Walter Scott Jr. of Peter Kiewit Sons’, Inc.

An unchronicled success story on a simple principal: “Cover your downside and the upside will take care of itself.”
Forbes
October 24, 1994

A young Boston contractor named David McCourt had built MFS’ fiber network in Boston. Later McCourt ended up as partner with Kiewit in McCourt/Kiewit International, which built residential cable TV/phone networks in the UK for cable operator Comcast; a joint venture of U S West and TCI; and Britain’s Mercury Communications.

One day in 1992 aboard Kiewit’s jet, McCourt told Scott he should think about competing against the Bell companies and cable monopolies in residential telephone and cable service. Scott liked the idea and he liked McCourt. Having dipped in as a contractor, Scott and McCourt learned enough to be able to tackle the business themselves. Scott told McCourt to find a company to buy that had the essential elements from which to build a residential telecommunications company. McCourt found C-TEC Corp., the nations 20 th largest local phone company, which is also in the cable TV and long distance businesses (1993 revenues, $284 million). Kiewit bought voting control of C-TEC in mid-1993 for about $200 million.

McCourt, 37, doesn’t want to talk much about his plans for C-TEC except to say that he’s looking at ways to compete with the Bells for local residential service without having to buy cable systems, which have been getting more and more expensive.

One approach would be to help small cable operators sell consumers a package of local phone, long distance and cable TV service, using C-TEC’s expertise in phone billing and switching. Another approach would be to build networks in direct competition with high-cost phone or cable operators. McCourt is also looking at opportunities overseas. “I just got back from Mexico,” says McCourt. “You know, 70% of the world outside North America has no telephone service; 90% has no cable service.”

Recently trading at 24 ¼ a share, C-TEC is well below the 34 ¼ a share Scott paid for Kiewit’s control block. But Scott isn’t worried. “We got into it because we had the person. David [McCourt] basically had the idea and convinced us that he could make a success out of it. I believed it then, I believe it now.”

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