Mega Broadband Investments Intermediate I LLC

Overview Key strengths Key risks Provider of fastest broadband services in most of its markets. Increasing competition from local telcos aggressively building out fiber-to-the-home (FTTH) services. Favorable margins in the low-50% area.High barriers to entry given capital spending requirements and rights of way. Competition from wireless players offering fixed wireless broadband services could limit net adds from digital subscriber lines (DSL) over the near to intermediate term. Good revenue visibility from increased demand for high-margin broadband. Participation in lower-income markets that have kept broadband penetration rates below incumbent peers. Strategically important to higher-rated minority shareholder Cable One. Elevated financial leverage around 5x and limited free operating cash flow (FOCF) on elevated capital spending. .  S&P Global Ratings believes Vyve's subscriber base

...Mega Broadband Investments Intermediate I LLC's (doing business as Vyve) price increases combined with modest subscriber growth should translate to mid-single-digit percent broadband revenue growth through next year. S&P Global Ratings believes Vyve's subscriber base will organically expand at about 1%-2% annually through 2024, lower than our previous estimate of about 2%-3%, driven by intensifying competition from overbuilders and fixed wireless. We expect net high-speed data (HSD) organic subscriber additions to be only about 3,000 compared with our previous expectation for about 5,300 net adds in 2023. We believe more intense competition from regional overbuilders, electric co-ops offering FTTH, and fixed wireless have had a greater impact on limiting Vyve's HSD subscriber growth. In 2024, we expect modest broadband subscriber growth of about 2,000-4,000 net adds as customer additions could remain under pressure as fewer copper wire-based customers are converting to cable, instead opting...

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