Comcast Buys a CLEC, More On the Way?

October 7th, 2009 by · 7 Comments

Cable MSO giant Comcast (NASDAQ:CMCSA, news, filings) is apparently buying Cimco Communications, a Chicago area CLEC that serves 2300 small and medium sized business customers.  Chicago is Comcast territory of course, and this purchase is clearly intended to give them a broader footprint amongst those customers.  This acquisition strikes me as a scouting foray.  After integrating a CLEC with an MSO on a relatively small scale in a single market, Comcast may see a path forward toward larger acquisitions across their footprint.

Comcast's intentions in the business market have always been a bit of a puzzle to me.  While small relative to Comcast's residential business, the business services division did $198M in revenue last year.  It's a substantial business yet one which I don't have much data for on my metro fiber list and on-net buildings list.  Most of their customer base are the smallest businesses, those with 2-20 people, and Comcast serves them with its usual hybrid fiber/coax infrastructure.  Cimco's customers are generally in the next tier of 20-50 people.  Larger companies are more likely to need direct fiber access, so I wonder if Comcast intends to pull fiber to bring these guys on-net.

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Categories: Cable · CLEC · Mergers and Acquisitions

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7 Comments So Far


  • Anonymous says:

    This possibly explains PAETECs recent stock move in combination with a recent analyst price target upgrade. The customer profile fits them as well.

    • Rob Powell says:

      Hmmm, Paetec and Comcast? That would be quite a mind-bender of a merger! Not one I believe is likely just yet, but still – it would certainly change the rules overnight.

  • Anonymous says:

    Fitch did a CLEC consolidation report about a year and half ago, primarily focusing on cable companies purchasing various clecs. Paetec, TWTC, XO, LVLT were featured and each were analyzed to what they brought to the table.

  • ES says:

    Do you have a PDF of that report you can share, Rob you usually have a good guess on these things. Who makes the most sense as a target from the cable space?

    • Rob Powell says:

      I’m still thinking about it. The hard part about cable MSOs buying CLECs comes down to territory overlap. A cable company buying a CLEC is doing so to leverage its infrastructure and not to fight the ILECs by leasing local loops and such. But cable territories don’t really match up to CLEC territories in most cases, so perhaps the likeliest scenario is something like this CIMCO acquisition. Small CLECs with a focused geography that falls clearly within an MSO’s footprint.

  • Fisher says:

    Comcast will only acquire where they have a cable network — PaeTec is national – no interest. Comcast is looking for (1) deeper reach by local fiber, (2) companies with biz customers and (3) experienced telecom management. The Chicago move was brilliant.

    Another fit for Comcast could be AFS – Comcast markets seem to have a high overlap with the exception of LasVegas – perhaps Vegas would be attractive to Comcast. If not, there probably would be many buyers for the AFS Vegas network if divested by Comcast. Cox would not like Comcast in Vegas!

    Rumor has it Comcast paid well north of 12x EBITDA for the Chicago CLEC.

  • Anonymous says:

    Here is a link to the Fitch report “Overview”. You will need to register on the Fitch website, which I believe is free to gain access to the full report.

    http://www.reuters.com/article/pressRelease/idUS134077+24-Mar-2008+BW20080324

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