Uniti Group Inc. Q3 FY2025 earnings call

• Merged with Windstream during the third quarter, now a premier insurgent fiber provider with a scaled national wholesale fiber footprint.
• Growth strategy includes building fiber into unique locations, operational excellence, and customer focus.
• Added industry veterans to leadership team and onboarded third-party partners, with 115 active third-party crews and aiming for 400 by next year's second quarter.
• Saw improvements in customer experience metrics at Kinetic in October, like highest first call resolution, lowest transfer rate, etc.
• Fiber overbuild and multi-gig capability upgrade (85% of fiber footprint) enhancing upsell opportunities.
• Fiber Infrastructure business has strong new bookings, with hyperscaler funnel growing 13% since Q2 and total addressable market for AI/hyperscalers 50% higher than original estimate.
• Capital structure improvements with refinancing of debt and successful ABS financing, aiming for healthy mix of ABS and non-ABS debt.

During the third quarter, Kinetic saw strong fiber revenue growth of 13%, the highest number of fiber gross adds ever, and the highest net adds in 2 years. Fiber Infrastructure had outstanding new bookings fueled by hyperscalers. Core fiber businesses contribute almost 80% of total revenue. Kinetic grew homes passed by 11% year-over-year and fiber subs by 17% year-over-year. Fiber Infrastructure has a blended cash yield of 34%. Kinetic Consumer fiber revenue grew 26% year-over-year, with fiber penetration of almost 29% during the quarter, up 50 basis points sequentially and 130 basis points year-over-year, while fiber ARPU increased 10% year-over-year.

• 2025 as-reported outlook: Kinetic expects revenues $945M and contribution margin $385M at midpoint, net CapEx $450M; Fiber Infrastructure expects revenues $1.1B and contribution margin $770M at midpoint; Uniti Solutions expects revenues $320M and contribution margin $155M at midpoint. Consolidated revenue and adjusted EBITDA expected at $2.2B and $1.1B at midpoint, with combined net leverage between 5.5x and 6x by end of 2025.
• Expect fiber to overtake legacy services as majority of revenue by end of 2026.
• Fiber Infrastructure business has strong lease-up potential with blended cash yield of 34%.

• Legacy services headwinds weighing on consolidated revenue and EBITDA in the next couple of years.
• Compliance risks related to forward-looking statements and need to adhere to SEC filings and risk factors.
• Potential execution risks with fiber build, integration, and managing legacy services transition.

Q: Brendan Lynch asked about Kinetic home passings and MDUs.

A: John Harrobin explained home passing delays were due to permitting and locate issues, with plans to catch up in Q1 2026, and Kenneth Gunderman and John Harrobin discussed MDUs as a growth opportunity with a new focus and proven playbook.

Q: Matthew Griffiths asked about consumer fiber ARPU.

A: John Harrobin discussed correlation between churn and ARPU, plans to use speed ladder, value-added services, inflationary price increases, and credit controls to drive ARPU growth, and addressed net adds and ARPU trends.