In much the same way that cell phone operators are reaching a critical customer mass, cable system operators are increasingly looking for new customers in need of digital services. There are only so many qualified households to go around and those are being assimilated quickly. A cable operator that has a solid business plan to locate and upgrade these remaining households, and retain them once upgraded, is a cable operator that should be ready to produce reliable profits for some time to come.
NexHorizon Communications Inc., a cable system developer and operator, works to acquire and upgrade rural cable systems to triple-play (phone, TV, broadband) digital services. The company has plans to become a national operator but is currently concentrating its efforts in the Southern California and Upper Midwest regions.
The company has made a solid beginning in its quest to become a leading national cable operator. In 2007, it began acquiring smaller rural systems in the San Diego area to upgrade and operate their systems. In recent weeks, the company has signed letters of intent for a Michigan system and two additional systems in metro San Diego. Closing is expected in the fourth quarter of 2008 for the Michigan system; no date has been announced for its Southern California system acquisitions. As the company works to consolidate its recent system acquisitions, it expects to immediately add an additional 30,000 subscribers and an estimated $21 million in revenue.
Although the practice of “redlining” is frowned upon (redlining is the practice of identifying individual communities for selective cable upgrading based upon income) in the cable world, NexHorizon Communications business plan of upgrading rural regions to current cable standards is looked upon favorably. As the upgrading of rural systems to broadband is a large issue in these regions of the country, the company is likely to have its pick of systems for customer-base additions.
The company has been careful not to add systems too quickly; rather opting to pay close attention to customer service and retention figures – a large issue with many cable operators. As NexHorizon reaches its critical mass of customers through acquisition and organic growth, current and projected revenue growth does appear to indicate a solid and consistent profit potential.
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