Local marketing could give WOW! an edge as rollouts ramp: Analyst

Raymond James analyst Frank Louthan tipped WideOpenWest’s (WOW!) local marketing focus to give it a leg up on the competition as the operator prepares to accelerate broadband deployments in 2022 after selling off five of its service areas earlier this year.

WOW! executives are planning to unveil the details of their post-sale strategy during an investor event on December 9. But CEO Teresa Elder said during an earnings call the operator is “in a very strong position to more aggressively invest in our broadband first strategy” following the divestiture and expects its plan “will result in a reacceleration of HSD subscriber growth” next year.

Elder noted on the call high-speed data (HSD) subscriber growth slowed in Q3 but WOW! managed to increase its total number of customers. It ended the quarter with 509,500 HSD customers, up 3% year on year. She added the operator still expects to achieve full-year subscriber growth similar to 2019 levels.

Company CFO John Rego explained that prior to its asset sales, WOW! was paying $100 million each year in cash interest expenses. Post-divesture that figure will be “significantly less,” opening “a lot of opportunities to put the capital to better use.”

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“We have an opportunity now to really go out and build the kind of homes here, through a greenfield strategy or a continuation of the edge-out strategy,” he said.

While the details of its expansion plan have yet to be revealed, Raymond James' Louthan argued WOW! could gain a competitive advantage by homing in on local messaging.

“Local marketing wins the day in small-town America, and we believe WOW is refocused on sponsoring the little league teams, 4H parades and neighborhood yard sales to get out the word, a model that served them and their predecessors well over the years, which can drive improved growth and broadband subs,” he wrote.

Louthan added he expects WOW! to face less overbuilding activity from rivals like AT&T in its smaller markets, offering it another boost. “AT&T is focused on expanding in larger markets, in our view, and targeting a small market with two existing cable competitors is not logical. As such, the runway for growth should remain solid for the next couple of years,” he concluded.


Given its recent divestitures, WOW! reported Q3 results on a pro forma basis.

Total revenue inched up year on year to $184 million compared $183.1 million in the year-ago period, with HSD revenue jumping 15% to $103.3 million. Video revenue fell to $52.8 million from $63 million, while Telephony sales dropped from $15.9 million to $14.2 million.

The operator posted a net loss of $21.2 million compared to a net loss of $20.3 million in Q3 2020.