Midcontinent Communications

Overview Key strengths Key risks Well-run cable operator capable of delivering 1 gigabit per second (Gbps) internet speeds in nearly all of its markets. Increasing number of competing fiber buildouts. Favorable programming agreement with Comcast. Potential for debt-financed mergers and acquisitions (M&A) that could increase its leverage above 4x. Good revenue visibility from increased demand for high-margin broadband. Longer-term potential for rate regulation under Title II. The increasing importance of high-speed data (HSD) will likely enable Midcontinent Communications to continue monetizing this demand as customers migrate to faster tiers to enable video streaming on multiple devices, the popularity of online gaming increases, and new applications emerge. We expect the company?s average revenue per unit (ARPU) in its HSD business to

...The company will benefit from rising high-margin broadband revenue for at least the next two years supported by its price increases and subscriber growth. The increasing importance of high-speed data (HSD) will likely enable Midcontinent Communications to continue monetizing this demand as customers migrate to faster tiers to enable video streaming on multiple devices, the popularity of online gaming increases, and new applications emerge. We expect the company's average revenue per unit (ARPU) in its HSD business to increase by 3%-5% over the next two years before moderating to about a 3% annual expansion over the longer term. We believe Midcontinent Communications will increase its subscriber base by 4%-5% over the next two years by continuing to take market share from telcos that offer inferior speeds....

Full Report