Cincinnati Bell, a wireline telecommunications company with significant fiber assets, today announced that Macquarie Infrastructure and Real Assets (MIRA), through its fund Macquarie Infrastructure Partners V (MIP), has completed its acquisition of the company in an all-cash transaction at an enterprise value of $2.9bn.

Transaction Background – Macquarie Infrastructure Buys Cincinnati Bell

A transaction for Cincinnati Bell was originally announced in December 2019, some 21-months prior, when Brookfield Infrastructure offered $10.50 per share for the company. Through subsequent competing offers, Macquarie Infrastructure (MIP) emerged as the successful acquirer of Cincinnati Bell, in March 2020, with an offer of $15.50 per share.

Overall, Macquarie Infrastructure’s proposal represented a 48% premium to Brookfield Infrastructure’s initial offer. In terms of valuation, Macquarie Infrastructure priced Cincinnati Bell at an EV / EBITDA multiple of 7.2x. Indeed, this transaction demonstrates the strong demand among digital infrastructure investors for Cincinnati Bell’s sizeable fiber network.

Below we review Cincinnati Bell’s digital infrastructure portfolio to highlight the company’s relevance to Macquarie Infrastructure.

Cincinnati Bell – Overview

Cincinnati Bell is a wireline telecommunications company which provides high-speed internet, video, and voice services to residential and business customers. Presently, the company’s footprint passes more than 1.3 million homes with both fiber infrastructure and legacy copper.

Cincinnati Bell is in the process of upgrading its network to fiber infrastructure, from this legacy copper. Indeed, the company has upgraded 50%+ of its network to-date, representing 17.8k+ fiber route miles in metro and last-mile locations. Geographically, this fiber network traverses:

  • Greater Cincinnati: 12.9k+ fiber route miles and 503k units passed with fiber-to-the-premise (FTTP)
  • Hawaii: 4.9k+ fiber route miles and 195k units passed with fiber-to-the-premise (FTTP)

Fiber-to-the-Premise (FTTP)

Cincinnati Bell’s fiber serves the Midwest region including Ohio (particularly Cincinnati), as well as parts of northern Kentucky and southeastern Indiana. In Greater Cincinnati, the company deploys and provides fiber services under the brand Fioptics.

Greater Cincinnati Network Map – Cincinnati Bell
Cincinnati Bell Midwest Network Map

Additionally, Cincinnati Bell’s significant network presence in Hawaii was gained from its acquisition of Hawaiian Telcom in 2018.

Hawaii Network Map – Cincinnati Bell
Cincinnati Bell Hawaii Network Map

Enterprise Fiber

Cincinnati Bell provides enterprise fiber services to businesses and carriers. Specifically, these enterprise fiber services include metro-ethernet, dedicated internet access, wavelength, IRU contracts, SONET (Synchronous Optical Network), and wireless backhaul to macro towers and small cells.

In Greater Cincinnati and its contiguous Midwest markets, Cincinnati Bell connects 30.2k lit addresses (i.e., a commercial address with fiber-based services). Additionally, the company supplies cell site backhaul services to ~90% of the 1.0k cell sites in the Greater Cincinnati market.

In Hawaii, Cincinnati Bell connects 21.2k lit addresses and focuses on high-bandwidth data transport products, such as metro-ethernet. Additionally, the company generates revenue from its ownership of the Southeast Asia to United States (SEA-US) subsea cable. Finally, Cincinnati Bell supplies cell site backhaul services to 80% of the 1.1k cell sites in Hawaii.

Competitors

Cincinnati Bell competes with wireline companies including AT&T, Horizon Telcom, Lumen Technologies, Windstream, and Zayo. In addition, the company competes with cable multiple system operators (MSOs), such as Charter Communications.

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