• Charter shakes up US market with $34.5bn deal to acquire fellow cable operator Cox
• The move will create a multiservice operator with greater scale, reach and efficiencies
• Meanwhile, Verizon has been given the green light for its $20bn acquisition of Frontier after it agreed to drop its diversity, equity and inclusion (DEI) policies

In the blink of an eye, the US communications, networking and video services sector was reshaped late on 16 May following two major announcements: Charter Communications is to acquire fellow cable operator Cox Communications in a deal that values the latter at $34.5bn; and US regulator the Federal Communications Commission (FCC) approved Verizon’s $20bn acquisition of broadband operator Frontier Communications following a commitment by Verizon that it will drop its diversity, equity and inclusion (DEI) policies.   

First, that cable mega-merger which, if granted regulatory approval, will shake up the competitive landscape of the US communications sector and provide Charter and Cox with greater scale as they try to deal with shrinking customer bases for their traditional services. 

The planned deal, announced late on Friday 16 May, is set to create a stronger rival to cable peer Comcast and the three main US telcos, AT&T, T-Mobile US and Verizon. 

A combined Charter and Cox would reach almost 70 million US households and have 37.6 million customer relationships, based on numbers from the first quarter of 2025. Merged, the companies would boast 35.9 million broadband connections, 14.4 million video service connections and 10.6 million mobile customers, with the vast majority of each being contributed by Charter, as the table below shows.

The combined company, which is set to take the name Cox Communications a year after the companies are combined, would have annual revenues of $68.2bn and adjusted EBITDA after capital expenditures of $14.2bn, based on full year 2024 financials. 

Charter is to pay Cox shareholders $21.9bn in stock and cash, and assume $12.6bn in debt and other financial obligations, giving the deal its $34.5bn value. Charter expects the combined company to reduce operating costs by $500m per year within three years of the deal closing as a result of “cost synergies… stemming from typical procurement and overhead savings.” 

Chris Winfrey, the current president and CEO of Charter, will assume the same role at the combined company, while Cox chief executive and chairman Alex Taylor will become chairman of the new entity. Charter’s current chairman, Eric Zinterhofer, will become the lead independent board director of the new company. 

Winfrey stated: “Cox and Charter have been innovators in connectivity and entertainment services – with decades of work and hundreds of billions of dollars invested to build, upgrade, and expand our complementary regional networks to provide high-quality internet, video, voice and mobile services. This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service to millions of homes and businesses. We will continue to deliver high-value products that save American families money, and we’ll onshore jobs from overseas to create new, good-paying careers for US employees that come with great benefits, career training and advancement, and retirement and ownership opportunities.”  

The move, if cleared by regulators and Charter’s shareholders, will (in theory) create a stronger company that is better equipped to survive and grow in a very competitive market, one where the cable operators are now hoping to make greater inroads into the mobile services market and offer even broader bundles of services. Both Charter and Cox have mobile virtual network operator (MVNO) agreements with Verizon (that it would make sense to combine into a single agreement, of course) while Charter is building out its own 5G data-only cellular access network using small cells and mid-band CBRS spectrum having landed a number of licences in a 2020 auction.

A combined 10.6 million mobile customers isn’t much compared with the three leading telco giants, AT&T, T-Mobile US and Verizon, but Charter’s mobile customer base has been growing quickly (at a rate of about 500,000 per quarter).

The other main cable operator, Comcast, by comparison, has 31.6 million broadband customers (consumer and business) and 8.1 million mobile customers, it noted in its first-quarter report.    

FCC gives Verizon a boost

But just as Charter and Cox aim to gain greater scale, one of their main rivals, Verizon, got the green light for an acquisition of its own that will give it greater broadband heft. 

Verizon announced in September last year it had struck a $20bn deal to acquire Frontier in a move that would significantly extend its broadband network infrastructure by enabling it to reach more than 25 million homes with fibre broadband lines across 31 states, as well as Washington DC. 

The FCC has now approved the deal, with the regulator’s new chairman Brandan Carr noting that its decision means “Americans will benefit from a series of good and common-sense wins.  The transaction will unleash billions of dollars in new infrastructure builds in communities across the country – including rural America.  This investment will accelerate the transition away from old, copper-line networks to modern, high-speed ones. And it delivers for America’s tower and telecom crews who do the hard, often gritty work needed to build high-speed networks,” with Verizon set to deploy at least 1 million new fibre lines per year once the deal is closed. 

But to get the FCC’s green light, Verizon has had to agree to change its diversity, equity and inclusion (DEI) policies. The FCC noted that the telco has “committed to ending DEI-related practices as specified in the FCC’s record and has reaffirmed the merged entity’s commitment to equal opportunity and nondiscrimination. This will ensure that the combined business will enact policies and practices consistent with the law and the public interest.” 

Frontier recently reported a slight increase in first-quarter revenues to $1.51bn. It ended March with 3.15 million broadband connections, while its fibre infrastructure now reaches 8.1 million US properties. 

- Ray Le Maistre, Editorial Director, TelecomTV