable Inc.
), the second largest cable MSO (multi service operator) in the
U.S., acquired regional fiber-optic network company, DukeNet
Communications LLC, for $600 million in cash. DukeNet was a 50-50
joint venture between
Duke Energy Corp.
) and Alinda Capital Partners.
DukeNet has an extensive fiber-optic network of more than
8,700 miles across North and South Carolina and five other states
in the southeastern part of the U.S. DukeNet offers data and
high-capacity bandwidth services to wireless service providers,
data centers, government and enterprise customers. Acquisition of
DukeNet will strengthen the Business Service division of Time
Cable MSOs are facing massive competitive threat from
fiber-based TV network of telecom operators, satellite TV
operators and online video streaming service providers. In order
to counter this threat, cable TV operators are increasingly
targeting enterprise customers. Business Service has become the
key growth area of Time Warner Cable. In the third quarter of
2013, the company generated $565 million revenues from this
segment, up 21.8% year over year.
Moreover, Time Warner Cable is incurring mounting programming
expenses. In Sep 2013, the company had to settle a deal with
), with significantly higher programming costs. In contrast, the
Business Service division is a high margin one. Acquisition of
DukeNet will enable the company to deliver more network services
to wireless towers. In 2011, Time Warner Cable had purchased
NaviSite Inc., a cloud-based information service provider, for
$230 million to strengthen its Business Service division.
Charter Communications Inc.
), the fourth largest cable TV operator in the U.S., is
aggressively targeting to acquire Time Warner Cable. However,
Time Warner Cable stated that before finalizing any deal it will
thoroughly evaluate whether the deal will add sufficient value to
its investors. Notably, shareholders of the company have approved
the divestiture. Time Warner Cable currently has a Zacks Rank #2
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