WOW nears mobile launch, doubles greenfield fiber buildout commitment

WideOpenWest (WOW) said it is closing in on a mobile service developed with Reach Mobile, and is effectively doubling its commitment to build fiber networks in greenfield areas where the competitive intensity is relatively low.

Speaking on Monday's Q1 2022 earnings call, WOW CEO Teresa Elder said the company is on target to launch its new mobile service in one of its southern markets later this month, and follow with launches across all of its markets in the third quarter of the year. With the launch, WOW will join Comcast, Charter Communications and Altice USA among US cable operators that have launched mobile services through MVNO partnerships.

Figure 1: With a southern market among the targets for WOW's initial mobile launch, candidates include Charleston, South Carolina; Augusta, Newnan and Columbus, Georgia; Pinellas and Panama City, Florida; and Huntsville, Montgomery, Auburn and Dothan, Alabama.
(Source: Sipa USA/Alamy Stock Photo)

WOW and Reach Mobile announced their partnership in February, telling Light Reading that the resulting service, which will be branded as "WOW! Mobile powered by Reach," will run on T-Mobile's network. Reach Mobile also has MVNO relationships with AT&T and Verizon.

WOW, a company rumored to be exploring a possible sale, hasn't revealed mobile pricing and packaging or detailed which smartphones models will be available at launch. But WOW has said the service will be offered under a no-contract model and will include unlimited talk and text. WOW plans to bundle mobile with its home broadband service and make mobile available as a standalone service.

As Reach Mobile CEO Harjot Saluja told Light Reading in March, the platform will enable WOW to sell a broad array of flexible tiers, including shared data plans and multi-line, family-oriented plans.

"Our partnership with Reach enables WOW to quickly enter the mobile market with minimal operational or developmental work on our part," Elder said.

John Rego, WOW's CFO, said only a "modest amount of money" was shelled out to get the program with Reach Mobile together. "There are no ongoing costs," he said. "It's a rev-share."

Greenfield expansion to be funded with free cash flow

WOW also announced that it is now targeting fiber-to-the-premises (FTTP) network buildouts to 400,000 homes passed by 2027, effectively doubling its original commitment. Together, the buildouts will increase WOW's footprint by 21%, the company said.

Figure 2: WOW's revised greenfield fiber buildout stands to expand its total service footprint by 21%.
Click here for a larger version of this image.
(Source: WideOpenWest Q1 2022 earnings presentation)

The updated plan calls for WOW to splash out $400 million on the expansions. Following initial greenfield buildouts in Seminole County and Orange County, Florida, WOW said it is targeting 30,000 homes passed in Greenville County, South Carolina, as its next greenfield market. Specific communities included in Greenville County include Five Forks, Fountain Inn, Mauldin, Piedmont and Simpsonville.

WOW is also expanding the fiber build in central Florida from 100,000 to 150,000 homes, and has identified other markets to be revealed later.

WOW expects to fund the greenfield expansion with its free cash flow. It originally embarked on the greenfield opportunity after selling a handful of systems to Atlantic Broadband (now Breezeline) and Astound Broadband for $1.8 billion.

"The increase [in commitment] reflects the momentum we're seeing in central Florida," Elder said. WOW's greenfield strategy, she added, continues to center on areas with attractive demographics with relatively low competitive intensity.

Elder said WOW's success in edge-outs (network expansions to adjacent areas) also led to the bigger greenfield commitment. Penetration in WOW's 2021 edge-out areas stood at 35%, and penetration in its 2020 cohort ended the quarter at 23.5%.

The expansion will impact capital expenditures. Rego said the average spend will be $225 million per year in the next three years, with $104-$105 million allocated for growth projects. Those will be led by the greenfield builds along with edge-outs and commercial service opportunities.

Financial snapshot

WOW posted Q1 revenues of $174.6 million, down 3.6% year-over-year. High-speed data revenues rose 3.6%, to $100.1 million.

WOW added 3,300 high-speed Internet subs in the period, ending Q1 with 535,000. The company expects to add 1,000 to 2,000 broadband subs in Q2, and add in the range of 14,000-17,000 for full-year 2022.

Elder said a majority of new broadband subscribers are taking speed tiers of 500 Mbit/s or more, and 85% of new customers are taking speeds faster than 200 Mbit/s. The average revenue per user for high-speed Internet in Q1, at about $65, rose from the year-ago quarter. But it dropped a smidge from Q4 2021 due to an increase in promotional activity in the first quarter of 2022.

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— Jeff Baumgartner, Senior Editor, Light Reading