WOW Q2 Deep Dive: All-Cash Buyout, Fiber Expansion, and Strategic Shift

Broadband and telecommunications services provider WideOpenWest (NYSE:WOW) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 9.2% year on year to $144.2 million. Its GAAP loss of $0.22 per share was 18.9% below analysts’ consensus estimates.

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StockStory’s Take

WideOpenWest’s second quarter results came alongside a significant development: the company announced it will be acquired by DigitalBridge Investments and Crestview Partners in an all-cash transaction. While the company’s revenue met Wall Street expectations, management emphasized ongoing progress in expanding its fiber-to-the-home offerings and greenfield markets. CEO Teresa Elder highlighted the company’s momentum in newer markets, stating, “We maintained strong penetration rates of 16%, all while growing our footprint.” Management also pointed to record average revenue per user (ARPU), driven by increased demand for high-speed tiers and a simplified pricing strategy.

Looking forward, WideOpenWest’s future performance will be shaped by the pending acquisition and its continued commitment to fiber expansion. Management stated that this year’s capital expenditure plans will remain unchanged, with ongoing investments in greenfield and edge-out markets. However, the company will not provide forward guidance during the regulatory approval process. Elder emphasized, “Our focus is now making sure we continue to run the business very well, while also going through all of the appropriate approvals with stockholders and with the regulatory authorities to get us to the close.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to subscriber growth in fiber markets, ARPU gains from pricing changes, and a business mix shift away from traditional video.

• Acquisition agreement finalized: WideOpenWest entered into a definitive agreement to be acquired by DigitalBridge Investments and Crestview Partners for $5.20 per share, with the transaction expected to close by the end of the year or in the first quarter of 2026, pending shareholder and regulatory approvals.
• Fiber expansion drives growth: The company continued to build out its fiber-to-the-home network, adding 15,500 new greenfield homes passed during the quarter and maintaining a 16% penetration rate in these markets. Elder noted strong consumer demand for higher speed tiers in these areas.
• Shift away from legacy video: Traditional video subscribers dropped by over 40% year over year. Management noted this decline was expected and allows the company to reduce programming costs and reallocate resources toward broadband and fiber.
• ARPU at all-time high: Average revenue per user reached a new peak, attributed to the June 1 rate increase and increased adoption of higher speed internet offerings. Management reported that 76% of new high-speed data-only signups chose 500 Mbps or higher plans.
• Capital allocation focused on growth: CapEx was directed primarily toward fiber expansion, with $14.1 million spent on greenfields and $4.3 million on edge-outs. The company reiterated that this strategy aligns with the interests of the incoming ownership group and current strategic direction.
• Adjusted EBITDA: Adjusted EBITDA was $70.3 million, up slightly year on year, with a margin of 48.8%, reflecting the company’s focus on cost discipline and the ongoing transition away from legacy video services.

Drivers of Future Performance

The company’s outlook centers on executing its fiber rollout and successfully closing the acquisition, while maintaining operational discipline.

• Fiber network buildout: Management indicated that ongoing investment in new fiber markets remains a priority, with plans to continue greenfield and edge-out expansion in line with current strategy. They believe this approach will support subscriber growth and improve the company’s long-term competitive position.
• Cost discipline amid transition: The company will continue streamlining operations, particularly by phasing out legacy video services and reallocating resources to broadband, which is expected to support profitability. However, management noted that the transaction process may limit guidance and flexibility in the near term.
• Acquisition and regulatory risk: The pending buyout by DigitalBridge and Crestview introduces uncertainty, including potential regulatory delays or changes in strategic direction post-close. Management emphasized that all current plans are subject to change following the completion of the acquisition.

Catalysts in Upcoming Quarters

In the quarters ahead, our analysts will be watching (1) progress toward closing the DigitalBridge and Crestview acquisition and any regulatory updates, (2) execution of greenfield and edge-out fiber expansion, and (3) continued improvement in subscriber trends, especially in new markets. We will also monitor how the company manages its transition away from legacy video and balances capital allocation during the pending transaction.

WideOpenWest currently trades at $5.06, up from $3.41 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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