WideOpenWest Inc (WOW) 2017 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to WOW!'s Fourth Quarter and Year-End 2017 Results Call. (Operator Instructions)

At this time, I would like to turn the call over to Mr. Lucas Binder, WOW!'s Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Binder.

Thank you, [Shontelle]. Good morning, everyone, and thank you for joining our year-end 2017 earnings call.

With me today is Teresa Elder, WOW!'s new Chief Executive Officer, who will be giving an update on our operating activities; and Rich Fish, WOW!'s Chief Financial Officer, who will cover the financial results.

Before we get started, we need to remind everyone that during our call, we will be making some forward-looking statements about our expected operating results, our business strategy and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties and other factors that may cause our actual operating results, financial position or performance to be materially different from those expressed or implied in our forward-looking statements. We disclaim any obligation to update such forward-looking statements.

For additional information concerning factors that could affect our financial results or cause actual results to differ materially, please refer to our filings with the SEC, including the Risk Factors section of the form 10-K filed with the SEC.

In addition, please note that in today's call and in our earnings release, we refer to certain non-GAAP financial measures, such measures include, revenue, including acquisitions and dispositions; residential subscription revenue, including acquisitions and dispositions; Business Services subscription revenue, including acquisitions and dispositions; adjusted EBITDA; transaction adjusted EBITDA; transaction adjusted capital expenditures; adjusted EPS and free cash flow.

While the company believes these non-GAAP financial measures will provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. These non-GAAP measures are reconciled in our earnings release to the most comparable GAAP measures.

With that, I'll turn it over to Teresa.

Thanks, Lucas, and thank you, everyone, for joining today's call. I can't tell you how delighted and honored I am to be WOW!'s CEO. I'm excited to be able to share with you today an update on our vision and strategy and to give you some preliminary insights on our initiatives heading into 2018.

Many of the company's growth initiatives are performing well and ahead of expectations, such as our network expansions through Edge-Outs and the continued improvement in Business Services. However, over the course of 2017, we fell short in some of our key operating and financial metrics, and have not lived up to our long-held reputation of providing exceptional customer experiences.

Missing such critical targets is very disappointing. I believe we have a strong plan in place to address these shortfalls and position the company for growth, as we exit this year. I'll share more specifics of this plan momentarily.

A key milestone in 2017 was our initial public offering and the refinancing of our balance sheet. Although the company's operating performance has clearly not met our expectations and we believe our stock is undervalued, the deleveraging of the balance sheet as a result of the IPO has positioned WOW! to be able to make the necessary investments to address the opportunities we have to increase our customer base and return to growth.

I know, with our solid plan, laser-like focus on what's important and executing precisely, we can improve our financial results and return WOW! to the company loved by customers, employees and investors.

I didn't join WOW! to accept the status quo. I believe in the future of this company, and I'm confident in our plan. And we've already begun to see momentum building in the right direction. There are many reasons why I'm not only excited but confident about WOW!'s future. In my first few months here, I've had the opportunity to meet with and listen to many stakeholders, including customers, partners, and employees from across our markets.

What I've seen and heard is overwhelming energy and support for a return to doing what we do best, delivering the WOW! experience. Our vision for the company is, therefore, clear. It is connecting people to their world through the WOW! experience, which we define as reliable, easy and pleasantly surprising every time.

Our path forward is clear, but that doesn't mean it will be simple. I have no doubt that 2018 will be a challenging year. The year-over-year comparisons of our quarterly results will not be favorable because the benefits to revenue and efficiencies from the investments we'll be making in customer care, marketing, sales, products and our people won't begin to materialize until late in the year. As we execute on our plan, I'm confident that our financial results will be greatly improved, including becoming free cash flow positive for the first time in WOW!'s history.

I look forward to sharing good news with you on future calls about how our investments in the business are paying off. The investments that we'll be making will restore WOW! to its competitive prowess and position the company for growth in the coming years. Growth, that will be driven by both increased penetration in our organic base and Edge-Out growth from expansion of our network footprint not currently serviced by WOW!.

We've won in the past and will again by being a challenger brand, and more nimble than our competitors, having an unmatched local focus, and by providing a differentiated customer experience and value proposition.

These investments of between $20 million and $25 million are being made in customer experience, customer acquisition and retention, products and services and, of course, our people. Specifically, in 2018, we are investing in tools to transform how we deliver the WOW! experience, so that we are viewed by our customers as reliable, easy and pleasantly surprising. We treat our customers as neighbors, not numbers, and relate to them on a personal level. You'll hear me talk about being reliable, easy and pleasantly surprising repeatedly because it's central to how we intend to win and retain customers and position WOW! for growth.

We're developing new digital platforms, a mobile app and significant improvements to the WOW! way website, so we can interact with customers on their terms, whether they are looking to purchase, upgrade or simply need a little help with their WOW! services. With these tools in place, not only will we be able to serve a modern and mobile customer base that increasingly wants to have more self-service options, we will begin to improve our cost structure for the future. On the customer acquisition and retention front, we are increasing our investment in marketing and sales to expand our WOW! brand presence, while adding more quota-bearing sales headcount.

We love being a challenger brand, and consequently, we are fortifying our efforts to being an active and engaged participant in the local communities in which we live and work. We give our neighbors the opportunities to interact and learn about WOW!'s brand on a personal level. We've conducted numerous studies of our brand and brand awareness, and have found that our customers think our best days are ahead and view us as most like them, which is the basis of trust. This drives greater retention and referrals.

I want to spend a moment and highlight one of our core successes. The Edge-Out growth initiative that was restarted in 2016. Since then, we've extended our network to over 104,000 incremental homes and added over 26,000 new customers as a result of that initiative, representing a combined penetration rate of 25%.

In 2017, we added over 63,000 homes and we've already achieved a 21% penetration. We're very pleased with the performance of Edge-Outs and this success gives us a great base to build upon and reinforces our understanding of what our customers want and how we can meet their demands.

In addition to Edge-Out, we're also very excited about the opportunities that we continue to identify to extend service to areas within our existing footprint. We continue to review our network and homes passed, finding significant opportunities with attractive returns in areas where we have already built out our network. Marketing and extending our brand to what we call these Edge-In opportunities, represents a further growth avenue we can leverage within our core business. Investments in expanding our product offerings will contribute to the growth of our base and will help us retain more customers. As we recently announced, our 1 Gig service is now available in more than 95% of our footprint and represents a leading Class B tier at a compelling price point.

Together with our 100-meg and 500-meg products, we believe our HSD product portfolio is among the strongest available in the industry. We also continue to drive a unified video experience across PayTV and OTT content through our ULTRA service. In addition to Netflix and Pandora, we have integrated YouTube and we'll continue to drive advanced video offerings.

As consumption models evolve, we will be prepared to meet customers' needs and requirements and deliver an experience that is reliable, easy and pleasantly surprising.

Additional product innovations for both residential and commercial customers are in our pipeline, and I look forward to sharing more details in the future. Now, let me speak about how we're investing in our people. We acknowledge that providing a differentiated experience to our customers is only possible through a highly trained and motivated workforce. We're fortunate to have many talented and passionate people in our business, who create the WOW! experience for our customers every day. Accordingly, we are enhancing investments in our people through training, development, compensation and retention efforts. We recently hired an accomplished and creative Chief Marketing and Sales Officer as well as our first-ever Chief Human Resources Officer. Those additions to the senior management team are already making a difference.

Business Services is an example where our investments across service delivery, product and people are supporting and experience that is reliable, easy and pleasantly surprising. As Rich will discuss, Business Services revenue continues to thrive with fourth quarter and full year growth, including acquisitions and dispositions up double digits.

Business Services is benefiting from added sales headcount, driving higher customer connects. All these investments will drive increased additions, lower churn, improved productivity and ultimately faster growth. Achieving each of these initiatives for our customers, shareholders and employees are exciting challenges and challenges that are absolutely within our reach. This is why I wanted to be the CEO of this company.

I've spent my entire career in challenging, competitive environments such as this, and I'm highly confident in our ability to execute on this plan because of the incredible people at WOW!, our loyal customers, our 1 Gig network and the strength of the WOW! legacy.

The transformation we're undertaking at WOW! is analogous to renovating a home you love, a home that has a great foundation and strong bones. Although living in the home, although renovations underway are challenging, the result is a more modern, efficient and valuable home. This is our vision for WOW!. Once again, to connect people to their world through the WOW! experience, which we define as reliable, easy and pleasantly surprising every time. I look forward to working with our management team and the Board of Directors to position WOW! to return to operational excellence, delivering an exceptional customer experience and positioning the company to capitalize on the tremendous growth opportunity before us.

Now, I'll turn it over to Rich to review our fourth quarter and full year 2017 results and provide an outlook on 2018. Rich?

Thanks, Teresa. For the fourth quarter of 2017, we reported total revenue of $292.8 million, net income of $84.2 million and adjusted EBITDA of $106.4 million. Adjusting our reported results for the effective historical transactions, total revenue, including acquisitions and dispositions totaled $290.3 million, and transaction adjusted EBITDA totaled $104.8 million for the fourth quarter of 2017. The sequential reduction in transaction adjusted EBITDA from the third quarter was primarily driven by the nonrecurring benefits to direct cost in the third quarter that we spoke about then as well as reductions in quarter-over-quarter average total RGUs. For the year ended December 31, 2017, we reported total revenue of $1.188 billion, net income of $159.5 million and adjusted EBITDA of $445.7 million.

Total revenue, including acquisitions and dispositions, totaled $1.174 billion, and transaction adjusted EBITDA totaled $437.1 million for the year ended December 31, 2017.

Net income for the year benefited in part by gains we realized during the year from the dispositions of our Lawrence market in the Chicago Fiber Network as well as the tax benefit we realized from the passing of corporate tax reform in the fourth quarter, all of which were partially offset by the impairment charge on intangibles and goodwill. Diluted earnings per share for the year ended December 31, 2017, totaled $2.02 per share and adjusted diluted earnings per share was $1.06 per share.

For the fourth quarter of 2017, adjusted diluted earnings per share were $0.32 per share. Total HSD RGUs increased by 2,700 during the fourth quarter of 2017 to 732,700 RGUs, which included a continuation of the improving trends in organic subscriber metrics that we've seen over the previous 2 quarters. And on a year-over-year basis, total HSD RGUs increased by 13,800 as compared to last year at December 31, 2016, net of the effect of acquisitions and dispositions. Total subscriber metrics for the fourth quarter also continued the improving trends from the previous 2 quarters, as we increased total subscribers by 900 during the fourth quarter of 2017 to 777,300, which represented an increase of 5,000 total subscribers, as compared to a year ago net of the effect of acquisitions and dispositions.

Business Services subscription revenue totaled $30.3 million in the fourth quarter of 2017, a year-over-year increase of $1.4 million or 4.8%, adjusting for the effect of historical transactions, Business Services subscription revenue including acquisitions and dispositions for the quarter increased $3 million or 11.2% over the fourth quarter of last year.

Business Services subscription revenue for the year ended December 31, 2017, totaled $116.7 million, a year-over-year increase of $7.6 million or 7%. Business Services subscription revenue, including acquisitions and dispositions for the year, increased $12.1 million or 11.8% over the year ended December 31, 2016.

As Teresa mentioned, as a result of the Edge-Out initiatives that were restarted in 2016, at the end of the year, we had extended our network by a total of 104,800 homes passed and have added a total of 26,400 new customers, achieving a total combined penetration rate of over 25%. The Edge-Out Nodes that we started in 2016 now passed 41,100 homes. These homes have been in the market at an average of 497 days, and we achieved over 31% penetration.

The 2017 Edge-Out Nodes passed 63,700 homes, having an average of 230 days in the market and have already achieved over 21% penetration. Needless to say, we're very pleased with the continued performance of Edge-Outs, and we're increasingly confident in our ability to not only identify and target attractive opportunities but also to execute on them effectively.

In addition to Edge-Outs, as Teresa mentioned, we're also extremely excited about the opportunities that we continue to identify to extend service to those areas within our existing footprint. These neighborhoods are extremely attractive because the capital requires to extend the network in our service capabilities to these homes has already been deployed. Marketing and extending awareness of the WOW! brand to these Edge-In opportunities, as we describe them, is one example of the expanded marketing and customer acquisition initiatives that Teresa mentioned previously.

Total capital expenditures for the fourth quarter of 2017 was $77.0 million. Strategic capital expenditures, which represents that subset of our total CapEx to expand our addressable market through Edge-Outs and Business Services market expansion totaled $21.9 million. Of that amount, $8.1 million was incurred towards the completion of the Chicago Fiber project, which will be in reimbursed as elements of the final build-out are completed in 2018.

Adjusting for the effect of acquisitions and dispositions, transaction adjusted capital expenditures for the fourth quarter totaled $68.9 million, of which strategic capital totaled $13.8 million. Excluding those strategic capital investments, transaction adjusted capital expenditures totaled $55.1 million or 19% of fourth quarter 2017 total revenue, including acquisitions and dispositions. Capital expenditures for the year ended December 31, 2017, totaled $301.3 million, which included strategic CapEx of $116.5 million. Of that amount, $46.3 million was incurred towards the completion of the Chicago Fiber project.

Transaction adjusted capital expenditures for the year totaled $254.9 million, which included strategic CapEx totaling $70.2 million. Excluding those strategic capital investments, transaction adjusted capital expenditures for the year totaled $184.7 million or 15.7% of total 2017 revenue, including acquisitions and dispositions.

With regard to the capital structure. In December of 2017, our Board of Directors authorized a $50 million share buyback program. And as of December 31, we had purchased over 461,000 shares in the open market and through March 9, 2018, we have purchased over 4 million of shares for roughly $41.4 million.

On December 14, 2017, we successfully completed the sale of a portion of our Fiber Network in our Chicago market to a subsidiary of Verizon for $225 million in cash. In addition, we entered into a new construction agreement with Verizon, whereby we will complete the build-out of the remaining elements of the network in exchange for approximately $50 million, which will be payable as segments of the final build-out are completed, which we expect to occur during second half of 2018.

Upon the closing, in the Chicago Fiber sale, we utilized the proceeds to pay down debt. And at the end of the year, had $69.4 million in cash on hand and outstanding debt balances totaling $2.277 billion. Total debt balances as of December 31, 2017, have been reduced by over $620 million since the end of last year. In total, leverage at year-end was 5.1x on a trailing 12-month transaction adjusted EBITDA basis, which is the reduction from 6.1x just a year ago.

From an accounting standpoint, we recorded a noncash charge related to the impairment intangible assets of $147.4 million in the fourth quarter. The estimation of the fair value of intangible assets on the balance sheet is very subjective analysis with multiple inputs and the loss of equity value post the IPO relative to the company's market comps complicated that analysis. As Teresa mentioned, we believe the market price of our stock is undervalued, but nonetheless, that specific data point now exists and represented the primary driver of the impairment charge.

Although unfortunate, the impairment on the intangibles is a noncash accounting event and has absolutely no impact on our business, customers, employees, initiatives for the year or our confidence about our future opportunities. As I said, we continue to believe our equity is significantly undervalued and are acting on that belief in a significant manner as evidenced by our $50 million stock buyback plan.

Corporate tax reform that was passed in December of 2017 had a significant positive impact. And that the reduction in the corporate tax rates resulted in the revaluation of the company's net deferred tax liabilities. This revaluation led to an income tax benefit totaling $104.6 million, which was the primary driver in the company's total income tax benefit for the year ended 2017, which totaled $132.5 million. The company has a very favorable tax position in that even after utilizing NOLs to offset tax gains from the Lawrence and the Chicago Fiber Network dispositions. We still have available NOLs totaling $649 million at the end of the year and don't expect to be a significant federal cash income taxpayer until at least 2022.

And finally, to address our outlook for the year. When we initiated our IPO process last spring, we viewed it as a logical culmination of a multiyear effort to delever our balance sheet and reduce the high cost of debt that has historically burden the business. Having come through that process last spring, we are where we expected to be, especially as it pertains to the company's aggregate level of total debt, which we've reduced by over $620 million from just a year ago, our resulting leverage ratios and our free cash flow outlook for 2018. Additionally, 2 of the 3 pillars of growth, Edge-Outs and Business Services, are executing in line or ahead of expectations. Our core business, which is the third growth opportunity for the company, will be well positioned to contribute as a primary driver of growth following the investments we are making in 2018.

The key highlights of the guidance for the year are that we expect HSD RGU growth of between 5,000 and 15,000 RGUs, and expect total revenue to be between $1.15 billion and $1.17 billion.

As we discussed earlier, we reported adjusted EBITDA for 2017 totaling $445.7 million. Excluding the impact of the dispositions of Lawrence and the Chicago Network, transaction adjusted EBITDA for 2017 totaled $437.1 million. All things being equal, we would have expected the outlook for 2018 adjusted EBITDA to be relatively flat from those 2017 transactions adjusted results. However, considering the $20 million to $25 million of the growth investments in sales and marketing, customer care, employees and products that Teresa discussed earlier, we expect that adjusted EBITDA for 2018 will be in the range of between $410 million and $420 million. As has historically been the case, there will inevitably be seasonality in our business on a quarter-to-quarter basis, and this will be especially significant in the first quarter, as we will incur the impact of the annual programming costs increases of between $8 million and $10 million on a sequential basis.

In addition, the initiation of the majority of the growth investments we've discussed will also negatively impact the first quarter's adjusted EBITDA as a result of increased levels of operating and SG&A expenses. The second and third quarter results will also see pressure associated with the implementation of our planned rate increase and the normal subscriber seasonality associated with the summer months. Accordingly, the company's leverage will increase slightly throughout the next couple of quarters as a result of reductions in LTM-adjusted EBITDA. In the fourth quarter, however, we expect that the benefits of the investments we're making will begin to have a positive impact on results and leverage will begin to trend down. Transaction-adjusted capital expenditures, which is highly correlated with adjusted EBITDA, will be lower in 2018 on a year-over-year basis, and we expect it to range from $225 million to $235 million, and that interest expense and other cash flow items will total between $130 million and $140 million. Accordingly, we expect free cash flow between $45 million and $55 million for the full year 2018, which as Teresa mentioned, will be the first year the company has ever had positive free cash flow and will represent year-over-year growth in free cash flow of over $150 million.

So that concludes our prepared remarks, and now we'll turn it back over to the operator to open the call for questions.

(Operator Instructions) Your first question comes from the line of John Hodulik with UBS.

Batya Levi for John. I'd like to start on the high-speed data side. The penetration of the Edge-Out homes has been on track. But you're expecting some slowdown in the net adds this year. Can you talk a little bit more on what you're seeing maybe on the organic side and maybe give some color on what the expectation for the Edge-Outs ramp this year would be? Do you still anticipate we can see 30% or so penetration of these new markets? And just one question also on the EBITDA side, maybe they are related. If we exclude the onetime incremental spending, your EBITDA guide is still flat to down for '18. So can you talk a little bit more on why we're not seeing that ramp on adjusted EBITDA?

Okay, the first question was expectations with regard to HSD subscriber growth. Teresa, do you want to...

,

Yes, absolutely. So we're going to continue to be very bullish on HSD and we feel that especially because of our 1 Gig network now passing 95% of our homes. We're in just an incredibly good position in that product, and we're going to continue to look to enhance that and move people up to higher speeds.

So we feel good about the growth both in the Edge-Out areas and anticipate that we'll continue to pace or exceed the expectations that we have in the Edge-Out areas. And really what we're doing with this concept we're calling Edge-In is redoubling our efforts within our core network as well. So looking for opportunities for addressable homes that we haven't had within our database previously. So that's the Edge-In piece of it. But then additionally, we're looking at the rest of our core base and increasing penetration there through the things we talked about with just an enhanced look at marketing and our sales force and making it just easier for our customers to buy.

And as a -- I'm sorry, I was just going to say, as it relates to the historical trends, specifically on the organic base, we've seen improvements on a quarter-over-quarter basis on the HSD organic customer metrics starting from the second quarter of 2017, wherein the organic base we lost approximately 5,300 HSD subscribers. That improved almost by half in the third quarter to 3,300. And it further improved significantly in the fourth quarter, where on an organic basis we lost approximately 900 customers HSD RGUs rather. So we continue to see improving trends over the last 3 quarters and certainly anticipate with the initiatives that Teresa spoke to, that we will continue to see that improvement trend into the future.

Okay. Maybe can you talk a little bit more about where this slowdown is coming from? Is it higher competitive intensity? Is it sort of a slowdown in marketing activity until you ramp these initiatives? And maybe, what's the targeted Edge-Out homes passed for this year?

I guess, talking about -- I don't know that so much has slow down because I think we're improving performance. But I think, clearly, HSD is a very competitive space, and we do have competitive offerings. So one of the other initiatives that we didn't talk about is also how we retain the customers we had, which, of course, also is accretive to the bottom line.

Right. And do you have a target for how many Edge-Out homes you'll have this year, that you could share?

I don't know that we've put that number out. But nonetheless, 40,000 homes passed is the anticipated Edge-Outs build for 2018. On a year-over-year basis, from 2017 to 2018, specifically just related to Edge-Outs, that represents a year-over-year reduction. However, combining the 40,000 homes passed that we plan for Edge-Outs in 2018 coupled with the opportunity that we are identifying through Edge-Ins from additional homes passed, we actually expect 2018 expansion from the combined impact of Edge-Outs and Edge-Ins to actually exceed that related to the -- that from the 2017 Edge-Out program, specifically.

Your next question comes from Frank Louthan with Raymond James.

Great. You mentioned the mobile app and some website improvements and that sort of thing. To what extent is your product a little behind the competition with this kind of features and what else do you think you need to add there to get up to the standard with some of your competitors and when should we expect to see this?

Yes. I mean, I think what we're doing with the mobile app and the wowway.com website and some of the things we're doing, we're doing it in a WOW! kind of fashion that will be very, I think, trusted by our customers. I think it will fit our demographic and our markets very well. So we feel good about the kinds of things that we're doing and how they will relate to our customers because we do it with a lot of research based on our local market. And I think that's one of the biggest advantages we have in interacting with our customers is that we know them best, they are our neighbors. We really, I think, have that kind of a strategy and work in a way that is utilizing the trust that they have in us. I think the brand health survey where it talks about that we are most like them is incredibly critical. So when we look at these things, yes, they are some standards that are in the industry, but we're launching them in a way that, I think, really speaks to our customers. And we anticipate those kinds of developments happening in the second, third quarter, which is consistent with what Rich was saying how on the year-over-year basis, we won't really start to see the upside, I think, until late in the year.

Okay. And then what sort of increased penetration do you see where you have a gig in your marketing and then what's the actual sell-through in that product itself?

Well, I think, the 1 Gig product is still very new to the market. So we're just really starting to double down on some initiatives to sell that. So I'd say stay tuned. We're excited about it. Our customers are excited about the many ways that they can use that 1 Gig service, especially as we look at the proliferation of IoT and the many ways that we can utilize that platform and launch other products on it. So I would say, stay tuned on that.

I think the other thing that I would say, Frank, on the benefit from the 1 Gig expansion or the rollout is actually the lift that we will get from increased sell-in to our 500-meg product. We have gone to great lengths to create kind of a simple, unbelievable value proposition with a good-better-best strategy as it relates to the HSD product. In the past, prior to the rollout of 1 Gig to the rest of the footprint, we were seeing sell-in disproportionately to our 100-meg product. Now that we have a gig in virtually the entire footprint, the good-better-best strategy means that we will begin to drive and see take rates of the 500-meg product as kind of the middle, kind of Goldilocks approach and that certainly is a much more value-enhancing product from an ARPU standpoint, gross margin, et cetera. So we do expect to see a shift over the remainder of the year.

Your next question comes from James Ratcliffe with Evercore ISI.

Couple, if I could. First of all, coming back to HSD for a bit. You talked about the improving performance on the organic side. How much of that was driven by improved churn versus improved gross adds on that front? And any breakdown for '18 of where you would expect the 5,000 to 15,000 to come from, because, clearly, more than 100% came from Edge-Out in '17, and is that's going to continue in '18? And secondly, if we talk a little bit about the buyback. I guess, you're pretty close to completing the authorization. How much room would you have to expand the buyback authorization before the size of the float becomes an issue?

Okay. I think the answer on that first one was what were the respective components on the improving trends of subscriber metrics over the last couple of quarters, it's actually been a little bit of improvement on both components, connects have improved as well as we've seen a lessening certainly in the fourth quarter was certainly a reduction in our churn percentages. So we're seeing improvements effectively across kind of both fronts.

As it relates to our guidance for 2018 on HSD RGUs and kind of how we split that out, the 5,000 to 15,000 range is really, if you think of it as the 2 components organic plus Edge-Out, we are essentially taking a view that we will continue to see modest improvement in the trends on the organic side that we currently are seeing over the last couple of quarters. Like I said, in the fourth quarter, we were slightly negative on the organic side to the tune of 900 customers, though we believe that, that will continue to improve quarter-over-quarter, giving us a net improvement in organic for the year of a small number, and then the increase up to the higher end of the range will primarily be driven by continued success in Edge-Outs.

On the third question, I think was related to the buyback. We are basically almost completed with the buyback. I think, as of March 9, I said that we were approximately 41 in change -- $41 million in change through the $50 million total program. I would say, we intend to certainly continue the program through the authorized total amount and then we will certainly evaluate next steps as it relates to that.

(Operator Instructions) Your next question comes from the line of Amy Yong with Macquarie.

I just have 2 questions and following up on the broadband, one. Teresa, you talked a lot about how you are the challenger brand. As you think about how you close the gap to maybe cable, how do we think about ARPU for 2018? And obviously, you had that big a price increase, I think in, 2017. So maybe if you could talk to that kind of tough comp? And then my second question is, as you examine the portfolio, are there other assets that you could look to divest and perhaps maybe monetize your fiber assets?

Okay, great. Thanks, Amy. So, yes, we do very much view ourselves as the challenger brand. And when I talk about reliable, easy and pleasantly surprising, I think that's where especially that comes into play on the pleasantly surprising. What we always need to do every time, whether it is on the video product or HSD, is be better than the expectations of customers from the last time they experienced us or better than the expectations of overall cable companies. So we're in a good, strong position to pleasantly surprise our customers. And when that happens, they're wowed. And when that happens, there are likely to tell others. And one of the things we see picking up are referrals. So being that challenger brand, having neighbor-to-neighbor tell others about us, really is I think starting to impact results, as we further capitalize on that and deliver on that WOW! promise every time.

In terms of our ARPU, we have already made notice of taking another rate increase of this year, so we will see that happening. And it is in a slightly different time frame than the last year, so there will be more months of rate increase this year just in subscriber months. So that will be part of the impact on ARPU, of course.

In terms of other assets to divest, we do not have anything that we anticipate at this time.

There are no further questions at this time. I will now turn the call back over to Lucas Binder.

Great. Well, this is Teresa. And just, once again, say, we appreciate you joining us this afternoon. Thank you so much for your continued interest in our business and your support of WOW!. Have a great day.

This concludes today's conference call. You may now disconnect.