Uniti Group (NasdaqGS:UNIT) FY Conference Transcript

Summary of Uniti Group FY Conference Call Company Overview - Company: Uniti Group (NasdaqGS: UNIT) - Event: 9th Annual Wells Fargo TMT Summit - Date: November 18, 2025 Key Points Merger with Windstream - The merger with Windstream has been completed, and the integration is progressing well, with new leadership being brought in to enhance operations [6][8][11] - The previous landlord-tenant structure was seen as a burden, and the merger allows for better alignment in capital allocation and investment strategies [7][8] - Cost of capital has improved significantly post-merger, unlocking additional financing opportunities, particularly asset-backed securities (ABS) [8][9] Fiber-to-the-Home Build Plan - Uniti Group has set a target of 3.5 million passings by the end of 2029, with a focus on ramping up construction through external contractors [15][17] - The cost per passing is projected to be between $850 and $950, which is below industry benchmarks [18][22] - Kinetic's internal crew capabilities have contributed to lower costs, and previous investments in fiber infrastructure provide a competitive advantage [19][21] Strategic Shift in Build Funding - The company is pivoting from subsidized builds to more strategic builds, with subsidized projects expected to account for only 10-15% of the overall plan [26][30] - The focus is on markets with higher density and lower costs to pass, which are more economically viable [27][28] Penetration Rates and Market Strategy - Target penetration rates are set at a blended 40%, with expectations of achieving 25% in year one and 30% in year two [40][41] - The marketing strategy is shifting to a more tailored approach, allowing for better pricing and customer retention [46][50] Financial Projections and Growth - The company expects fiber revenue to surpass copper DSL revenue in the first half of next year, with a significant inflection point for revenue and EBITDA growth anticipated in 2027 [54][62] - A target of $100 million in annual run rate synergies from the merger is expected, primarily from operational efficiencies [63][64] Funding Mechanisms - Uniti Group has successfully executed two ABS financings totaling $840 million, with plans to increase the role of ABS in their funding strategy [57][58] - The company is exploring various funding mechanisms, including potential asset divestitures and joint ventures to support fiber build initiatives [59][60] Hyperscale Opportunities - The demand for hyperscale services is growing, with a significant increase in the sales funnel, expected to impact the P&L starting in 2026 [66][68] - Initial returns from hyperscale deals are projected to exceed traditional anchor deals, providing a strong revenue model [70] Market Perception - There is a need for the equity market to better understand the potential of the Windstream business and the strategic direction of Uniti Group [71][72] - The company is focused on executing its plans to build confidence among investors and demonstrate growth potential [73] Additional Insights - The leadership team is blending experience from both traditional and competitive fiber markets, which is expected to enhance operational effectiveness [11][12] - The company is optimistic about achieving sustainable ARPU growth, although it may stabilize at a lower rate compared to recent spikes [47][50]