US cable operator Wow! announced agreements to sell around a third of its customers and related operations for a total of USD 1.8 billion. Atlantic Broadband will buy the Wow! activities in Cleveland and Columbus, Ohio for USD 1.125 billion, and Astound Broadband (RCN, Grande Communications and Wave Broadband) has agreed to acquire Wow!'s Chicago, Evansville (Indiana) and Anne Arundel (Maryland) service areas for USD 661 million.
Proceeds from the sale will go towards reducing Wow!'s debt, helping halve its leverage ratio to 2.5x compared to 5.0x at the end of March. The deal also will free up resources to invest in expansion in the company's remaining 14 service areas in Alabama, Florida, Georgia, Michigan, South Carolina and Tennessee.
The sale will reduce Wow!'s subscriber base to around 532,000, compared to a reported 859,200 subscribers at end-March. On a pro forma basis, the remaining network will pass 1.9 million homes, with a subscriber penetration rate of 29 percent, up from 26 percent pre-sale. For the trailing 12-month period ended March 2021, adjusted EBITDA would have been USD 288 million and revenues USD 731 million.
Ohio expansion
Cogeco, the owner of Atlantic Broadband, said the Ohio networks pass around 688,000 homes and businesses and serve approximately 196,000 internet, 61,000 video and 35,000 telephony customers as of end-March. For the year to March, the operations generated revenues of USD 244 million and pro forma adjusted EBITDA, including adjustments to reflect the expected cost structure of Atlantic Broadband and run-rate synergies, of USD 103 million.
The takeover will take Canada-based Cogeco Communications to over half its revenues from the US. It also increases Atlantic's internet customer base by 38 percent, to 707,000 in total, with a network fully upgraded to Docsis 3.1 for gigabit speeds.
Adjacent markets
Astound said the acquisition fits well with RCN's existing networks in Chicago and Washington, DC, offering synergies with its footprint there, while Evansville represents a stable return in a new market for the company. In total, the company is acquiring 128,000 residential and business customers, more than 700,000 homes passed and 5,700 miles of plant under the deal.
