Uniti(US:UNIT)2024-05-03 16:20Financial Data and Key Metrics Changes - The implied valuation for Windstream is at an attractive 5.3 times EBITDA multiple and 4.7 times on a synergy-adjusted basis [6] - The company expects full year AFFO to range between $1.36 and $1.43 per diluted common share, with a midpoint of $1.40 [39] - The leverage ratio at quarter end was 6.07 times based on net debt to first quarter 2024 annualized adjusted EBITDA [69] Business Line Data and Key Metrics Changes - Uniti's consolidated bookings during the first quarter were $0.6 million of MRR, with April expected to be one of the largest months on record with close to $500,000 of MRR [30][31] - Uniti Leasing revenue and EBITDA estimates have been slightly increased due to higher than expected lease-up activity [38] - Uniti Fiber revenue and adjusted EBITDA estimates have been slightly lowered due to the timing of enterprise sales [38] Market Data and Key Metrics Changes - The combined company will serve more than 1.1 million customers, with a strong presence in the Midwest and Southeast [21] - Kinetic is currently targeting building fiber to 1.9 million homes by 2027, achieving over 40% coverage with fiber [29] - The company overlaps with Charter in about 40% of households and with Comcast in about 15% to 20% [109] Company Strategy and Development Direction - The merger with Windstream is expected to create a premier insurgent fiber provider in the U.S., focusing on expanding fiber-to-the-home deployments [21][40] - The company plans to prioritize expanding the fiber-to-the-home build and continue investing in Uniti Fiber and leasing businesses [40] - The combined company will retain the Uniti name and expects to report business segments as Kinetic Fiber Infrastructure and Managed Services [62] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of fiber as a mission-critical asset in communications infrastructure, especially during the digital transformation era [54] - The company expects to realize significant incremental upside from enhanced sales and cost of capital improvements [37] - Management expressed confidence in the strategic optionality that the combined company will have compared to the two companies separately [52] Other Important Information - The company will suspend its common dividend going forward, with a total of $0.45 per share distributed for the 2024 tax year [7] - The merger is expected to generate annual CapEx synergies of $20 million to $30 million per year [37] - The company has entered into a bridge funding commitment with certain banks in the amount of $300 million to fund the cash consideration for Windstream [35] Q&A Session Summary Question: Access to Windstream's Financials - Management acknowledged the importance of transparency and plans to provide more information going forward, especially regarding Windstream's financials [74] Question: Timing of the Deal - Management explained that the deal was made possible after clearing previous financing work and having ample liquidity, allowing for a proactive approach to M&A [50] Question: Debt Structure and Leverage - Management clarified that the pro forma leverage of 4.8 times includes the $425 million cash required at closing and does not include the preferred equity [75] Question: Fiber-to-the-Home Build Plans - Management indicated that the target for expanding the fiber-to-the-home build may extend beyond 2027, especially with the BEAD program [106] Question: Competitive Landscape - Management provided insights on market overlap, indicating competition with Charter and Comcast, and noted the number of ACP customers served by Kinetic [109]