MetroNet Holdings LLC

Our adjusted leverage metrics include $200 million in preferred equity from the sponsor, which we treat as a debt-like obligation, adding about four turns to our debt-to-EBITDA leverage metric. Although we recognize the preferred equity has some favorable cash flow characteristics, we do not believe the key financial terms of the preferred equity are strong enough to treat this instrument as equity. The stable outlook reflects our expectation that MetroNet will be able to significantly reduce its S&P Global Ratings' adjusted leverage to the 9x area through earnings growth over the next 12 months as the company develops new markets and increases its broadband penetration. We could lower the rating if aggressive competition or execution missteps resulted in an inability

...High-margin broadband revenue should continue to grow at a healthy rate for at least the next two years driven by price increases and subscriber growth. The increasing importance of high-speed data (HSD) should enable MetroNet Holdings LLC to continue monetizing 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 MetroNet's subscriber base will continue to grow from a combination of more homes passed and market share gains from telecom 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 the importance of reliable high-speed internet connections and demand for faster tiers, accelerating HSD revenue growth, which accounts for the vast majority of MetroNet's earnings. Video cord-cutting could increase...

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