S&P downgrades Cable One to ’B+’ on weakening broadband outlook

Investing.com -- S&P Global Ratings has downgraded Cable One Inc's (NYSE: CABO) issuer credit rating to ‘B+’ from ‘BB-’, citing deteriorating business prospects driven by aggressive competition from fiber-to-the-home and fixed wireless access providers. The agency simultaneously maintained the credit ratings on CreditWatch with negative implications, signaling that a further one-notch downgrade to ‘B’ is likely once the cable operator closes its pending acquisition of Mega Broadband Communications Investments (MBI).

Intensifying pressure from lower-priced fixed wireless options and expanding fiber overbuilds continues to threaten Cable One’s high-margin business model. With fiber overlap surpassing 60% and fixed wireless competitors offering plans around $50 per month, the company’s elevated average revenue per unit of roughly $80 leaves its subscriber base increasingly vulnerable.

S&P projects that Cable One’s residential broadband penetration will slide to roughly 28% by 2028, down from 33.5% in 2025. While Cable One has introduced promotional pricing to curb subscriber defections, analysts expect these discounts to further depress average revenue and overall broadband earnings over the medium term.

The ongoing CreditWatch placement highlights risks tied to the impending Oct. 1 close of the MBI transaction, which is expected to push consolidated leverage into the low-5x range. Under revised forecasts, S&P anticipates full-year 2026 earnings contractions of 10% to 11% at Cable One and 15% to 16% at MBI, following steep second-quarter EBITDA declines across both entities.

Beyond near-term operating headwinds, Cable One faces significant capital structure scrutiny ahead of a substantial debt wall in 2028. After drawing $700 million on its revolving credit facility earlier this month, the operator now confronts roughly $2.3 billion in debt maturities that year, which could prolong the negative CreditWatch status post-closing if refinancing risks remain elevated.

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