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WOW Won't Wax Wireless… for Now

Jeff Baumgartner
3/11/2019
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WideOpenWest CEO Teresa Elder has spent about half her career in the wireless industry, but doesn't see mobile becoming part of the competitive cable operator's service bundle anytime soon.

"I don't think we've seen any competitive disadvantage, because we don't have a wireless product right now," Elder said Thursday (March 7) on the company's Q4 earnings call. "Our customers really rely on us for the products that we provide and our focus on … being a strong alternative and challenger brand to the other cable companies out there."

Elder, a former exec of Clearwire and a former CEO of Vodafone Ireland, was named CEO of WOW in December 2017. "We are well aware and always watching what's happening in that space. But right now, we feel good about the focus on what we're delivering." (See WOW Appoints Teresa Elder New CEO.)

WOW is mostly focused on a traditional cable services bundle of voice, video and data, along with services tailored for business customers.

A small number of WOW competitors have pushed ahead with mobile products that lean on MVNO deals. Comcast and Charter Communications have about 1.33 million mobile subscribers combined via their respective deals with Verizon Wireless, and are using those bundles to drive their high-margin broadband business. Altice USA is planning to launch a mobile product, in partnership with Sprint, later this year. (See Charter CEO: 'Spectrum Mobile Is Ramping Up'.)

With respect to video, WOW was asked if it was looking at strategies that could see it team up with an OTT provider. WOW hasn't announced any deals with virtual MVPDs, but it has integrated Netflix on the set-top box and added new digital offerings such as Cheddar, the news and technology service targeted to younger audiences. (See Altice USA Expects to Bring 'Major' OTT-TV Player to Set-Top Platform and Smaller Cablecos Fleeing Legacy Pay-TV.)

"We continue to look at alternative providers and new offerings for our customer base," Elder said, adding that WOW's network is "very well suited" for OTT. Most of WOW's network has been upgraded to DOCSIS 3.1 with 1-Gig broadband service options. (See WOW Gives Gig Access to 95% of Footprint.)

Among the individual subscriber categories, WOW lost 5,500 video customers (for a total of 406,100), shed 4,300 telephony subs (lowering that total to 204,300), and tacked on 7,100 high-speed Internet customers (for a total 759,600). WOW said it lost about 4,400 revenue generating units (2,600 residential high-speed subs, 1,200 video subs, and 600 phone) from the impact of Hurricane Michael, which hit WOW's system in Panama City, Fla., last October.

WOW posted Q4 revenues of $258.4 million, down 1.8%, and issued $5.4 million in Hurricane Michael-related credits in the period. A bright spot was business services revenue, which climbed 12.7% in Q4 versus the year-ago period. (See WOW Revenues Dip 2.9% to $1.15B for 2018.)

WOW also continues to pursue an "edge-out" strategy in which it extends its network to adjacent markets. The company estimated that it extended its network by more than 138,000 new homes passed at the end of 2018, and that it has achieved a penetration of 33.6% to date in its various edge-out communities.

WOW is targeting between 30,000 to 40,000 new homes passed for 2019 edge-out projects, CFO Richard Fish said.

On the call, Elder noted that WOW added headcount in customer care and invested in sales and marketing and the company's broader "digital transformation."

"Our investments helped to substantially improve the customer experience throughout 2018 and we have seen trouble call volumes decline, which positions us to realize operational efficiencies heading into this new year," she said.

— Jeff Baumgartner, Senior Editor, Light Reading

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