Time Warner Cable Inc. (TWC), the second-largest cable TV operator in the U.S. is gradually strengthening its foothold in the small and mid-sized business (SMB) segment.
The company generated $1,696 million revenues from this segment in the first nine months of 2013, an improvement of a whopping 22.4% year over year. Time Warner Cable is expected to generate nearly $2.5 billion revenues from the SMB segment in 2013. Meanwhile, management stated that it will double this figure to over $5 billion in the next four to five years.
The SMB segment has posed a huge growth opportunity for the cable TV industry. Significant improvement in business data and video traffic is expected to act as a future growth catalyst for the industry.
Furthermore, managing wireless backhaul traffic for the mobile towers has also opened up a multi-billion dollar market. Cable operators are now gradually offering innovative wireless broadband services to their business customers in order to maintain this momentum.
Large cable TV operators such as Comcast Corp. (CMCSA) and Time Warner Cable are immensely exploring the SMB segment as a counter-strategy to protect their loss in the legacy video-offering market where telecom giants like Verizon Communications Inc. (VZ) and AT&T Inc. (T) are aggressively offering fiber-based video services.
Currently, the market size of the U.S. Business Services segment is approximately $8 billion. Various industry research studies estimate that the SMB segment is expected to offer a market opportunity worth $20 billion to $30 billion.
Within the SMB segment, Time Warner Cable is particularly targeting the wholesale businesses such as mobile backhaul service to wireless operators and managed services in the small cell backhaul space.
For mobile backhaul, the company deploys its fiber-to-the-tower (FTTT) networks and for small cell backhaul the company uses a bundle managed service of line-powered hybrid fiber-coax networks, pole attachment rights, building access rights and trained technicians’ support.
Time Warner Cable currently has a Zacks Rank #3 (Hold).
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