Broadband and cable provider WideOpenWest goes by the emphatic acronym WOW!, and the company is equally emphatic about its chances to build out fiber-to-the-home in greenfield markets despite the fact that it recently slashed its revenue and subscriber guidance for the full year of 2022.
Speaking at this week’s Bank of America Securities 2022 Leveraged Finance Conference, WOW! CFO John Rego explained that the company’s decision in 2021 to sell several of its cable markets for about $1.8 billion helped the company pay off existing debt and put it in a more comfortable capital position to continue expanding its fiber reach even as macro-economic factors have put more pressure on WOW! and other broadband operators.
“We had this interesting idea that we were going to sell some markets, and we sold five of our 19 markets in an effort to substantially de-lever the company,” Rego said. “We were six-times leveraged [debt to capital], and six-times leverage is a lot for a small company… We needed to shrink the company a bit so that we can grow the company.”
As a result, WOW!, which refers to itself as a “challenger brand,” or a provider that is likely to be the second or third broadband operator in a given market, has been able to take time to identify greenfield markets outside of its existing Midwest and Southeast footprints that offer the competitive conditions that line up well with its business aims and strengths. Typically, that means markets where there already is a 1-gigabit broadband operator and a legacy DSL operator, Rego said.
With that in mind, WOW! earlier this year embarked on an effort to build out fiber to 400,000 homes in greenfield markets. “They don't have to be on the periphery of our network,” he said. “We can build anywhere. The first builds were announced in Seminole County, Florida. We broke ground in June, and we will be online selling into those markets starting in probably January.”
Rego described the greenfield fiber effort as “the big kahuna” of WOW!’s business opportunities, but added that the company also continues to eye opportunities to grow its commercial service business, which is focused on small and medium-sized enterprises. He also said WOW! is not planning to sell off any other markets.
Regarding ongoing and increasing macroeconomic pressures, Rego suggested he’s seen it all before. “I'm 61. So I was around in 1987. I was around in 1992-93, 2000, 2008. So, the current environment brings challenges, but this, too, shall pass.”