Wave Broadband — a broadband company that has built a gigabit fiber network with services from Washington down to California completely independent of the big carriers — is today announcing that it has raised $130 million. It plans to use the extra funds to expand that network across more cities in that footprint, and to launch new services for residential and business customers.
The Kirkland, WA-based company is not disclosing its valuation but says that it is profitable and that its assets alone are worth some $2.5 billion. (Those assets include 5,000 route fiber miles, with 1,500 more to come this year.)
Wave says that this latest financing comes in the form of a bond sale led by Deutsche Bank and supported also by Wells Fargo, Sun Trust, and RBC Daniels.
This latest funding round is only the second time that Wave has taken significant funding since opening for business in 2002. The first was a $1.1 billion round that came from private equity firms GI Partners and Oak Hill Capital in 2012.
In addition to the fundraise, Wave is adding two new executives: Steve Friedman as been promoted to become the new EVP overseeing fiber design and construction; and Harold Zeitz is its new president and COO to oversee the company’s enterprise business, coming most recently from Classmates.com, where he was president.
“We are thrilled to accelerate our fiber expansion with this additional funding and announce the new roles for Steve Friedman and Harold Zeitz. This furthers our commitment to provide business clients with carrier-class service, and residential customers with the fastest internet speeds at a great price, all backed by exceptional local customer service,” said Steve Weed, Wave CEO and founder in a statement. The company currently employs just over 1,000 people.
In a market that is seeing carriers like AT&T and Verizon getting bigger and bigger, Wave stands out for keeping its focus on a specific region and serving it well with a network that it fully owns catering specifically to a growing demand for gigabit Internet and other services that run over high-speed broadband services like TV. Covering areas like Seattle, Portland and Silicon Valley, its 5,000 fiber miles are distributed across a corridor that is not more than about 1,000 miles in distance.
The company is currently generating over $350 million in annual revenue and has self-funded the bulk of its growth, which has come by organic expansion as well as 17 acquisitions including Black Rock Cable, Spectrum Communications and disposed assets from Charter. The idea here will be to match the amount being raised today to use the total for new fiber construction and other capital spend over the next 24 months, with none of it being invested in operations (and “no burn rate”, as a spokesperson pointed out).
Today Wave has over 420,000 customers with about 85% of them residential and 15% commercial. It’s the business customer base — which includes government organizations, large public and private companies, wireless carriers, and SMBs — that is growing the fastest right now, the spokesperson says, at a rate of about 25% year-on-year compared to residential at 10%.
Wave says there is no plans at the moment to add wireless services to its current list of products, which include voice, broadband, and soon colocation and hosted PBX services.
In addition to the new services, Wave says its adding fiber rings between California markets including Concord, San Jose, Sacramento, and San Francisco with virtual cross-connect services to multiple Bay Area data centers and expanding residential gigabit internet services to 10,000 more residents in its footprint.