Texas Firm To Consolidate Broadband Providers


Texas-based TPG a private equity firm has purchased cable/telecommunications companies RCN and Grande Communications Network in a $2.25 billion dollar deal with the goal of creating a top-ten cable and internet provider. Google Capital, Alphabet Inc.’s investment fund will also take an unspecified minority stake in the companies. The transaction is expected to close in the first quarter of 2017.

Both companies were purchased from Boston-based ABRY Partners, another private equity firm in two separate transactions.

TPG is partnering with Patriot Media, a media company led by Steve Simmons and Jim Holanda, that currently manages both RCN and Grande. The companies serve markets in Austin, Boston, Chicago, Dallas, Lehigh Valley, New York, Pennsylvania, San Antonio, and Washington, DC. The goal of the deal is to expand the footprint of Patriot media by adding markets and improving service delivery.

Patriot Media says it will use the cash infusion from TPG to reinvest in its networks and add more gigabit internet service capabilities.

Even so, the deal also represents another consolidation in an already narrow broadband market. Smaller companies like RCN and Grande have been acquisition targets in recent years as providers try to move into new areas or take market share away from big providers like Verizon and AT&T, but that often means fighting over higher population cities and towns at the expense of rural areas or small localities. Many cities in the US only have a single service provider available. In lieu of reliable, affordable high-speed service choice some municipalities have attempted to set up municipally supported networks, but those efforts have come under attack from private providers.

The FCC recently stepped in to try and support local networks, but those efforts were overturned last week by the US Court of Appeals for the Sixth Circuit, which ruled in favor of large providers. 19 states currently have laws on the books supported by the telecommunications industry to limit municipal broadband networks.