Time Warner Paying $600 Million for DukeNet to Expand Presence in Southeast US

Andrew Klips |

Time Warner Cable Inc. (TWC) said Monday morning that it will spend $600 million in cash to acquire fiber optic network provider DukeNet Communications LLC as it aims to grab more market in the Southeast United States.  Time Warner inked a definitive agreement with Duke Energy Corp. (DUK) and privately-held Alinda Capital Partners, who each own 50 percent of DukeNet.

Charlotte, North Carolina-based DukeNet specializes in providing data and high-capacity bandwidth services to wireless carriers, data centers, government and enterprise customers.  Its fiber optic network spans 8.700 miles and includes customers in North and South Carolina as well as five other surrounding states.

The sales as part of a plan at Duke Energy, the largest electric power holding company in the U.S. with more than $110 billion in assets, to divest some non-core assets.  DukeNet was only a small portion of Alinda as well.  The company is one of the world’s biggest infrastructure investment firms, with roughly $7.8 billion in equity commitments to infrastructure investments across the U.S., Canada, the U.K. and Europe.

“Business Services is a key growth area for Time Warner Cable and this acquisition will greatly enhance our already growing fiber network to better serve customers, particularly those in key markets in the Carolinas,” said Phil Meeks, Executive Vice President and COO of Business Services for Time Warner Cable.

The transaction is expected to close in the first quarter of 2014, pending customary closing conditions.

Time Warner has been making moves to broaden its footprint in the broadband cable space and business offerings as competition in programming for television has grown increasing challenging.  About a month ago, Time Warner ended a month-long impasse with CBS Corporation (CBS) over programming rights that resulted in Time Warner customers in select regions being blacked-out of popular programming like Showtime as well as sports programming for NFL, MLB and college football games.

In August of 2011, Time Warner said it was spending $3 billion to buy Insight Communications, the ninth largest cable operator (also a high-speed Internet and phone provider to consumers and businesses) in the United States.  Insight had about 750,000 customers throughout Ohio, Kentucky and Indiana at the time of purchase.  The merger was completed in February 2012.

Currently, NYC-based Time Warner is the second largest cable company in the U.S., trailing only Comcast Corp. (CMCSA) .

Shares of TWC are trading about 1 percent lower in early Monday action at $111.70, but are still ahead about 18 percent so far in 2013.

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Companies

Symbol Name Price Change % Volume
CBS CBS Corporation Class B 62.64 1.67 2.74 2,308,466
TWC Time Warner Cable Inc n/a n/a n/a 0
DUK Duke Energy Corporation (Holding Company) 74.69 0.83 1.12 1,450,261
CMCSA Comcast Corporation Class A Common Stock 69.14 0.44 0.64 3,828,095
PYCFF Marret Resource Corp 0.30 0.00 0.00 0

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