Moody's Investors Service reduced Cable One, Inc.'s Corporate Family Rating to B2 from B1 and shifted the outlook from stable to negative, the ratings agency said on Tuesday. The company also saw its existing senior unsecured notes downgraded to Caa1 from B3, while the Ba3 senior secured credit facilities were placed on review with direction uncertain.
The rating action reflects a deterioration in the firm's credit profile compared with Moody's prior expectations through 2028 following Cable One's acquisition of Mega Broadband. Moody's said credit metrics will be softer and that the company faces a longer path to normalizing performance in its core high-speed-data division.
Agency analysts expect operating trends to remain depressed for a longer period than previously projected. They noted that results tied to new customer acquisition and retention measures under Cable One's new leadership will take time to show through, and that intensifying competition in the residential broadband market is likely to delay recovery.
Moody's also pointed to a material decline in Cable One's valuation, which increases the cost of capital for completing the remaining purchase of Mega Broadband later this year.
On June 22, 2026, Cable One offered an exchange in which up to 50% of existing Mega lenders could receive half cash and half a new first-lien first-out facility alongside existing Cable One lenders. Two days later, on June 24, 2026, the company reported that lenders holding 34% of Mega's loans agreed to the exchange. Moody's said considerable uncertainty persists about the longer-term capital structure.
The ratings agency warned that differing combinations of first-lien first-out and first-lien second-out instruments could produce varying notching results for Cable One's secured credit facilities, depending on how Mega's debt is incorporated.
Following GTCR's exercise of its put option on January 2, 2026, Cable One is contractually required to acquire the remaining 55% interest in Mega Broadband, with a minimum closing date of October 1, 2026. Depending on the portion of Mega's debt that is exchanged into Cable One debt, the company's debt load will rise by between $480 million and $1.4 billion after the acquisition.
Operationally, Cable One reported a 5.1% year-over-year decline in residential data revenues in the first quarter of 2026. The subscriber base contracted by 57,900 customers, or 6.1%, over the same period.
As of Q1 2026, Cable One's reported debt-to-EBITDA ratio stood at 4.4x, or 5.1x on a pro-forma basis reflecting the Mega purchase. Moody's projects residential data subscriber counts will fall in the mid-single-digit range through 2026, then decelerate to low single-digit declines in 2027 and 2028. The agency expects free cash flow to remain under 5% of outstanding debt, driven by weaker earnings, higher-cost new debt issuance and the substantial capital expenditures required to maintain, upgrade and expand the network.
Key points
- Moody's cut Cable One's Corporate Family Rating to B2 from B1 and downgraded senior unsecured notes to Caa1 from B3, while placing Ba3 secured facilities on review with direction uncertain.
- The downgrade reflects weaker credit metrics after the Mega Broadband acquisition, slower stabilization of the high-speed-data business and a higher cost of capital tied to a lower valuation.
- Sectors affected include residential broadband providers, corporate credit markets and leveraged financing within the telecom sector.
Risks and uncertainties
- Capital structure uncertainty - varying mixes of first-lien first-out and first-lien second-out debt following the Mega exchange could change instrument notching and secured facility outcomes, affecting debt holders and credit markets.
- Funding and leverage risk - completing the remaining 55% purchase of Mega Broadband will raise Cable One's debt by $480 million to $1.4 billion, increasing leverage and pressure on free cash flow.
- Operational pressure - continued residential subscriber declines and weaker revenues may persist through 2026, with only gradual improvement expected into 2027 and 2028, weighing on telecom sector earnings and investment profiles.
Note: This article presents Moody's reported actions and Cable One's disclosed financial figures and timing; it does not add or infer facts beyond those provided by the ratings agency and the company.