Cox bulks up investment portfolio with Segra buy

Cox Communications has announced the acquisition of Segra’s business services arm, a move that should give its enterprise services a boost as well as proving to be a sound financial investment.

Cox will pick up Segra’s commercial services segment, which uses a dense metropolitan fibre network to serve enterprise and carrier customers across nine states in the US’s Mid-Atlantic and Southeast regions. Segra’s current owner, investment fund EQT Infrastructure, will retain the business’s fibre-to-the-premises (FTTP) operation serving residential and SMB customers in  Virginia and North Carolina.

The companies did not disclose the value of the deal. However, Bloomberg, whose sources broke the news of the deal earlier this week, said it could be valued at more than $3 billion, including debt.

As one would expect, Cox talked up the potential benefits of the deal to its customers. But it’s pretty clear from the canned comments it shared that this is also something of a strategic financial investment.

“Cox is focused on buying and investing where it makes sense, and we believe that the demand for broadband infrastructure will continue to grow, making fibre an attractive area for long-term investment,” said Pat Esser, president and CEO of Cox Communications. “Acquiring Segra’s commercial services business is another key milestone in our pursuit of strategic infrastructure to ensure that we’re providing the best products and services to our customers.”

Telecoms infrastructure assets – towers, fibre and so forth – are proving an attractive area for investors, and have been for some time, due to the long-term and predictable returns they offer. It should come as little surprise then that telecoms operators are interested too.

And Cox is no stranger to making strategic investments in this market.

“In the last few years, Cox network infrastructure investments have included EasyTel, EdgeConneX, InSite Wireless, StackPath, Unite Private Networks and ViaWest. The Segra acquisition supports that ongoing focus,” the company said.

Cox acquired EasyTel, a Tulsa-based business services provider with a metro fibre network, in 2013, but the others – which include data centre, towers, fibre, and edge computing companies – were all strategic investments alongside other investors.

The firm did not mention RapidScale, the cloud services provider it bought just under three years ago to boost Cox Business’s managed services portfolio.

RapidScale continues to operate under its own brand, within Cox Business. Its new owner plans a similar future for Segra, which will operate as a standalone business in the Cox portfolio following the acquisition. Its brand will be retained and its existing management team will remain in place, Cox said.

“Our relationship with Cox will allow Segra to leverage expert resources, capabilities and strategic insights in order to scale up operations and accelerate long-term growth,” said Timothy Biltz, CEO of Segra. “Cox and Segra are equally devoted to the communities we serve. We will be even more strongly positioned to meet growing demand from carrier and enterprise customers for high-bandwidth fibre-infrastructure solutions.”

The deal is subject to various closing conditions, including regulatory approvals. The companies did not share when they expect it to close.