Uniti’s Kinetic sees temporary churn from satellite broadband in its copper broadband markets

Kinetic saw that satellite providers like Starlink, in its copper markets, attracted customers with aggressive promotional rates and free equipment, and that the timing of the company’s rate increases had an effect. However, the company remains confident that it can win back customers who churned to satellite when it builds out fiber in more copper markets.

The service provider's experience is becoming common in the broadband space. Fellow telco Shentel noted on its first-quarter earnings call that it saw churn to satellite providers in its most rural markets. Still, it is winning back customers by making more of its rural base aware of its fiber-based broadband services.

“It's kind of a double whammy there in our copper markets, and we know that we're building fiber as fast as we can everywhere, and this is why,” Harrobin said. “So, we view LEO churn as temporary, in some respects, because we know that when we build fiber in those markets, we'll get it back.”

Harrobin added that when it enters a fiber market, it gains momentum with customers. “When we come with fiber, we see the benefits of that,” he said. “And we even see it in some of our early RDOF markets that we've built out that didn't have a provider before. We do win customers from Starlink there.”

Ramping up FTTH

Uniti’s rollout of Kinetic FTTH continued to gain steam throughout the first quarter.

The company reported gains in both consumer fiber revenue and gross adds revenue, which grew 26%, and it saw 39,000 gross fiber additions.

Kinetic also added 30,000 net new fiber subscribers during the first quarter, ending the quarter with 564,000 total fiber subscribers.

“We had the highest quarter on record for fiber gross adds, and total Kinetic fiber subscribers grew 22% from the prior year period,” said Paul Bullington, CFO of Uniti. “Kinetic Consumer Fiber revenue grew 26% year-over-year during the quarter. This growth is being driven by strong adoption of our fiber-to-the-home product, bolstered by the performance of the various marketing initiatives at Kinetic that target both our newer and more seasoned cohorts.”

Kinetic also continues to enhance its fiber reach.

Although Kinetic’s build-out pace was affected by what it described as “unprecedented” winter storm activity, the service provider is still on target to reach its goal of 450,000 to 500,000 new homes with fiber in 2026.

In March, it built 45,000 new homes, and another 45,000 in April.

The provider also made gains in the number of homes passed with fiber. During the first quarter, Uniti passed an additional 88,000 homes with fiber, its highest level of new passings in almost 4 years, ending the quarter with approximately 1.94 million homes passed with fiber.

Bullington said it has laid out an aggressive three-year fiber expansion plan.  

“We remain on target to reach 2.3 million to 2.35 million homes passed with fiber by the end of this year, bringing fiber coverage within the Kinetic footprint to over 50%, a significant milestone toward our goal of reaching 3.5 million homes by the end of 2029,” he said. “We also expect to end the year with between 675,000 and 700,000 fiber subs and realize $635 million to $655 million of consumer fiber revenue in 2026, an increase of roughly 25% to 30% from the prior year.”

Attacking churn

When Uniti completed its acquisition of Windstream, which came with the Kinetic consumer copper and fiber broadband division, a key goal was to reduce customer churn.

And the results seem to be paying off as Kinetic’s customer churn was 1.45% in the first quarter.

The service provider has been leveraging best practices brought over by Frontier, Ziply, and other providers.

First, Kinetic created a new agent tool with recommended offers, including targeted price guarantees for high-risk churn customers. It also launched proactive fiber-outage alerts and expedited Wi-Fi extender replacements.

“We put in place a bunch of mechanisms to identify and resolve customer pain points, and this is not only driving our loyalty, but also our overall efficiency,” Harrobin said. “When you think about it, like last quarter, we actually beat our record by just a little.”

However, Harrobin noted that churn is a seasonal issue.

“The first quarter and fourth quarter are a little bit lower than other quarters, and this past quarter we improved churn by 24 basis points, 25 basis points,” he said. “Our objective is to widen that improvement year-over-year for the next couple of quarters, but it will follow seasonal patterns.”

Fiber infrastructure, Kinetic drive revenues

Driven by gains in Fiber Infrastructure and its Kinetic consumer business lines, Uniti reported consolidated first-quarter revenue of $987.5 million.

Uniti’s Fiber Infrastructure contributed $294.8 million of revenues and $192.7 million of contribution margin for the first quarter of 2026. Fiber Infrastructure’s capital expenditures during the quarter were $70.4 million, and upfront payments received from customers were $152.4 million.

Gunderman said it “had another strong quarter of new bookings at Fiber Infrastructure, the third highest quarter on record.”

Meanwhile, Kinetic generated $548.0 million in revenue and $235.5 million in contribution margin for the first quarter of 2026, achieving approximately 43% contribution margin. Kinetic’s capital expenditures during the quarter were $251.9 million.

“At Kinetic, we had the strongest quarter ever of gross adds and the highest number of homes constructed in nearly 4 years,” Gunderman said.

Another key development during the quarter was Uniti Solutions, which contributed $191.8 million in revenue and $95.8 million in contribution margin for the first quarter of 2026, achieving margins of approximately 50%.

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