Shifting Signals Create Uncertainty for Rural Broadband Consolidation

CoBank's report reviews why the wireless and cable industries consolidated, and assess what could happen in the rural broadband market. Findings include:

• The cable and wireless industries have consolidated over the last 20-30 years to create scale and gain access to valuable nationwide spectrum. Observers are watching to see if history will repeat itself in a similar tech provider industry: the rural broadband market.
• While scale will be important for the future of rural broadband delivery, the industry’s unique aspects may prevent massive consolidation.
• The industry is fragmented, which typically leads to consolidation when growth begins to slow. However, not all operators will be merger and acquisition (M&A) targets, especially cooperatively owned companies committed to their deep-rooted mission to serve their local communities.
• Infrastructure funds and private equity sponsors will continue to play an important role in industry M&As, but recent headwinds from inflation, higher interest rates and labor shortages could cast a cloud over near-term activity.
• Some level of consolidation is expected over the next 5-10 years, but it’s a question of when and how much.