WOW!'s Strategic Fiber Expansion and Liquidity Position Amid Takeover Offer: A Case for Immediate Action

WideOpenWest (WOW!), a U.S. broadband provider, is at a pivotal juncture. A proposed $5.20-per-share takeover offer by DigitalBridge and Crestview Partners—valuing the company at $1.5 billion—has sparked debate over whether the deal undercuts its long-term potential. While the stock has traded at a 63% premium to its August 2025 closing price, the offer still appears to undervalue the company's fiber expansion momentum and robust EBITDA margins. For investors, this represents a rare opportunity to capitalize on a mispriced asset before its public liquidity evaporates.

The Fiber Growth Story: A Catalyst for Value Creation

WOW!'s strategic pivot to fiber is reshaping its competitive position. In Q2 2025, the company passed 15,500 new homes in Greenfield markets, bringing the total to 91,100 homes with a 16% penetration rate. These all-fiber markets are now the primary growth engine, with 2,300 new subscribers added in the quarter. By contrast, legacy markets have seen subscriber declines, but management has redirected capital to fiber, which now accounts for a growing share of revenue.

The company's capital expenditures of $47.9 million in Q2 2025 were heavily weighted toward fiber infrastructure, including line extensions and scalable network upgrades. This aligns with a broader industry trend: the 2025 Telecommunications Benchmarking Study notes that the median broadband provider achieved 98.3% fiber-to-the-premises connectivity in 2024, underscoring the sector's shift toward high-speed infrastructure. Altice USA, a peer with aggressive fiber growth, added 56,000 net fiber customers in Q2 2025 alone, achieving a 21.9% penetration rate. While WOW!'s metrics lag behind, its Greenfield strategy is still in early innings, and the company's 40–50% EBITDA margin target post-debt restructuring suggests significant upside.

EBITDA Margins: A Shield Against Short-Term Volatility

Despite subscriber losses in legacy services, WOW!'s EBITDA margins have improved markedly. In Q2 2025, the company reported a 48.8% EBITDA margin, up from 44.1% in Q2 2024. This resilience stems from cost discipline—operating expenses fell 14.6% year-over-year—and a shift in revenue mix toward higher-margin broadband services. The 2025 Telecommunications Benchmarking Study highlights that the median broadband provider saw a 2.2% decline in operating margins in 2024, yet EBITDA grew by 1.4%. WOW!'s performance outpaces this trend, even as it navigates subscriber attrition.

The company's EBITDA strength is further validated by its ability to maintain low churn and record average revenue per user (ARPU) for high-speed internet. With a net leverage ratio of 3.4x LTM Adjusted EBITDA, WOW! is in a strong position to fund its fiber expansion without overleveraging. This financial flexibility contrasts with peers like Altice USA, which reported a 53% year-over-year increase in fiber customers but faces higher debt loads.

The Takeover Premium: A Mispricing Opportunity

The $5.20-per-share offer represents a 37.2% premium over the unaffected price of $3.79 and a 63% premium to the August 8, 2025, closing price. However, this valuation fails to account for the long-term value of WOW!'s fiber assets. The 2025 Telecommunications Benchmarking Study estimates that the replacement cost of fiber networks exceeds 10x EBITDA, yet the takeover price implies a multiple of just 3.4x. This discrepancy suggests the acquirers are undervaluing the company's infrastructure and growth potential.

Moreover, the takeover's all-cash structure removes liquidity for public shareholders, who will no longer be able to trade shares post-delisting. While the offer provides immediate compensation, it locks in the current valuation, ignoring the potential for a higher bid. Crestview, which already owns 37% of the company, has agreed to support the deal, but activist investors like LB Partners have criticized the offer as “opportunistic.” This tension could force a renegotiation, particularly if the market continues to price in a higher multiple.

Investment Thesis: Act Before Liquidity Disappears

For investors, the key question is whether the current offer reflects WOW!'s intrinsic value. The company's fiber expansion, EBITDA resilience, and industry benchmarks suggest it is being sold at a discount to its long-term potential. While the takeover guarantees a 63% return for shareholders who accept the offer, the risk of a higher bid remains. If the special committee of directors or other stakeholders push for a revised offer—potentially aligned with replacement cost estimates or peer multiples—shareholders could see a significantly higher payout.

The delisting timeline (end of 2025 or early 2026) adds urgency. Once the transaction closes, public shareholders will lose the ability to trade their shares, making the current offer the final valuation opportunity. Given the company's strategic fiber growth and strong EBITDA margins, the current price appears to understate its value. Investors should consider the following:
1. Support Activist Efforts: Backing calls for a higher bid could unlock additional value.
2. Hedge Against Delisting: If the offer is revised upward, the stock may trade at a premium before the deal closes.
3. Assess Replacement Cost: The 10x EBITDA replacement cost benchmark suggests the company is undervalued by at least 200%.

In conclusion, WOW!'s takeover offer is a compelling but incomplete story. The company's fiber expansion and EBITDA margins position it for long-term growth, yet the current valuation fails to reflect this potential. For investors, the window to act is narrowing—before liquidity vanishes and the market's mispricing becomes permanent.