Midcontinent Communications

The stable outlook reflects S&P Global Ratings' expectation that Midcontinent will benefit from solid growth from broadband and commercial services in the near term, and that competitive dynamics in its territories will remain favorable relative to other incumbent cable operators, such that leverage declines to the low-4x area from about 4.5x. We could lower the rating if the company completes a debt-financed acquisition or dividend that pushes leverage above 5x. Also, we could lower the rating if a more competitive environment resulted in the EBITDA margin declining to the mid-30% area, leading to debt leverage rising above 5x with little sign of improvement. We could raise the rating if Midcontinent's leverage declined to below 3.5x and we were confident that

...We expect high-margin broadband revenue to continue to grow at a healthy rate for at least the next two years driven by price increases and subscriber growth. As broadband becomes increasingly important in consumers' lives, we believe that demand for faster internet to stream video on multiple devices will allow Midcontinent Communications (Midcontinent) to raise prices as customers migrate to faster speed tiers. We also believe that Midcontinent 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. Midcontinent's broadband moat provides a powerful hedge against video cord-cutting over the near-term. We believe the plethora of online streaming alternatives will result in video subscriber losses continuing to decline by about 5%-6% per year over the next two years. Still, Midcontinent should be able to limit earnings and cash...

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