Cable One (CABO) Q3 2026 earnings review
Cable One loses fewer customers, but it warns of bankruptcy
Cable One, the rural internet provider behind Sparklight, is losing fewer customers while its debt problems grow more urgent. Chief executive Jim Holanda said it lost only about 7,500 home internet customers, its best result in seven quarters. But lower prices pushed revenue down 12% from a year ago. The company also wrote that it may need bankruptcy protection if it cannot refinance.
| Revenue | $332.2M −11.7% from a year ago |
|---|---|
| Average monthly home internet bill | $78.48 $82.17 a year ago |
| Ebitda, excluding one-offs | $159.8M −20.8% from a year ago |
| Full-year capital spending plan | Unchanged high-$200 millions, close to 2025 |
⚖️ Verdict: 🔴 Bearish
The story got worse, because Cable One now says its cash cannot repay the debts due in 2027 and 2028. A court has also blocked its purchase of MBI, a smaller cable company. The good news: new sales channels cut customer losses by more than half. But each new customer pays less, so revenue and cash profit kept falling.
The question now is how Cable One refinances its debt. Either lenders extend the loans because the business still earns steady cash, or they set the terms in a restructuring. The November 13 court hearing and any refinancing deal will tell.
🐂 Bull Case
Cable One Lost Far Fewer Internet Customers
Cable One sells home internet under the Sparklight brand and has lost internet customers every quarter for two years. In the third quarter it lost about 7,500, against 17,100 in the second, which chief executive Jim Holanda called its "best residential data subscriber results in seven quarters".
Holanda credited new sales channels: door-to-door sales nearly doubled from the second quarter. Those visits plus online orders brought in 44% of new connections, against 27% a year ago. But the customer base still shrank 5% from a year ago, because each quarter more people still leave than join.
What to watch: net customer losses in the fourth quarter, reported early next year. A second quarter of smaller losses would show that the new channels, not a single good season, explain the gain.
Positives this quarter didn't test
Several newer products and sales efforts could help Cable One keep customers and lift what each one pays, but the quarter gave no figures that show their effect on revenue yet.
- Mobile phone service for Sparklight internet customers: Holanda said results are "in line with our expectations" but gave no line count; a published count would show whether bundles cut cancellations.
- Business sales: Holanda said "sold revenue increased 17% in the third quarter", meaning contracts signed but not yet billed; business revenue over the next two quarters will show how much turns into sales.
- Faster home internet: the cable operator offers multi-gigabit speeds in over half of its markets, according to its quarterly filing; a wider rollout would give it a speed edge over wireless rivals.
🐻 Bear Case
Cable One Now Mentions Bankruptcy as a Possible Outcome
Cable One owes $3.55 billion, and most of it falls due by mid-2028. The cable operator wrote in its results release that its cash and operating cash flow will be "insufficient to repay the debt described above on the applicable maturity dates". Without a financing deal, it may need to "seek relief under Chapter 11 of the U.S. Bankruptcy Code", the release said.
- Cash on September 30: $675 million
- Bank credit line: fully drawn after a final $200 million on October 8
- Costs written off on abandoned financing deals: $7.0 million
- 2030 bonds: fair value of $122 million in its own filing, against $503 million owed
Finance chief Todd Koetje put net debt at 4.1 times Ebitda, meaning earnings before interest, tax, depreciation and one-offs, over the last four quarters. Last quarter he quoted the latest quarter times four instead. On that measure the ratio climbed to about 4.5 times by our math, from 4.2, because Ebitda keeps falling.
What to watch: a signed refinancing, which the Sparklight owner says it is still negotiating, before its 2028 loans and the MBI loans come due. Until lenders agree to extend those loans, bankruptcy remains a real possibility for the business.
A Court Blocked the MBI Purchase
MBI is a regional cable company in which Cable One owns about 45%. Its other owners, led by investment firm GTCR, used an option in January that obliges the Sparklight owner to buy the rest for about $480 million. On October 9 a federal court, acting on a suit by CoBank, one of Cable One's own lenders, barred the purchase for now.
CoBank argues that paying the price would be a "constructive fraudulent transfer", a payment that harms existing creditors. GTCR now says Cable One "failed to use their reasonable best efforts to contest and resist the CoBank Action". The cable operator calls those claims without merit.
- MBI revenue: down 9.2% from a year ago
- MBI internet customers: down 7.1%, against 4.9% at Cable One
- Purchase obligation on Cable One's books: $479 million, up $53 million in the quarter
- MBI loans due in November 2027: $916 million
What to watch: the court hearing set for November 13. If the deal closes, Cable One spends cash it needs for its own debts and adds a business that loses internet customers faster than it does, with loans due within about a year.
Lower Prices Won Customers but Shrank Internet Revenue
Home internet brings in 61% of Cable One's revenue. Fiber networks overlap mid-to-high 50s percent of its homes, Koetje said, and wireless rivals reach nearly every market. Holanda said rival offers held down ARPU, the average monthly bill per customer: "Competitive pricing and promotional activity remained elevated and put pressure on ARPU and revenue."
The average monthly internet bill fell to $78.48 from $80.56 in the second quarter. Koetje said new customers sign up at lower prices than existing ones pay. So internet revenue dropped 10.3% from a year ago, about twice the pace at which the customer base shrank.
Koetje said of the write-downs: "These accounting charges do not impact our cash flow, liquidity, operating strategy or long-term growth initiatives." But the quarterly filing tied a $159 million cut in the value of its local cable licences to "reduced estimated future cash flows due to increased competition in certain of our markets".
What to watch: the average internet bill in the fourth quarter. Holanda expects it to settle $2 to $5 below its peak. A bill under about $77 would mean price cuts have gone past his range.
Cash Profit Fell Faster Than Revenue
Holanda cited "the meaningful cash flow that continues to be generated by the business". The quarter cuts against that claim. Ebitda, meaning earnings before interest, tax, depreciation and one-offs, fell 21% from a year ago, while revenue declined 12%.
Two cost lines moved in opposite directions. Operating costs, which cover the network, software and TV programming, went from 25.5% of revenue to 29.7%, on higher software and contract labour bills. Lower pay cut overhead and sales costs by 2.0 percentage points of revenue. So the Ebitda margin lost 5.6 percentage points.
Capital spending rose 9%, mostly on modems and installation for new customers. It took 49% of Ebitda, against 36% a year ago. That leaves less cash for debt. Ebitda minus capital spending, the measure Koetje calls free cash flow, came to $81.9 million, down 37%.
What to watch: the Ebitda margin in the fourth quarter, the first after an early retirement offer to staff. If it keeps falling, cost cuts are not keeping pace with the lower prices.
👓 Other Themes
Rivals Changed Prices Several Times in One Quarter
Holanda described rivals whose prices change month to month. He agreed that providers raised prices at the start of the fourth quarter, but said the increase "lasted all of 30 days near as I can tell". He also pointed to "surge pricing" at Starlink, the satellite service. His answer is to sell gigabit speeds at a steady price, because wireless and satellite rivals cannot match them.
Advertising Sales Moved to an Outside Firm
On July 1 Cable One handed its advertising sales to an outside company. It now books that revenue after the agency's fee, so advertising revenue fell about $2.8 million from a year ago, Koetje said. Its costs fell in step, "largely offset by lower costs" in his words. Part of the revenue drop therefore reflects bookkeeping, not lost customers.
New Operating Chief and an Early Retirement Offer
Cable One hired Heather McCallion as chief operating officer, plus three senior vice presidents for operations and customer service. Holanda also announced "an early retirement offering launched this quarter" to match costs to lower revenue. The cable operator has not said how many staff accepted or what it saves, so its effect on profit will show only in later quarters.
💲 Other KPIs
Internet sales to businesses fell 6.7% from a year ago, about the same drop as in the second quarter. Most of the gap comes from tower contracts sold in March; without them, the decline was about 3% by our math. Koetje said business data "has actually been effectively flat to growing" on that basis, which our figure does not support.
Deferred revenue, meaning fees customers paid in advance for service and installation, dropped 29% from a year ago to $16.4 million. The balance has shrunk in each of the last four quarters, from $23.1 million. The company notes that most customers pay month to month, so the balance says little about future sales.
Interest costs climbed 8.2% from a year ago, because the Sparklight owner carried more debt at a higher average rate. Its weighted average cost of debt reached 4.8%, against 3.9% a year earlier. The fully drawn credit line charges about 6.7%, so interest costs will keep rising while that borrowing stays in place.
🔮 Guidance
Unchanged. The plan still has capital spending close to last year's $285 million. By our math, that leaves about $65 million for the fourth quarter, 12% below a year ago. Koetje tied the third quarter's higher spending to more new connections and in-home Wi-Fi equipment, and said the company still aims to cut debt.
❓ Key Questions
How will Cable One repay its 2027 and 2028 debts?
The company says its cash cannot cover these maturities and that talks with lenders continue. Investors need the structure under discussion, and whether it covers the MBI loans, before the November 2027 deadline arrives.
What debt limit do the bank loans set?
The company says it meets its loan terms and expects to for a year. Ebitda keeps falling, so readers need the maximum ratio to judge how much room is left.
Why report leverage over four quarters now?
Last quarter Koetje gave net debt against the latest quarter's Ebitda times four. On that measure the ratio rose to about 4.5 times by our math, against 4.1 on the new basis.
How many customers cancel each month?
New connections improved, but Holanda called retention the remaining opportunity. A monthly cancellation rate would show whether the new retention tools work, or whether lower prices alone explain the smaller losses.
What does MBI earn on Cable One's measure?
Cable One may have to buy MBI and carry its debt. MBI's revenue minus operating costs fell to about 51% of revenue from 54% by our math, but the company gives no Ebitda figure.