Cable One (CABO) Q4 2025: $403M Debt Paydown Reshapes Balance Sheet Amid Broadband Headwinds

2026-02-26 | By EarningsIQ Research

Cable One’s Q4 marked a pivotal turn in capital allocation, with aggressive debt reduction and a sharpened focus on operational discipline as subscriber declines and competitive intensity persisted. Leadership transitions and platform modernization have set the stage for new growth levers, even as the broadband landscape grows more crowded. The MBI acquisition and a disciplined approach to mobile and business services will define the company’s competitive posture in 2026.

Summary

• Debt Reduction Accelerates: $403M in debt repaid, reinforcing conservative capital management amid industry uncertainty.
• Subscriber Pressure Persists: Broadband net losses improved but remain negative, with competition from fiber and fixed wireless intensifying.
• Strategic Expansion Focus: MBI acquisition and mobile rollout position Cable One for longer-term growth despite near-term churn risks.

Performance Analysis

Cable One’s Q4 2025 results reflected persistent top-line pressure as total revenues declined, driven by continued residential broadband subscriber losses and industry-wide competition from both fiber and fixed wireless alternatives. Residential data revenues fell, with customer counts dropping by approximately 10,700 in the quarter, although the sequential improvement in both gross connects and disconnects signaled early traction from recent go-to-market and retention initiatives. Notably, ARPU remained stable, anchored by a mix of value-oriented offerings and upsell of premium in-home services such as Eero, premium Wi-Fi, and tech support.

Operational leverage was challenged by lower revenue and elevated competitive spend, with adjusted EBITDA margin contracting and free cash flow declining year over year. However, Cable One’s cost structure benefited from lower programming costs as video subscriber losses accelerated, and SG&A was managed down through reduced rebranding and labor expenses. Capital expenditures remained disciplined, focused on network upgrades, new market expansion, and integration activities. The company’s significant voluntary debt paydown—over $400M in 2025—was funded by robust operating cash flow and asset monetizations, leaving the balance sheet in a stronger position heading into 2026.

• Broadband Net Losses Narrowed: Net subscriber declines improved versus prior quarters, but negative momentum persists.
• ARPU Stability Maintained: Price discipline and premium product adoption offset value-seeking customer mix.
• Business Services Gaining Traction: Commercial segments, especially carrier and enterprise, saw higher installs and expanded sales channels.

While the business remains under pressure from competitive dynamics, Cable One’s financial flexibility has improved, setting a foundation for future investment and strategic moves.

Executive Commentary

Strategic Positioning

1. Balance Sheet Fortification

Debt reduction has become a central pillar of Cable One’s strategy, with $403M paid down in 2025 and a net leverage ratio of 3.9x. This conservative approach, enabled by strong cash flow and asset sales, provides capacity for upcoming obligations, including the retirement of convertible notes and funding for the MBI acquisition, while maintaining flexibility for future downturns or opportunities.

2. Broadband Retention and ARPU Management

Churn reduction and ARPU stability are now top operational priorities. The company’s billing platform transformation and product simplification have enabled more targeted offers and improved customer experience. Over one-third of residential broadband customers now use advanced in-home services, with adoption rates exceeding 80% in Q4, helping to offset ARPU headwinds from value-seeking segments.

3. Competitive Response and Network Investment

With fixed wireless now nearly ubiquitous and fiber overbuilds covering 60% of passings, Cable One is leveraging its high-capacity wired network and multi-gig upgrades to defend share. The network’s excess capacity, with peak utilization below 20%, supports both premium offerings and value packages to attract and retain customers in contested markets.

4. Mobile and Business Services Diversification

The late Q1 2026 mobile launch is positioned as a retention and ARPU enhancer, not a primary growth engine. Early pilots focused on operational readiness, with broader rollout expected to support customer stickiness. In business services, new sales channels and leadership hires are targeting underpenetrated segments, with early signs of increased commercial installs and wallet share expansion.

5. MBI Acquisition and Rural Expansion

The pending $480M MBI acquisition will add over 200,000 customers and expand Cable One’s rural footprint, with integration planning already underway. This move aligns with the company’s strategy of scaling in complementary geographies and extracting cost and tax synergies, while maintaining a disciplined approach to leverage and capital allocation.

Key Considerations

This quarter marked a shift from foundational transformation to execution, with the company’s leadership emphasizing operational discipline and readiness for a more competitive broadband landscape. Strategic capital allocation and product innovation are being balanced against the realities of subscriber pressure and evolving market structure.

Key Considerations:

• Debt Paydown Prioritization: The aggressive reduction in leverage enhances resilience and supports future M&A or capital return flexibility.
• Mobile Rollout as Retention Lever: Mobile is viewed primarily as a churn-mitigation tool, with disciplined scaling and integration into the core broadband value proposition.
• Business Services Momentum: Expanded sales channels and leadership focus are driving commercial growth, diversifying revenue streams beyond residential broadband.
• Network Capacity as Differentiator: Underutilized network supports both premium and value segments, positioning Cable One to compete on reliability and speed as fiber and fixed wireless options proliferate.
• Integration Execution Risk: MBI and other asset integrations require tight coordination to realize anticipated synergies and avoid operational disruption.

Risks

Competitive intensity remains the core risk, especially as fiber and fixed wireless expand, pressuring both subscriber base and pricing power. Execution risk around the MBI integration and the scaling of new products like mobile could impact cost structure and customer experience if not managed tightly. Macroeconomic uncertainty and potential for further industry consolidation could also shift the landscape, requiring continued agility and disciplined capital allocation.

Forward Outlook

For Q1 2026, Cable One guided to:

• Capital expenditures remaining consistent with 2025 levels
• Cash income taxes between $40M and $50M

For full-year 2026, management expects:

• Stable CapEx and ongoing balance sheet deleveraging

Management highlighted several factors that will shape results:

• Continued subscriber pressure offset by retention and premium product initiatives
• Execution of the MBI acquisition and integration as a key value driver

Takeaways

Investors should focus on Cable One’s ability to defend its broadband base, realize synergies from the MBI transaction, and execute on new product rollouts in a highly competitive market. The company’s financial flexibility and disciplined capital allocation offer a buffer, but operational improvement and customer retention remain essential for long-term value creation.

• Balance Sheet Strength: The $403M debt reduction provides strategic flexibility and reduces refinancing risk as industry dynamics evolve.
• Operational Execution: Platform modernization and leadership changes are beginning to yield improvements in churn and gross connects, but sustained subscriber growth remains elusive.
• Integration and Growth Watch: Successful MBI integration and mobile adoption will be critical to stabilizing and expanding the company’s customer base in 2026.

Conclusion

Cable One enters 2026 with a fortified balance sheet and a clear focus on operational discipline and customer retention. While subscriber headwinds and competitive threats persist, the company’s strategic investments in network, product, and M&A integration lay the groundwork for future growth and margin stabilization.

Industry Read-Through

Cable One’s experience underscores the intensifying competition in U.S. broadband, with fiber and fixed wireless eroding legacy cable share and forcing operators to double down on retention, product innovation, and disciplined capital management. The shift to mobile as a bundled retention lever, rather than a standalone growth engine, mirrors trends at larger peers. The company’s rural expansion and focus on network capacity highlight the importance of scale and operational agility as industry consolidation and technology shifts reshape the landscape. Other regional operators should note the need for balance sheet strength and product diversification to withstand ongoing subscriber and pricing pressures.

CABO Communication Services Cable Broadband Debt Reduction Mobile Rural Expansion Integration