Blackstone, through two of its funds, Blackstone Tactical Opportunities and Blackstone Infrastructure Partners (BIP), today announced an investment in Hotwire Communications, a fiber-to-the-home (FTTH) provider in the United States.
Hotwire Communications – Overview
Hotwire Communications is headquartered in Fort Lauderdale, Florida and is a fixed broadband provider. Through its 100% fiber infrastructure, the company offers broadband Internet, voice, and IPTV services under the Fision brand to residential and business customers.
Hotwire Communications serves over 200k customers in 600 communities across Florida, Georgia, North Carolina, and South Carolina. Specifically, the company specializes in multiple dwelling units (MDUs), including gated & active adult communities, single-family home developments, condominiums, and student housing.
Business Model
Overall, Hotwire Communications’ business model focuses on providing services under exclusive contracts and typically on a bulk basis for broadband Internet and/or VoIP services. Therefore, the company often serves 100% of the residents at the properties that its network connects to.
Hotwire will often submit one bill to an Association for its services, and residents pay that Association through homeowner’s expenses.
Blackstone – Supporting Hotwire Communications’ Growth
Blackstone is a global private equity firm with $649bn in assets under management (AUM). However, the firm is making the investment in Hotwire Communications through two funds with distinct strategies.
Firstly, Blackstone Tactical Opportunities is the firm’s vehicle for investing in “high-conviction themes”, which in the case of Hotwire Communications, are data proliferation and consumer connectivity. Secondly, Blackstone Infrastructure Partners is the firm’s permanent capital infrastructure vehicle, with a return target in the core to core+ range.
Strategy
Blackstone intends to scale Hotwire Communications’ business through further investment from these two unique capital sources. Notably, Blackstone Tactical Opportunities can make investments in both equity and debt, which are both key components for fiber build-outs. Additionally, Blackstone Infrastructure Partners’ permanent capital is ideal for Hotwire’s fiber-to-the-home deployments, which can often have long payback periods of 10 years or more.
Rural Digital Opportunity Fund (RDOF) – Support Won
Hotwire Communications’ fiber deployment also has support from the Rural Digital Opportunity Fund (RDOF) program. Specifically, Hotwire Communications was the 65th highest recipient of support funds from the RDOF Phase I Auction (Auction 904).
In the RDOF Phase I Auction, Hotwire Communications received support of $5.2m, over 10 years. Specifically, this support was awarded solely in Florida, in 3.2k locations, equating to $1,593 of support per location.
Overall, Hotwire Communications will use the RDOF funding to construct and operate new fiber optic networks in Florida. Indeed, the company will provide download speeds of 1 gigabit per second and upload speeds of 500 megabits per second.
