WOW! sees fiber broadband growth potential in Greenfield, edge-out markets amidst a challenging Q4
WideOpenWest (WOW!) likes its fiber broadband chances in Greenfield and Edge-out markets.
During the fourth quarter, the cable MSO’s market expansion projects passed 11,600 homes, including 9,300 extra homes in Greenfield markets and 2,300 additional homes in Edge-out projects.
By the end of December 2024, WOW!’s Greenfield fiber initiatives had reached 61,900 homes and 10,300 subscribers, representing a 16.6% penetration rate. Likewise, the company’s 2024 Edge-out projects passed 8,300 new homes and 3,300 subscribers, representing a 39.8% penetration rate.
It also strengthened the fiber penetration rate from just under 10% at the end of 2023 to 16.6% at the end of 2024.
“Although we slowed during the third quarter, we increased our construction pace in the fourth quarter, adding homes in our newest communities of Brighton, Michigan and Hernando Beach, Florida. We doubled our all-fiber footprint in 2024, adding 31,500 new homes while increasing penetration rates in our markets,” said Teresa Elder, CEO of WOW!, during the cable MSO’s fourth-quarter earnings call.
She added, “We remain encouraged in our legacy markets, which saw positive trends in ARPU, driven by customer upgrades to high-value services and consistent levels of low churn, all of which highlights our solid base of satisfied customers.”
Accelerating fiber growth
Despite the progress WOW! made during the quarter, it is not stopping there.
The company completed a new $200 million loan in October.
John Rego, WOW! 's CFO, said the new funding will enable the company to continue investing in its greenfield fiber market expansion.
“As we mentioned on our last call, during the quarter, we secured a new super-priority term loan for $200 million,” he said. “The agreement allows raising an additional $175 million in capital 1 year after the super-priority close date. That additional liquidity will enable us to accelerate our fiber greenfield growth strategy in '25 and beyond as we continue to work toward our goal of passing 400,000 new homes over the next few years.”
During the quarter, WOW!’s total capital spend was $51.7 million, down $28.9 million from last year but up $11.2 million from last quarter due to the hurricane remediation efforts.
WOW!’s expansion CapEx decreased to $31.4 million from the same period last year and $1.2 million from the previous quarter. In the fourth quarter, it spent $3.9 million on Greenfield builds, $2.5 million on Edge-Out, and an additional $3 million on business services.
Rego said that “in 2025, we expect to spend between $60 million and $70 million on greenfield expansion CapEx.”
Enhancing broadband value
Like other broadband providers, WOW! saw the effects of Hurricanes Helene and Milton on its subscriber base.
Fourth-quarter high-speed data revenue decreased 3.5% year-over-year to $104.9 million, including $1.9 million of revenue credits issued to customers due to Hurricanes Helene and Milton.
WOW! It reported 478,700 subscribers as of December 31, 2024, down 11,800 from September 30, 2024. HSD RGUs totaled 470,40, down 10,200 from September 30, 2024.
Elder said that excluding the impact “that we mentioned from the hurricanes as well as the effects from the ending of the Affordable Connectivity Program (ACP) last year, we saw an improvement in '24 over '23, adding “we're also pleased with the trajectory of what we're seeing for 2025.”
Likewise, WOW sees opportunities from the new pricing structure, which has had several effects: driving customers to purchase higher speeds, increasing ARPU, and lowering churn.
“We have seen good momentum from our simplified pricing, which not only brings in customers but also has helped us with overall customers going to higher tiers and higher ARPU,” Elder said. “And one of the things we've been seeing is that our churn is going down.”
Elder added that churn decline is seen not only in “our greenfield market” but also in our legacy markets, with the implementation of our simplified pricing with the optional price lock last year. We think YouTube TV also has a tangible benefit on churn.”
Fourth quarter struggles, opportunities
Due to its struggles with subscriber growth, WOW! reported total revenue of $152.6 million, down $16.2 million, or 9.6%, from the fourth quarter of 2023.
Driven by the reduction in video and high speed data (HSD) revenue generating units (RGUs) and a $25.5 million decrease in volume across all services, the cable MSO’s total subscription revenue was Total Subscription Revenue for the quarter was $140.3 million.
The company said that the decrease was partially offset by a $21.3 million increase in average revenue per unit (ARPU), inclusive of $2.5 million of revenue credits issued for Hurricanes Helene and Milton and rate increases issued for Video services and a lesser extent, HSD services, during 2024.
Elder said its traditional video business declined further during the quarter and has now dropped to 60,600 subscribers, down 33% from last year.
“We anticipate this trend will continue as we transition to YouTube TV, which grew significantly this past year,” she said.
Looking at the first quarter, WOW! expects total revenue to be between $147 million and $149 million.
On the broadband side, WOW! expects HSD data to be between $102 million and $104 million and HSD net adds between negative 6,000 and negative 4,500.
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.