Uniti Group at JPMorgan Conference: Strategic Fiber Focus

On Tuesday, 13 May 2025, Uniti Group (NASDAQ:UNIT) presented at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. CEO Kenny Gunderman outlined the company’s strategic emphasis on fiber infrastructure, detailing both growth prospects and challenges. Despite a recent stock sell-off attributed to merger-related information asymmetry, Uniti remains committed to its proposed merger with Windstream, expected to close by Q3 2025.

Key Takeaways

• Uniti Group is focusing on fiber infrastructure as a key growth driver, with a merger with Windstream on the horizon.
• The company aims for strategic revenue growth of 4% to 6% and adjusted EBITDA growth of 8% to 10%.
• Kinetic, Uniti’s fiber-to-the-home business, is expanding rapidly, with plans to reach 3.5 million homes by 2029.
• Uniti has executed a $600 million commercial fiber ABS deal, with further capacity anticipated.
• Despite market concerns, demand from hyperscalers remains strong, with significant capacity sales growth.

Financial Results

• Strategic Revenue Growth: Uniti targets a 4% to 6% increase.
• Adjusted EBITDA Growth: Aims for 8% to 10% growth.
• Fiber Revenue Growth (Kinetic): Approximately 20% growth in fiber revenue.
• Capital Intensity: Expected to decrease to 20% to 25% by 2025.
• ABS Financing: A $600 million deal executed, with potential capacity up to $4 billion in the midterm.
• Lease-Up Yields: Reached 27% in the last quarter.

Operational Updates

• Kinetic Fiber Build: Plans to pass 325,000 homes this year, targeting 3.5 million by 2029.
• Fiber Build Cost (Kinetic): Average cost of $650 per passing, noted as industry-leading.
• Second Fiber Provider Presence: Less than 20% of Kinetic’s footprint has a second provider.
• Tower Portfolio: Combined company to have 10,000 towers and 3,000 small cells.
• Hyperscaler Capacity Sales: Selling 20 to 40 times more capacity compared to previous years.

Future Outlook

• Merger Timeline: Expected to close by Q3 2025, possibly as early as July or August.
• Fiber Revenue Target (Combined): Aiming to increase fiber revenue percentage to 80-90%.
• Capital Spending Strategy: Flat for Uniti Wholesale and Fiber; increased for Kinetic during fiber build.
• Hyperscaler TAM Estimate: Currently $15 billion, projected to triple or quadruple in 3-4 years.

Q&A Highlights

• Stock Sell-Off Explanation: Attributed to asymmetrical information on the Windstream merger.
• Hyperscaler Demand: No slowdown observed; long-term growth expected.
• Fixed Wireless Impact: Seen as both a challenge and opportunity for different business segments.
• Windstream MLAs: Robust agreements expected to streamline post-merger operations.

Readers are encouraged to refer to the full transcript for a detailed understanding.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Richard Cho, Analyst, JPMorgan: Hi. My name is Richard Cho. I cover Communications Infrastructure for JPMorgan. Today, we’re joined by Kenny Gunderman, President and CEO of Uniti Group. Thank you for joining us today.

Kenny Gunderman, President and CEO, Uniti Group: Thanks for having us, Richard. It’s a pleasure to be here.

Richard Cho, Analyst, JPMorgan: For those that might not follow Uniti that closely, can you give us a quick summary of your assets and customer base? And what were or what are the key benefits to the proposed transaction with Windstream?

Kenny Gunderman, President and CEO, Uniti Group: Sure, absolutely. First, before getting into the assets, it’s important to understand that we’re big believers in fiber and believe that fiber is a mission critical asset. It’s the connective tissue really to all broadband today and frankly, all broadband into the future. So whether you’re talking about mobile wireless or fixed wireless or satellite or certainly fiber to the home, fiber to the building, all of it is enabled essentially at some point in the value chain by fiber, and fiber is critically important and won’t be replaced anytime soon. So when we think about themes in the industry today, like convergence, for example, or like the hyperscalers and generative AI, all the spend going on there, fiber is at the epicenter of both of those.

And so when you think about the assets that the new Unity will have under one roof, think about a large national wholesale business with 240,000 route miles around the country, close to 800,000 connected buildings, selling big pipes to the hyperscalers, selling big pipes to the wireless carriers, traditional wholesale providers. So a terrific business that’s growing at 5% or 6% a year top line. Secondly, think about Uniti Fiber, which is a regionally focused, metro focused fiber business where we built fiber first or early into Tier two or Tier three markets to provide lit fiber and dark fiber to enterprises, schools, government and wholesale customers. And again, a business that’s performing very well, growing 5%, six % a year with a long runway for growth. And then thirdly, and very importantly, we’ll have Kinetic, which is a fiber to the home business with 4,400,000 homes.

By the end of this year, we’ll have fiber built to about 2,000,000 of those homes with a plan to build a lot more after that. And again, similar to the Uniti Fiber theme, it’s building into Tier two and Tier three markets first or early with fiber, which we believe is critically important. And so taken together, what we like to call a fiber powerhouse with an insurgent mentality, really at the epicenter of the convergence and the hyperscaler themes.

Richard Cho, Analyst, JPMorgan: And I think people in the past had just viewed fiber as either a consumer play or an enterprise play and also mainly a Tier one market play. But I think given the increasing, I guess, digital world we’re living in, are you well positioned in your Tier two and Tier three markets, both for consumer and or do you see it as one asset that serves all types of customers and it’s becoming more and more important for that? How have you seen that change?

Kenny Gunderman, President and CEO, Uniti Group: Yes, absolutely. I think we don’t want to be all things to all people at Uniti. We’re picking our spots like any good insurgent would. But we think to be a national to be a wholesale provider in fiber, scale really matters. It matters when you’re talking to a hyperscaler or it matters when you’re talking to a wireless provider or an international ISP.

They want to have route diversity. They want to have an expansive national network to call upon and a trusted adviser or trusted vendor when providing services. And we are all those things with the 240,000 route miles around the country. And so a big part of our business is that diversity of customers across all the different use cases of fiber. And it’s sort of independent of Tier one versus Tier two, etcetera.

We don’t care, right? We don’t care where the traffic originates from as long as it backhauls onto our network. But when it comes to metro fiber and competing with lit fiber, in particular, and competing for enterprise customers or competing for residential customers, we really think that’s a ground game. That’s a game where you need to have boots on the ground. It’s hyper local.

And so having a lit network that’s supported by boots on the ground with a local sales team and a local sales strategy, local customer support are critically important. And that’s why when it comes to the metro strategy for Uniti, it’s focusing in the Southeast, where we’re in Tier two and Tier three markets. And for Connecticut, it’s focusing in the Southeast and the Midwest, again, in Tier two and Tier three markets. So pick your spots when it comes to enterprise and residential and a national wholesale provider.

Richard Cho, Analyst, JPMorgan: And we’ll get to the hyperscale opportunity, which the Southeast, the Siemens like and Midwest are both hotbeds for new development. But you reported earnings early last week and the stock sold off a little bit despite reiterating your 2025 guidance. What do you think was behind that move? And anything you want to clarify there?

Kenny Gunderman, President and CEO, Uniti Group: Yes. As a large shareholder, I would say the stock traded off way too much. But I would say it’s one of our biggest challenges right now but also one of our biggest opportunities for investors, the underlying reason. So what I mean by that is we’re obviously public, and we have been for some time, but we’re merging with Windstream, which has been a private company for about five years now. And really large percentage of the business on a combined basis will be Windstream.

So there’s asymmetrical information in the marketplace as a result. And so when we reported results last week, our results were right in line with our plan. We reiterated guidance for the year for Uniti, and we reiterated guidance for the year for the combined company, importantly. So no outlook was changed, but we think again, this is theory, but we think based upon asymmetrical information that there was some confusion that we were potentially lowering guidance for the combined company when, in fact, we were not. Everything we said was right in line with what we said at the time we announced the merger and everything was in line with what we put in the proxy a few months back.

So again, I’d say that’s a challenge for us because until the deal is closed and we’re able to start giving consolidated guidance very clearly to the market, that’s been an issue we’ve been dealing with. But I also say I think it’s an opportunity for investors because there is a little bit of a technical disconnect between what we think the real intrinsic value of the business is and some of these odd trading days like we had last week.

Richard Cho, Analyst, JPMorgan: And I guess you also talked about kind of being on target to close the deal but waiting for some approvals. It seems you have 16 of 18 of the approvals. Kind of can you give us the latest update on when you think the deal might close and how the other two approvals are going?

Kenny Gunderman, President and CEO, Uniti Group: Yes. We’re feeling really good about it. When we announced the deal, we originally said we thought it would close in the second half of twenty twenty five. On the last call last week, we actually refined that down to the third quarter, and we went even further to say we think it could close as early as July or August. So feel like we’re on track, maybe ahead of schedule, waiting on two states and feel very good about both.

We’re on the docket for one of those states and I think about to be on the docket for the second one sometime soon. No issues have been identified, importantly. So really think it’s a matter of time, but we’re working through the system and looking forward to getting there soon.

Richard Cho, Analyst, JPMorgan: Approvals are always difficult, but they do end up coming through. I guess something that I’ve always been very impressed about is the ability for Uniti and for Windstream’s Kinetic service is the ability for you to build organically and build out fiber. You’re expected to pass 325,000 this year, and it seems like your pace has kind of accelerated. Can you give us an update on, one, what are your, I guess, build capabilities and how you see that evolving into and past the merger?

Kenny Gunderman, President and CEO, Uniti Group: Yes. It’s a great topic. So over the past ten years, both Uniti and Windstream as separate companies have invested heavily in the fiber networks that are coming together here, building out long haul fiber, metro fiber and really the core backbone of the network. And to use a different lingo, a lot of fiber to the node was built, fiber to the DSLAM. And so as a result, over the past few years, when fiber to the home developments really started to ramp, including at Kinetic, a lot of people were building at $1,000 or $1,500 per passing to get to the home.

Kinetic has been building at $650 per passing, which we think is the best in the industry, certainly one of the best in the industry. And we get asked all the time, why is that? And one of the reasons is because of that historical investment in the backbone that has allowed that last incremental investment to be made at a lower cost. So hugely important advantage that we have on a go forward basis. So when you’re starting at a low cost point, that helps in terms of the economics of the future model.

The Kinetic footprint has 4,400,000 homes, again, in Tier two and three markets around the Southeast, the Midwest and the Mid Atlantic. By the end of this year, Kinetic will have built to 2,000,000 of those homes, as I said. That is the build that Kinetic built to about 170,000 last year, they’re going to build to about 325,000 homes this year. So you can already see the ramp in the build. And what we’ve said publicly is that we want to get to 3,500,000 of those homes by 2029.

And so when you do the math over that three year period, that ramp is steadily going up. We’re not going to stop at 3.5%. There’s still more homes to be built after that, but that’s what we’re willing to commit to for 2029. And that’s a substantial percentage of the footprint that’s going to be built with fiber. And when you look at the underlying economics of building fiber to the home, it’s growing that the fiber revenue at Kinetic today is growing at about 20%.

And so that is analogous to what we’re seeing at Uniti Fiber when we’re building into these metro markets as an early fiber provider. And so we’re very excited about that business plan being expanded and accelerated into the Kinetic footprint.

Richard Cho, Analyst, JPMorgan: Most people don’t like giving just one year or little and two or three year targets. So 2029 for now seems good enough. I guess with that, it seems like you’re moving as fast as you can and getting some good efficiency and that build target is going. But I think does having that kind of twenty twenty nine million ’3 point ’5 million target help you kind of signal to your competitors or potential competitors that you will be building there and they might decide to build in other locations instead? Kind of how do you view that strategically?

Kenny Gunderman, President and CEO, Uniti Group: Yes. That’s a really smart question because, look, any time we communicate at a conference like this or otherwise, we know that there are multiple constituents listening to what we say. It could be customers. It could be vendors. It could be competitors.

It could be a potential eventual strategic partners, financial or otherwise. And so yes, we want people to know we’re going to protect our footprint. And I would say that over the past three or four years, Windstream has built aggressively in the Kinetic footprint, and that has dissuaded overbuilders. So one of the advantages of the Kinetic footprint is that probably less than not probably, but we know less than 20% of the footprint has a second fiber provider, which, again, is analogous to what we see at Uniti Fiber. So less than 15% of that footprint has a second fiber provider.

And so when you’re in a market and you’ve built fiber, it is a real repellent to that second fiber coming in. And so we think with now expanding the build plan even further and being more aggressive, we should be able to repel any eventual overbuilders or any overbuilders in a material way.

Richard Cho, Analyst, JPMorgan: That’s great. I guess as part of your guidance, you have put out 4% to 6% strategic revenue growth and 8% to 10% adjusted EBITDA growth. Can you kind of, I guess, deconstruct that for us a little bit? Like what is going into that? And how, I guess, what’s the kind of resilience of that growth?

Kenny Gunderman, President and CEO, Uniti Group: Yes. We’re very proud of that growth. And I think to understand, you have to step back and understand that fiber, the tailwinds behind fiber in general are positive. I mean there’s growth in hyperscalers, there’s growth in mobile broadband, there’s growth in fixed wireless, fiber to the home. All those things that I was talking about at the beginning are pushing growth in fiber.

So that’s a hugely beneficial aspect of our business, especially when you consider that today at Uniti, independent of the combination, 90 plus percent of our revenue is on fiber. So that’s number one. Number two, we have a strategy of targeting markets, Tier two and three markets, that are less competitive. And so arguably, the growth or at least the opportunity in those markets is lower, but we argue that the growth potential is higher because if you’re one of the first in there, you prevent others from coming in, so you’re able to capture a disproportionate percentage of that growth on a go forward basis. And I think we’re proving that to be true.

Number three, our churn at Uniti is very, very low. We talk about it all the time as industry leading churn. The tower companies talk about 0.2%, zero point three %, zero point four % churn. That’s pretty much where our fiber churn is. And depending on the product, it may be higher, it may be lower.

Dark fiber churn is virtually zero. Enterprise churn is 0.5%, zero point six %. But on a blended basis, it’s a very positive number. And so when business is not leaving out the back door and you’re continuing to sell in a consistent way, you’re able to get more and more growth. So that’s a hugely beneficial part of our business.

And when you own the fiber, you’re able to control the network and you’re able to control the customer experience. And so you’re able to give a better customer experience that leads to lower churn. Last point, we have virtually no legacy services at Uniti today. So we have no legacy TDM weighing down our growth. We have no legacy products that are being end of life, are being replaced by other things.

Some of the more established and traditional carriers have those things that sort of mask growth that they may have in their business. So when you take all that, you’re able to get to those 4% to 5% to 6% growth rates on a regular basis. Now take all that and then how does that look on a combined basis with Windstream? And so the number that I mentioned, 90% -ish fiber revenue, that number is going to dip when we combine with Windstream. It’s going to be more like in the 50% to 60% range, which, as you know, when comparing that to other copper to fiber stores, that’s not bad out of the gate.

But as a result, we’re going to have a lower amount of fiber, and so that growth rate is going to come down on a combined basis. But the Kinetic plan to overbuild that legacy copper and replace it with fiber will get us back to 80% to 90% fiber revenue in by some point in the future once we get past that once we get past the build, and then we’ll get back to those steady top line growth levels. So we’re going to manage out of that legacy service revenue that we’ve got at Kinetic and get back to those 4% to 56% growth rates.

Richard Cho, Analyst, JPMorgan: Yes. And it seems like your focus is very much so on the kind of the fiber revenue, whereas I think a lot of legacy carriers often kind of hold on to that legacy revenue and at the detriment of the new kind of growing fiber market. Something that, I guess, there was a lot of attention on last year, and it’s been mostly driven by the hyperscalers with the whole data center boom. But then I think people realize the data centers need to be connected to something to be useful. And so for the first time in a decade, I think we saw real strong demand for new fiber routes.

Kind of what have you seen? What deals have you signed? And how do you approach this opportunity? Because the hyperscalers have a lot of money, but they often want to kind of control a lot of their infrastructure. How do you approach working with the hyperscalers?

Kenny Gunderman, President and CEO, Uniti Group: Yes. At Unity, we say a data center is a warehouse until it has fiber. And there’s some truth to that, right? So these mega data centers that the hyperscalers are building have, in most cases, four redundant fiber routes into them. So when you compare a data center that they’re building to a data center that was built a traditional data center that was built years ago, and you know this, Richard, there are multiple in terms of size of capacity and the power required.

And the same is true of the fiber that’s going into those facilities are that’s required to service them. So I tell people all the time, we well, two things. Number one, we’re not betting the future of Uniti on hyperscalers. We they’re a very small percentage of our revenue today. Last year, only two of our top 20 customers were hyperscaler customers.

But we are very, very excited about the growth potential because we think it’s going to be tremendous. And I think you’re starting to see that in our bookings numbers. You’re starting to see that in our funnel. And when you go back three or four years ago, we were selling to the hyperscalers. We were selling traditional dark fiber, twelve, twenty four strand deals.

We were selling dark fiber leases. We were selling waves. So all things very traditional and really didn’t catch the eye of anybody in the marketplace, certainly not in the public market. Fast forward to today, we’re selling 20 to 30 to 40x the amount of capacity at one time. So a 12 to 24 strand count is now four sixty four, eight 30 two, massive strand count deals that are servicing these data centers to stay on pace with the size of the data centers that are being built.

And so that opportunity has not yet started to reflect itself in our revenue and EBITDA because we’re just now turning up these deals. But when you fast forward, we’ve said a couple of quarters ago, we estimated TAM from hyperscalers for the fiber space to be about $15,000,000,000 today, which is up from, again, a very small number a few years ago. And we think that number is going to be three or four times that in the next three or four years, and we expect to capture a large share of that. So very excited about that customer segment. I think that it often gets intermingled with the AI theme, which, of course, it should because a lot of these investments are meant to enable AI.

But the reality is I think the hyperscalers are just planning for incremental broadband expansion, whether it’s related to AI or cloud or some other use case of fiber that we haven’t identified yet. So very exciting for us.

Richard Cho, Analyst, JPMorgan: Yes. I think there was, again, a lot of attention last year and the start of this year. It seemed like there was a bit of a pullback for overall AI data center builds. But I think people forgot that, that was for maybe stuff really far out. Have you seen any change in your discussions with the hyperscalers?

Because I feel like people think it’s this thing that you should kind of start and stop where there’s a lot of planning involved to actually build this infrastructure.

Kenny Gunderman, President and CEO, Uniti Group: Yes. We so we follow the discourse in the market closely, and we always try to triangulate what is being said publicly by analysts or investors or even the hyperscalers with what we see in our funnel and what conversations we’re having privately with them. And I would say that not only have we not seen a slowdown, we are firmly of the view that they’re planning for the long term. They’re playing the long game. And they are saying to us what they’re saying publicly, but you just have to listen closely.

And they’re saying things like, we’re using this capacity as fast as we turn it up. We are investing for the long haul because infrastructure will be a critical distinguishing characteristic. We are there’s a risk of underinvesting versus overinvesting. If we don’t use this infrastructure for AI, we’ll use it for something else, and on and on and on. If you listen to those comments, they’re basically saying to the marketplace, we’re going to continue investing in this because we have to and because we think it’s critically important.

And you mentioned it, Richard, but the sales cycle on fiber is six to twelve months. It takes that long to develop a complex network solution. If you’re just buying a wave or if you’re just buying dark fiber, it could be very quick. But for a complex network solution, it’s six to twelve months. And so many of the decisions that we’re seeing run through the funnel and into bookings today started six, nine, twelve, eighteen, twenty four months ago, and it takes six, nine, twelve months to turn up the network.

And so these and when and those sales cycles are even longer for data centers and for power. And so these are long lead time decisions that play out over multiple months. And so just doing quarterly check ins is not really indicative of what’s happening, at least behind the scenes for us. It’s much more of playing the long game and the trajectory is up and to the right.

Richard Cho, Analyst, JPMorgan: And I guess with that, can we talk a little bit about, I guess, your CapEx spending and your kind of capital envelope in that you’re building out a lot of fiber, you have potential hyperscale deals that you need to keep an eye on that are coming down the pipeline. And I’m sure there are other capital needs. How are you approaching your kind of capital envelope? And how do you see that kind of changing over the next few years, if at all?

Kenny Gunderman, President and CEO, Uniti Group: Yes. So we a few years ago, back in 2017, ’20 ’18, we identified about 10 or 12 metro Tier two, Tier three metro areas in the Southeast that we really wanted to build anchor customers into. So back to the what I was saying earlier about being one of the early or first fiber providers, we identified some markets that we really wanted to build into using wireless carriers, dark fiber, fiber to the tower, small cells, even schools and health care campuses as the anchor customer to build into those markets with the expectation that we would build these networks, put somewhat of a moat around the market and then we would lease up the networks to the second, third and tenth customer over time and really get that 4% to 5% to 6% growth that we talked about. Tying that back to capital intensity. So we told investors our capital intensity would go above 50% early on.

But trust us, we’re going to manage that number down through the lease up of those networks. And so for this year, guiding for 2025, we said our capital intensity would go down to 20% to 25% by this year. So we have managed down that 50% to almost half through leasing up those networks. And I’m saying all that because we really had a conscious effort we were on a conscious effort to convince the market that we you could trust us to build anchor networks, lease them up. And so on a go forward basis, we want to have a healthy mix of lease up and anchor builds on a go forward basis.

And it just so happens we’re on the precipice of now building a lot of anchor networks for hyperscalers, as we just talked about. And as we said on the past couple of earnings calls, we are already starting to see lease up of those hyperscaler anchor deals right in line with what we’ve seen historically on those anchor builds we did years ago. And we’re about to be in the midst of an accelerated build at Kinetic, which will cause our capital intensity to spike above 30%. But we think once we get past that build, we’re going to bring that capital intensity back down. So sorry, I’m going on.

But ultimately, over the next number of years, what you should expect to see in our capital spending is roughly flat for Uniti Wholesale and Uniti Fiber compared to what you’ve seen historically. And you’ll see capital spending at Kinetic going up as we get over this build hump, and then it will come down more in line with what you’ve seen in past.

Richard Cho, Analyst, JPMorgan: And I guess in the past, both for kind of consumer fiber builds and even enterprise, but and obviously, markets plays into this a lot and volatility, which we’ve seen over the past month or two. But in terms of funding your builds, kind of I know you’ve used the ABS market a little bit. How has that evolved for Uniti? And how do you see that evolving?

Kenny Gunderman, President and CEO, Uniti Group: Yes. It’s been a so earlier this year, we did the first commercial fiber ABS Uniti did. It was roughly $600,000,000 deal, a little less than 6.5% coupon, three tranches. The first two were investment grade. The third, high yield grade.

Huge success for us. We had a tremendous amount of interest in the transaction. Subsequent to that, Zayo has done a couple of commercial fiber ABSs, and we’d love to see them be successful with that. We have also said that, that was not all the ABS capacity we had at Uniti. We actually have more ABS capacity just at Uniti.

But on a combined basis with Windstream, our we’ve said publicly we think our ABS capacity in the near term is about $1,000,000,000 plus incremental to what we’ve already done. What we haven’t said and I’m saying now is that we actually that capacity is actually three to four times that $1,000,000,000 number. We think in the midterm, we could do 3,000,000,000 to $4,000,000,000 of ABS. So we view that as a terrific financing tool, a terrific arrow in the quiver for us going forward, especially when you consider the rates at which we think we can raise that money. And just as a frame of reference, the last secured debt deal we did was at 10.5% at Uniti, and that was during a very volatile time for us, obviously.

But when you consider that versus raising money at 6.5%, we think there’s some embedded maybe material embedded interest savings in our current plan. So we do expect ABS to be an important part of the plan going forward. But we also expect the high yield market to be an important part of our financing plan, too. We’re not going all in on ABS and replacing the entire capital structure with ABS. We’re going to have a healthy mix of ABS and high yield.

Richard Cho, Analyst, JPMorgan: It just gives you options on kind of managing that mix. Right. If anyone wants to ask a question, feel free to raise your hand. Otherwise, I’ll keep going. I guess you talked a lot about kind of the idea and with infrastructure, it’s always getting that anchor tenant to kind of get that build out.

But I guess as you lease it up, those are very high incremental margin dollars that come in. How does Uniti approach the anchor tenant and then the lease up? And what are what should investors expect in terms of cash yields?

Kenny Gunderman, President and CEO, Uniti Group: Yes. It’s a hugely important part of our strategy. And for those of you who’ve been around telecom for a long time, you remember back in the late ’90s, early 2000s, a lot of fiber was built with the demand on the comp. And we, like a lot of fiber companies, learn from that. And so we never build fiber unless we have an anchor customer.

And so the model is to build an anchor customer in the 5% to 10% initial cash flow range, meaning the dollars that go in the ground are immediately going to generate a 5% to 10% cash flow yield out of the gate. And then we don’t build fiber for one customer either. It’s a shared infrastructure model. So the model is to build in areas, whether it’s long haul or metro, where there’s a clear lease up strategy for customers on top of that. And we believe with the second, third, fourth, fifth customer, you get well north of 10% yields on that fiber.

And we’ve held ourselves accountable to that. So we’ve every quarter, we report on our anchor builds and where our blended yields are post lease up. And Richard, you know this, but last quarter, our blended yields were at 27%. So initial 5% to 10%, we’re now at 27%. And that number is going to continue to go up.

And by the way, that 27% is inclusive of other anchor deals that have been blended. So ultimately, we think we’re executing on that strategy. And I mentioned the hyperscaler deals. The early returns on the hyperscaler deals were not quite to 27% because we’re still early on in those deals, but we are at kind of 15% to 20%. So we’re tracking towards that success on lease up.

Richard Cho, Analyst, JPMorgan: No, that’s great. And you mentioned it a little bit earlier, but in AT and T and T Mobile presenting today, there has been a lot of enthusiasm around fixed wireless access, and that takes a big pipe on the back end of that to be able to deliver that kind of data. Can you talk a little bit about your, I guess, fiber to the tower portfolio? And how has that been growing?

Kenny Gunderman, President and CEO, Uniti Group: Yes. So people ask us about fixed wireless. And on the one hand, for Kinetic, it’s been a threat. It’s been a bit of a share taker away from Kinetic, it’s one of those challenges that we have, which we’re working through. But I also remind people that fixed wireless is good for Uniti because we’re selling those big pipes to the wireless carriers who need those big pipes to service those fixed wireless and LTE and five gs networks.

So we have, to your point, Richard, we have about with a on a combined basis, we’re going have about 10,000 towers in the portfolio, and we’ll have about 3,000 small cells in the portfolio. So we are a big provider to the wireless carriers. We love to provide those big pipes to the wireless carriers. But I also tell folks, remind folks that in the same way we’re not betting the future of the company on hyperscalers, we’re not betting on the future of the wireless carriers either. They represent on a combined basis, they’re going to represent less than 10% of our total revenue.

So they get a lot of airtime with us. I think people like to know what their spending patterns are and what and try to get a read through from us so we get a lot of questions about it. And they are important customers of ours, But less than 10% of revenue on a combined basis, whether there’s growth in one year or not, is not going to really impact our business. And just as a data point, wireless bookings were down in 2024 versus 2023, but we had almost a record year in bookings because it was more than offset by hyperscalers and other carriers. So we love the wholesale fiber business for a lot of reasons, but one is because we’re diversified across all these different use cases, including wireless, hyperscalers, etcetera.

Richard Cho, Analyst, JPMorgan: And last thing, you did mention on the call that the combined company, if and when the merger does go through, Windstream has a lot of MLAs with hyperscalers. And how should people think about the combined organization post merger? Are you I guess, premergers kind of are not able to do certain things or sell a certain way. What do you see for the combined company post merger?

Kenny Gunderman, President and CEO, Uniti Group: Yes. So Windstream has a big wholesale business today. We do. They’re both extremely complementary of each other. It’s one of the things about this transaction I’m most excited about.

People ask about Kinetic a lot, but I’m really equally excited about the wholesale businesses coming together because Windstream offers a lot of lit services today, wave products, which we don’t have really at Uniti, and we have a big network, and we provide a lot of dark fiber services, which Windstream doesn’t have today. So very complementary product set. And to your point, Windstream also has a much more robust list of customer MLAs with hyperscalers and superscalers, which is another term. The Teslas and Netflixes and Akamai’s of the world. And for those of you who don’t know, an MLA is a master lease agreement.

It’s basically a complicated agreement that you have to negotiate with a customer to put in place before you can do business with them. It’s kind of the terms of doing business. And when I mentioned that six to twelve month sales cycle earlier, a big chunk of that sales cycle is putting that MLA in place. And so when we combine with Windstream, we’re going to be able to circumvent a large chunk of sales cycle with those 40 customers. And on a combined basis, when we’ve got a bigger, more robust product set to sell and more customers we can sell into immediately, we’re very excited about that.

Richard Cho, Analyst, JPMorgan: Yes. It seems like a great opportunity. Thank you for the time.

Kenny Gunderman, President and CEO, Uniti Group: Thank you, Richard.

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