Uniti’s CEO says its hyperscaler funnel represents about $1.5B of total contract value
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As hyperscalers advance their growth strategies to support AI and cloud services for enterprises, Uniti is positioning itself to be a key bandwidth provider with its array of lit and dark fiber services.
Speaking to investors during its second-quarter earnings call, Kenny Gunderman, CEO of Uniti, said it has a long list of potential wholesale service opportunities that becomes even larger when factoring in Windstream.
Besides bringing more assets into its fold, Windstream also brought new fiber-based hyperscaler customers. On August 1, Windstream signed a 20-year, nearly $100 million indefeasible right of use (IRU) agreement with a major hyperscaler that spans approximately 500 miles on the existing intercity network.
“This is a deal that we've been working on together for some time and would not have been possible without Uniti's network and Windstream's relationship with the customer,” Gunderman said. “This cross-selling opportunity is precisely the type of deal we've been foreshadowing, and we expect to see more shortly.”
As a combined company, Uniti sees the hyperscaler sales funnel representing about $1.5 billion of total contract value.
“At Uniti alone, hyperscalers have increased as a percentage of the total funnel from less than 15% a year ago to now 40%, and that's on a total funnel that's increased 80% since the second quarter of 2024,” Gunderman said. “The activity of both companies alone has been robust, but the closing of this deal is an accelerant, and we expect a nice ramp in the second half of 2025 and certainly into 2026.”
A disciplined approach
Although Uniti has seen its win rate with hyperscalers rise consistently over the past 18 months, the company maintains it will take a disciplined approach.
Each hyperscaler deal needs to meet specific criteria: proximity to existing fiber routes and metro regions.
“We're not going after deals that are built out in the middle of nowhere that are not either contiguous to or strategic to in some other way, our network,” Gunderman said. “We're very focused on deals that are either in an existing metro or near an existing metro, or deals that connect our metro markets to others, or that are relatively close to our network and give us the ability to expand it strategically.”
But the reason that hyperscalers are choosing Uniti is not just service price. Instead, they look at a provider’s reliability, ability to build on time and within budget, and to the customer’s specification.
Gunderman maintains that Uniti’s broad set of assets and regions is a key factor.
“Being a scaled provider matters with them because I think they want a robust group of network providers to serve them, but not so long a list that it's unmanageable,” he said. “They like to have partners that they can go back to regularly.”
In terms of the types of deals Uniti pursues, the focus will be on lease-up versus anchor/greenfield builds.
For example, the hyperscaler fiber deal that Windstream brought to the table is a 20-year IRU on existing infrastructure using 296 existing strands. One of the benefits is that it will require minimal capital and operational costs.
Also, the fiber deal includes the option of right of first refusal (ROFR) on incremental fiber strands.
“We’ve got hyperscalers taking these large strand count deals from us, and then they're coming back for the second deal,” Gunderman said. “And in this case, this particular hyperscaler has asked for an ROFR on another 432 strands on top of the 296 initial strands.”
Lease and fiber drive revenue growth
During the second quarter, Uniti’s revenue growth was driven by increases in its Uniti Fiber and Uniti Leasing segments.
Uniti Fiber contributed $74.3 million of revenues and $28.8 million of Adjusted EBITDA for the second quarter of 2025. Uniti Fiber’s net success-based capital expenditure during the quarter was $20.6 million.
Uniti Leasing contributed revenues of $226.5 million and Adjusted EBITDA of $220.1 million for the second quarter. Uniti Leasing’s net success-based capital expenditure during the quarter were $1.8 million.
Consolidated revenues for the second quarter of 2025 were $301 million.
“We saw another quarter of solid results at Uniti and continue to execute on our priorities successfully, as we set out earlier this year,” Gunderman said. “Our core recurring strategic fiber revenue grew approximately 5% in the second quarter of 2025 when compared to the second quarter of 2024, consolidated bookings were consistent with levels in recent quarters, and the capital intensity of our fiber business continues to become more efficient.”
Looking forward to the rest of 2025, Uniti’s outlook will consider the consolidation of Windstream’s expected results for the five months following the closing of the Merger on August 1, 2025.
The company said it expects the Windstream deal to “contribute additional revenues and Adjusted EBITDA of approximately $1.0 billion and $160 million, respectively, during such period.”
For the full year, Windstream has forecast total revenues of $2.2 billion.
Uniti said its “2025 outlook is based on management’s current expectations and beliefs but is subject to change as we continue the integration of Windstream and Legacy Uniti.”
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Sean Buckley
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