Rural Broadband – Prepare for Rollups

Implications: As I have said in past analyses; Contiguous Rural Broadband Networks – The Key To Attracting Rural Investment Dollars and Rural Broadband – A Need for Alternative Technologies and a Business Model – Part 2, the rural sector is a good place to invest in.

Analysis: The rural market is not going anywhere.  It is a long term investment opportunity.  SureWest is spending money.  However, in a recession how do they justify the expenditure?  The answer is when you are the incumbent it is easy to justify the capital expenditures.  If SureWest was a CLEC, it would be facing an uphill battle in terms of raising money in this environment.

SureWest needs to upgrade its network.  Aside from the fact the customer base is demanding it.  The other reason for upgrading the network would be for acquisition purposes.  No one wants to buy an old network.

Now is the time to roll up rural carriers.  A tight capital market with broadband demand means opportunity for rural rollups.

Opportunity like this only comes when there is financial distress.  In a few months, the rural carriers will be screaming for cash.