Uniti wraps its Windstream merger, accelerates residential and business fiber strategy

Paul Bullington, CFO of Uniti, told investors during its first quarter earnings call that the Uniti and Windstream assets “are highly complementary and will combine to create a premier fiber infrastructure company with both national and deep regional capabilities, as well as a fiber network that is predominantly owned and operated.”

He added that as it moves to shut down legacy TDM and copper-based services, Uniti expects new growth opportunities for Kinetic and the Fiber Infrastructure units.

“Going forward, as we continue to transition away from legacy services such as Windstream TDM services, we continue to expect the Kinetic and Fiber infrastructure segments to realize low to mid-single-digit top-line growth with an improving margin profile,” Bullington said.

Fiber broadband focus

Now that it has completed the Windstream merger, which was initially launched in May, the service provider is eying ways to accelerate the fiber-to-the-home (FTTH) build.   

While Kinetic continues to grow, the provider currently provides residential service in 18 states: Alabama, Arkansas, Florida, Georgia, Iowa, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina and Texas.

Uniti reports that the combined company will initially serve more than 1.1 million fiber broadband customers and 1.5 million existing homes passed and will have a strong presence in the Midwest and Southeast. Additionally, an enhanced free cash flow profile will allow the company to expand its FTTH build by up to 1 million additional households.

By the end of 2025, Uniti (through its Kinetic division) expects to have reached approximately 2 million homes passed with fiber, doubling the number from 2024. They plan to achieve this by passing an incremental 325,000 homes in 2025. 

Uniti’s fiber-to-the-home platform will continue to be branded as Kinetic.

The merger combines Uniti’s national wholesale-owned fiber network with Windstream’s Kinetic FTTH broadband business to create what it says will become an insurgent fiber provider.

Gunderman said the reach of New Uniti's insurgent fiber network, extending our successful strategy of targeting less competitive markets for wholesale and enterprise, now into residential fiber-to-the-home.”

He added that “we have been able to drive attractive financial results in large part because of our fully-owned fiber network and associated owners' economics.”

Uniti is also enhancing its leadership ranks. The company named former Frontier and Verizon broadband executive John Harrobin as president of Kinetic and Harold Zeitz as a new Board member of Uniti.

“Both John and Harold are industry veterans who bring proven fiber-to-the-home experience via Frontier and Ziply, respectively, further positioning us for success,” Gunderman said. “John will be a critical leader in helping accelerate our insurgent fiber mentality at Kinetic.”

Driving on-net business fiber

While driving FTTH will be a key focus for Uniti, the merger will also enhance the combined company’s on-net fiber capabilities for businesses.

A big part of this will be converting more of the Windstream network from TDM and copper to fiber.

Kenny Gunderman, CEO of Uniti, told investors during its first quarter earnings call that the Windstream assets enable it to get closer to having all its business customers on its fiber network infrastructure.  

“Our combination with Windstream not only extends our fiber network materially but will bring large parts of Windstream's business on-net immediately with a 4-year plan to achieve virtually 100% on-net,” he said. “As such, with owners' economics and our same disciplined growth strategy, we will eventually see similar economic trends in Windstream's business, including mid-single-digit revenue growth, growing EBITDA, and declining capital intensity.”

Looking forward, Uniti sees potential to pursue hyperscaler data center opportunities more aggressively by adding Windstream’s Wholesale network to its fold.

“Windstream's Wholesale network is highly complementary to ours on key routes, and Windstream's largely lit waves product capabilities are additive to our strong dark fiber portfolio,” Gunderman said. “On a combined basis, we'll be able to sell a full product suite and immediately begin selling into an expanded customer base given that Windstream has an incremental 40 different MLAs with hyperscalers to complement Uniti's current count of only four.”

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