Cable One Inc.

Our stable outlook on Cable One reflects our belief that while leverage is currently strong for the rating (at around 2x), the company will eventually increase leverage to the 3x area to fund acquisitions. We believe a downgrade is unlikely over the next 12 months and would most likely be caused by a more aggressive financial policy such that acquisitions, dividends, or share repurchases push leverage above 4x on a sustained basis. We estimate the company would need to engage in roughly $1.5 billion shareholder returns over the next year for this to occur. It is difficult to envision a scenario in which operating performance deteriorates to the point of leverage rising above 4x without debt-funded initiatives, as this would

...High-margin broadband revenue should continue to grow at a healthy rate for at least the next two to three years driven by price increases and subscriber growth. The increasing importance of high-speed data (HSD) should enable Cable One Inc. to continue to monetize demand as customers migrate to faster tiers to enable video streaming on multiple devices, online gaming grows, and new applications emerge. S&P Global Ratings believes Cable One will continue to grow subscribers from a combination of more homes passed and market share gains from telco competition that uses copper-based infrastructure with inferior speeds, though these opportunities are dwindling. The COVID-19 pandemic will have a limited impact on earnings and cash flow. Large-scale quarantines have increased both the importance of reliable high-speed internet connections and the demand for faster tiers, accelerating HSD revenue growth, which accounts for the vast majority of Cable One's earnings. Video cord-cutting could increase...

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