Seemed like it took a rather long time to close, but ABRY Partners has finally completed its acquisition of RCN. The $1.2B deal was originally announced five and a half months ago back in March, and the question I had at the time is what ABRY's intentions were toward the metro fiber arm of the company, RCN Metro. That question is at least partly answered.
According to the press release, RCN Metro will be separated from the consumer and small business unit, and will be led by CEO Mike Sicoli, formerly EVP and CFO of RCN. That will free up RCN Metro, which had necessarily been managed fairly conservatively due to the overall condition of its parent - the triple play business is a tougher neighborhood. Despite that, the metro fiber division had been putting up decent growth numbers and increasing its EBITDA margin into the mid-30% range.
The questions don't end here though, as just what direction ABRY will point the newly separated company in is still unclear. Is there more M&A on the horizon? One match that I find quite interesting for these assets would be Intellifiber, which is known to at least be testing the M&A waters. Or might we simply see an organic expansion fueled by a well-funded capex budget, as FiberLight is doing to the south?
A third alternative would be for ABRY to turn around and flip it - at an 8-10 multiple that would be some $500-600M, and I'll bet they could get that easily if they tried. But I suspect they have plans to operate it for now.
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