WideOpenWest chief financial officer John Rego said the company had been looking for some time to sell off some assets to take down leverage, adding that the deal unveiled Wednesday with Astound Broadband and Atlantic Broadband represented an opportunity to take down that leverage quickly, and give the company more breathing room to execute its strategy.

Rego, who joined WOW last year from Telaria Inc., said on a conference call to discuss the sale of systems in five markets Wednesday that the company’s leverage ratio was at about 5.5 times forward-looking cash flow in 2020. While leverage was reduced to about 5 times by March 31 of this year, he still believed it was too high.

“Compared to our peer group, we were too highly levered,” Rego said on the call, adding that at the same time deal multiples were rising above the public market trading level for WOW stock. WOW stock was trading at about 8 times cash flow prior to the deal announcement. It valued the June 30 sale at about 11 times cash flow.

“It seemed to us if conditions were right, we could sell off a piece of the company and do a nice deleveraging...The stars were aligned here,” he said on the call. 

Rego added that due to WOW’s hefty Net Operating Loss carry-forwards -- about $1 billion worth -- the company won’t have to take a large tax hit on the sales. He estimated that NOLs will cover about 88% or 89% of the taxes associated with the deal. In addition, WOW will retain more than $200 million of its NOLs after the deal is closed. 

WOW CEO Teresa Elder said that some of the proceeds from the sale will be used to continue edge-out and greenfield expansion programs for its network. While some of the company’s current edge-out efforts were located in the markets it is selling, she said on the call that there remains ample opportunity to expand the network.

WOW has said all along that it is focusing on building out and improving its network, and at the Credit Suisse Virtual Communications conference earlier this month noted that the goal is to move all of its services onto its IP network, which he said at the time could be completed in a couple of years. Investors should get more insight into the company’s strategy at its upcoming Investor Day, expected in the fourth quarter. 

 WOW said that after the deal closes it will provide service in 14 markets with about 532,000 total customers and 502,000 data subscribers. While WOW did not release details on how many subscribers were involved in the sales, Atlantic Broadband parent Cogeco said in a separate release that the Columbus and Cleveland systems had 196,000 internet, 61,000 video and 35,000 telephony customers as of March 31. In its own press release, Astound Broadband said the WOW Chicago, Anne Arundel and Evansville systems had about 128,000 residential and business customers. WOW also said that after the deal closes, its total service penetration rate will rise to 29% from 26% previously. 

In a research note, B Riley Securities analyst Daniel Day estimated the sale price works out to about $5,616 per broadband subscriber, higher than the company’s current valuation of $4,500 per broadband customers.

Day wrote the sale could serve as a catalyst for other stocks in the sector, adding that if WOW’s current 8-times trading multiple were increased to 11 times -- the value of the sale -- its stock would be trading at between $33 and $34 per share. Day had raised his 12-month price target on WOW to $28 per share on June 23.  

WOW stock rose as much as 17% ($3.09 each) in early trading Wednesday to $21.34 each. The stock was priced at $19.42 each (up 9%) at 1:42 p.m. 

WideOpenWest chief financial officer John Rego told an industry audience that the overbuilder is open to being a buyer or seller of systems, especially as deal multiples have risen in the past year, but added that the company will most likely remain focused on growing its broadband business and building out its network.

Speaking at the virtual Credit Suisse Conference Tuesday, Rego pointed to two recent deals -- Astound Broadband’s sale to Stonepeak Infrastructure Partners for $8.1 billion and Cable One’s purchase of Hargray Communications for $2.2 billion. He added the forward-looking cash flow multiples for those deals -- 12.5 times for both transactions -- highlight the success of the broadband business. 

“Valuations have stepped up rather nicely,” Rego said, adding that the Astound deal was made when WOW’s stock was trading at about 5.5 times cash flow, and the Cable One deal when WOW’s multiple was around 8.5 times. 

“If we wanted to think about deleveraging quicker [and] faster, we could think about selling a market or two of the 19 that we have,” Rego said. “We’ve done this before. We’ve bought them and we’ve sold them.”

WOW has about 859,200 voice, video and data customers in 19 markets in 10 states in the Midwest and Southeast. The company’s current leverage ratio is about 5 times cash flow -- down from 5.5 times about a year ago. Rego said the company is on the path to tick down its leverage below 5 times this year.

“We’re a public company. Essentially we’re for sale every day. You can buy one share of stock or you could buy all of the shares of stock,” he continued, adding that a merger with a larger company is “always on the table” as well.

But for now it appears that WOW will focus on growing its broadband rolls, as well as rolling out its IP network.  

“A real goal for the company is to get all of our services on the IP network,” Rego said. “That opens up a lot of possibilities for us going forward. Look for us to get that done in the next couple of years.”

Rego also reiterated his guesstimate that WideOpenWest could have fewer than 100,000 video customers in the next three years. Rego first made that prediction in February, during the company’s Q4 earnings call. As of Q1, WOW has 290,900 video customers and 823,800 high-speed data subscribers.  

At the Credit Suisse conference, Rego said only  36% of WOW subscribers have video, while 96% have the data service. He added that in 2019, WOW lost about 32,000 video customers, more than doubling to a loss of 65,000 video subscribers in 2020. 

“Just following that math along it’s very easy to see how we get to sub-100,000 [video customers] in the next couple of years,” Rego said.

On the flip side, broadband subscriber growth has been strong,  WOW added 23,700 high-speed data customers in 2019 and 32,300 in 2020, up 36% and a new record for the company. In the first quarter of this year, broadband subscribers rose by about 10,000. 

Also at the Credit Suisse conference, WOW CEO Teresa Elder said broadband growth has been strong during the pandemic as customers opted for higher speeds and bought products like its WiFi mesh offering for whole-home WiFi. She added that self-install kits for broadband also helped drive sales. At the beginning of 2020, only about 30% of broadband customers took advantage of self-install. By the end of the year that number rose to 80%, she said.  

Operators across the country have shifted their focus to broadband over the past few years, following Cable One which first adopted a broadband-first stance in 2013. The prevailing wisdom is that with costs rising for content, operators are better off focusing on broadband and its much higher margins.   

Rego estimated that WOW’s gross margins for broadband are about 97%, while gross margins for video are “sub-20%.”

While video margins have been an issue with cable operators for years, particularly around the high cost of content, Rego pointed out that TV service has some less obvious costs too. 

Also Read: MVPDs Find Margins of Victory in Broadband 

“TV disproportionately drives more cost into opex than does its counterpart HSD,” Rego said, adding that video service related calls to customer care centers are generally longer and 20% of the time require an additional truck roll. HSD service problems, he said, can mostly be solved by the customer. Video also disproportionately drives capital expenditures through truck rolls, higher-cost CPE and more expensive maintenance at the headend. 

WOW’s emphasis on broadband is showing up on the revenue line. In Q1, 53% of the company’s revenue was driven by HSD. If video subscribers fall below 100,000, broadband would account for 80% of revenue.

“We could get to a point where we could have topline revenue not dissimilar from where we are now, but 80% of it is driven by HSD,” Rego said. "That's broadband first at its finest. That's a game changer." 

Teresa Elder, CEO of WideOpenWest (WOW!), has returned to work after a battle with COVID-19, the cable operator said in an SEC 8-K filing made Monday.

WOW! announced just over three weeks ago that Elder had been admitted to a Denver-area hospital for treatment.

Related: WOW! CEO Elder Hospitalized with COVID-19

Bill Case, chief information officer for the company, stepped in as acting CEO. Additionally, cable industry veteran and WOW! board chairman, Jeff Marcus, temporarily took on a formal leadership role as executive chairman.

Englewood, Colorado-based WOW! has positioned most of its employees to work-from-home status since March 16.

WOW! serves 19 markets, primarily in the Midwest and South, with broadband, cable, phone, business data and cloud services. 

Teresa Elder, CEO of WideOpenWest (WOW!), has returned to work after a battle with COVID-19, the cable operator said in an SEC 8-K filing made today. 

WOW! announced just over three weeks ago that Elder had been admitted to a Denver-area hospital for treatment. 

Also read: WOW! CEO Elder Hospitalized with COVID-19

Bill Case, chief information officer for the company, stepped in as acting CEO.  Additionally, cable industry veteran and WOW! board chairman, Jeff Marcus, temporarily took on a formal leadership role as executive chairman.

Englewood, Colorado-based WOW! has postponed most of its employees to work-from-home status since March 16. 

WOW! serves 19 markets, primarily in the Midwest and South, with broadband, cable, phone, business data and cloud services. 

Teresa Elder, CEO of cable company WideOpenWest (WOW!) has been hospitalized with the COVID-19 coronavirus, the company said Sunday (March 29).

Bill Case, chief information officer, will be acting CEO of the cable and broadband provider during Elder's hospital stay and recovery. 

Elder had been working remotely since March 16 due to the company's move to work-from-home status wherever possible. 

"All of WOW! is united in wishing Teresa a quick and full recovery," said WOW! board chairman Jeff Marcus. "The board, her leadership team and every WOW! employee offers their support and prayers to her and her family." 

WOW! serves 13 markets, primarily in the Midwest and South, with broadband, cable, phone, business data and cloud services. 

WideOpenWest continues to grow its high-speed internet business through its so-called “edge-out” strategy, adding 7,900 high-speed data customers in the third quarter.

But overall revenue for the Englewood, Colorado-based midsized cable operator dipped 2.1% to $285.4 million in the quarter, as WOW lost another 6,300 video subscribers. In short, the 9.4% improvement in residential broadband revenue to $11.2 million couldn’t offset the 10.8% decline in TV services revenue to $12.9 million.

Still, the video subscriber performance represented an improvement over the 7,100 users lost in the third quarter of 2018. And WOW sustained progress on its longer term goals, which are to grow revenue in the areas of residential broadband and business services. Subscription revenue for the latter grew 5.2% in Q3 to $34.7 million.

WOW ended Q3 with 773,900 broadband users, penetrating 24.1% of a footprint that grew by 14,000 homes in Q3 through the edge-out scheme. WOW said the edge-out growth resulted in the addition of 1,900 broadband subscribers in Q3.

During Friday’s earnings call with equity analysts, WOW CEO Teresa Elder was asked about WOW becoming a “hub” for OTT services, as opposed to a traditional video distributor.

“We feel very good about our ability to provide streaming services and we believe customers come to us specifically for that,” Elder said. (Transcript provided by Seeking Alpha.) “So it's definitely something that we encourage. And I believe that with the whole-home WiFi product, it's just an excellent customer experience. So we definitely embrace those changes.”

WideOpenWest continues to grow its high-speed internet business through its so-called “edge-out” strategy, adding 7,900 high-speed data customers in the third quarter.

But overall revenue for the Englewood, Colorado-based midsized cable operator dipped 2.1% to $285.4 million in the quarter, as WOW lost another 6,300 video subscribers. In short, the 9.4% improvement in residential broadband revenue to $11.2 million couldn’t offset the 10.8% decline in TV services revenue to $12.9 million.

Still, the video subscriber performance represented an improvement over the 7,100 users lost in the third quarter of 2018. And WOW sustained progress on its longer term goals, which are to grow revenue in the areas of residential broadband and business services. Subscription revenue for the latter grew 5.2% in Q3 to $34.7 million.

WOW ended Q3 with 773,900 broadband users, penetrating 24.1% of a footprint that grew by 14,000 homes in Q3 through the edge-out scheme. WOW said the edge-out growth resulted in the addition of 1,900 broadband subscribers in Q3.

During Friday’s earnings call with equity analysts, WOW CEO Teresa Elder was asked about WOW becoming a “hub” for OTT services, as opposed to a traditional video distributor.

“We feel very good about our ability to provide streaming services and we believe customers come to us specifically for that,” Elder said. (Transcript provided by Seeking Alpha.) “So it's definitely something that we encourage. And I believe that with the whole-home WiFi product, it's just an excellent customer experience. So we definitely embrace those changes.”

WideOpenWest announced Thursday that industry vet Teresa Elder has been named CEO and has joined the board of the competitive cable operator.

She succeeds Steven Cochran, who is retiring from WOW following 15 years with the company. Cochran wills stay on in an advisory role through June 30, 2018, to help with the transition.

Elder was the founding president of Clearwire Wholesale (sold to Sprint) and, before that, was CEO of Vodafone Ireland and president of AT&T Broadband West (now part of Comcast). She is also late of MediaOne (Comcast today), US West (now part of CenturyLink).

WOW, which has been aggressive with its DOCSIS 3.1 deployment, went public in May.

RELATED: WOW to Complete 1-Gig Rollout in Q1 2018

WOW this week also announced it has closed its sale of a portion of its fiber network in the Chicago market to a unit of Verizon for $225 million in cash, which will be  used to help pay down existing debt related to WOW’s revolving credit agreement and to reinvest in its business.

Tied in, WOW and Verizon inked a new construction deal in which WOW will complete the build-out of the network in exchange for about $50 million, payable as the remaining network deployment is completed. The final buildout of the network is slated for completion in the second half of 2018.

WOW’s board has also authorized a stock repurchase program that will enable the company to repurchase an aggregate of $50 million of its outstanding common stock. That program is expected to be executed over the next 12 months.

“We are delighted that Teresa Elder has joined WOW! as CEO,” Jeff Marcus, chairman of the board of WOW, said in a statement. “She is a highly experienced executive with a demonstrated track record of operational success within the tech, telecom and cable industries. Her passion for building businesses and her knack for innovation, make Teresa the ideal executive to lead our company forward.”

He added: “On behalf of the Board, I would like to thank Steven for his years of service to the Company, first as CFO and most recently as CEO. Steven has worked tirelessly to position the Company for long-term success.”

“It is truly an honor to join WOW!’s talented team,” Elder said. “With our entrepreneurial spirit, very competitive gigabit speeds and strong balance sheet, we are uniquely positioned for the future. I look forward to working with the WOW! team to deliver exceptional experiences to our customers, growth to our shareholders and a great workplace for employees. In the days and months to come, I will be working closely with our team and Board to craft and then implement a business strategy, grounded in operational excellence and innovation, thereby empowering WOW! to reach its full potential – for the benefit of all stakeholders.”

“I am thankful for the opportunity to have led such an extraordinary organization, and to have been a part of the WOW! family for more than 15 years,” Cochran said. “I wish my colleagues all the best and look forward to ensuring a seamless transition to Teresa, who I firmly believe will thrive in the position.”

Elder is also chair of the management board at Stanford’s Graduate School of Business, and was recently elected to the board of trustees of the Cystic Fibrosis Foundation following years as a national committee member, public policy advocate and fundraiser for the foundation.

She earned a BS in Business Administration from Creighton University and a MS in Management from the Stanford University Graduate School of Business, where she was a Sloan Fellow and Class President.