Liberty Global has entered into an agreement to acquire 100% of Puerto Rico’s second largest cableco Choice Cable TV and combine it with its existing Liberty Puerto Rico division to become the island’s sole cable network operator. The transaction – to be carried out in partnership with US private investment fund manager Searchlight Capital Partners which owns 40% of Liberty Puerto Rico – values Choice (registered as Puerto Rico Cable Acquisition Company) at an enterprise value before transaction costs of approximately USD272.5 million, worked out as a multiple of 6.1 times Liberty’s estimate of Choice’s 2015 full-year operating cash flow, adjusted for the projected annual impact of synergies following full integration. The announcement stated that at 31 August 2014, Choice’s network passed approximately 345,000 homes and served around 154,000 revenue generating units (RGUs). Once the deal is completed – with closure expected in H1 2015 pending regulatory approval – the resultant multi-service cable group will operate a network reaching over 80% of Puerto Rican homes, with more than 700,000 cable TV, broadband internet and fixed telephony RGUs, generating over USD380 million of annual revenue. The combined business will remain 60%-owned by Liberty Global and 40%-owned by Searchlight, while Liberty Global says it expects to assign its 60% interest to its new sub-group, the Liberty Latin America & Caribbean Group, or LiLAC Group (also including Chilean cable subsidiary VTR), once its regional spin-off proposal is approved by shareholders.
TeleGeography’s GlobalComms Database says that Choice Cable operates in 31 municipalities in parts of southern, western and north-western Puerto Rico and is currently owned by US-based equity house Spectrum Equity Investors. The acquisition of Choice follows the merger of Liberty Cablevision (operating in east, central and northern regions of Puerto Rico) with another Puerto Rican cableco OneLink (covering the capital San Juan and seven surrounding municipalities) – approved in November 2012 before integration of the companies was completed in Q4 2013 – to form the current Liberty Puerto Rico (registered as Liberty Cablevision of Puerto Rico). The latest deal will give Liberty a complete nationwide licensed operating footprint. UK-headquartered Liberty Global operates cable-based services in 14 countries, mainly in Europe.