Uniti Group at TD Cowen Summit: Strategic Insights on Fiber and AI

On Tuesday, 12 August 2025, Uniti Group (NASDAQ:UNIT) participated in the TD Cowen Communications Infrastructure Summit, where CEO Kenny Gunderman outlined the company’s strategic direction post-Windstream merger. Despite lowered guidance due to Kinetic’s underperformance, Gunderman expressed optimism about Uniti’s long-term prospects, driven by fiber and AI demand.

Key Takeaways

• Uniti’s consumer fiber revenue increased by nearly 27% year-over-year.
• The company is transitioning to unsubsidized fiber builds with third-party contractors.
• Internal fiber build costs are around $6.50 per passing; expected to rise with third-party involvement.
• AI is anticipated to significantly boost demand for high-bandwidth connectivity.
• Uniti plans to exit TDM managed services by 2025 and wholesale by 2028.

Financial Results

• Revenue and Growth: Consumer fiber revenue saw a robust growth of 27% year-over-year, while wireless bookings rose by 30%.
• Guidance and EBITDA: Guidance was lowered, mainly due to Kinetic’s struggles in build execution and DSL business pressure. TDM services are generating 40% to 45% cash flow from EBITDA minus CapEx.
• Cost Metrics: Internal fiber build costs are approximately $6.50 per passing, expected to increase to $8.50-$9.50 with third-party contractors, but overall costs should stabilize at $7.50-$8.50.

Operational Updates

• Fiber Build Strategy: Uniti is focusing on unsubsidized builds, enhancing predictability with third-party contractors, and densifying existing markets.
• Penetration Rates: Aiming for a 40% terminal penetration, potentially conservative with the Fiber Forward initiative.
• ACP Subsidy: Currently, there are about 70,000 ACP subscribers.
• Commercial Fiber Business: Secured a $100 million, 20-year IRU deal on existing routes.

Future Outlook

• Fiber Dominance: Fiber is expected to surpass fixed wireless in reliability and latency.
• ARPU Growth: Opportunities include upselling to one-gig speeds and introducing two-gig plans, targeting a 3% ARPU growth.
• Capital Markets: Kinetic is preparing for an ABS raise, with $3 billion to $4 billion capacity available.
• AI Impact: AI is projected to drive high single-digit to double-digit growth in the fiber business.
• TDM Exit: Planned exit from TDM services by 2025 and wholesale by 2028.

Q&A Highlights

• Elliott Investment: Elliott approaches its investment with a private equity mindset, minimizing concerns about public market equity release.
• M&A Strategy: Focused on building organic value rather than aggressive M&A.
• Tax Benefits: Post-merger, Uniti anticipates minimal tax liabilities in the near future.
• AI Implementation: Emphasizing AI across operations, from fleet management to customer experience.

Readers are invited to refer to the full transcript for more detailed insights.

Full transcript - TD Cowen Communications Infrastructure Summit:

Greg, Analyst, TD Cowen: Good afternoon. Welcome to our eleventh annual TD Cowen Communication Infrastructure Summit. I’m joined today by the president and CEO of Unity, Kenny Gunderman. Kenny, thanks for joining us.

Kenny Gunderman, President and CEO, Unity: Greg, thanks for having us. It’s always a pleasure to be here. It’s one of our favorite conferences.

Greg, Analyst, TD Cowen: Great. Good to hear. Your stock has been down a little bit since the Windstream closing and then earnings. I think it was maybe $60,000,000 lighter than a lot

Kenny Gunderman, President and CEO, Unity: of the

Greg, Analyst, TD Cowen: folks looking at in terms of our models. Obviously, with the Windstream merger, it’s a little messy. But maybe help articulate what you think the reasons were for the weakness. We didn’t see any block shares and most of the REIT and dividend investors are it’s a small percentage of the float now. But you know, what would you contextualize the weakness to?

And what are the catalysts in execution you need to do to make it work?

Kenny Gunderman, President and CEO, Unity: Yes. So we’re very happy to have the transaction closed. That was a huge milestone that we’ve been working on for eighteen months now. So really pleased with that. And the tailwinds behind our business continue to be that two jet engines, right, convergence in fiber to the home plus AI driven demand in our commercial fiber business.

Those themes are stronger today, frankly, than when we announced the deal. They’ve been growing over the past twelve, eighteen months. And our execution has been good. We put up a solid quarter from a performance point of view. It’s right in line with our expectations.

And the growing demand in AI and the themes driving greater penetration opportunities within fiber to the home, we think, are better than what we’ve expected. So with all that said, intrinsically, we think the value of our business is better than it’s ever been. And so with respect to the reaction to the quarter and the close, we put it in two categories. I think one is that we did lower guidance, know, kinetics behind plan. And I’m sure we’re going to talk a little bit about that today, but kinetics a little bit behind plan.

But we’ve got a great strategy and plan in place to get caught back up. And then secondly, this is a big transaction and a lot of technical things happening, right? We’re going from a REIT to a C Corp. We’re going from a triple net, largely propco type business model now to a true fiber to the home operator. So there’s a shift in the shareholder base.

There’s definitely some technical implications related to the merger consideration. And we expect there’s some volatility. So when we think about what we observe holistically, what we observe about our performance and a relatively smallish reduction in the guide, We think it’s probably more technical related. And when we’ve been out interacting a lot with shareholders for the past four, five, six days, and we haven’t heard anything that rises to the top.

Greg, Analyst, TD Cowen: Got it. And maybe we can talk about the fundamentals, though, and the EBITDA guide down. I think it was four major reasons and it was mostly all Kinetic related really. One is Windstream is off to a slower 2025, if you will, in terms of builds and subsequent subscriber penetration. I think the second is you expect 2,000,000 fiber to the home passings this year and there could be some higher costs as you accelerate that build.

The third is maybe pressure on the DSL side, maybe DSL ARPU to be more specific. And the fourth is, I think, fiber forward spend to get that year two, year three penetration, you want to spend it. So there’s a lot there to chew on, but can you unpack some of this? Some of this seems more one time in nature, right, once you do all these

Kenny Gunderman, President and CEO, Unity: Yes, absolutely. I think you captured it correctly, Greg. The two big drivers of the guide down are really behind on the build and the pressure in the DSL business. The other two that you mentioned, incremental cost on ramping up the build and the really, I’d characterize it as ramping up the go to market in response. Those are more in response to the fact that we’re a little bit behind plan.

So when you put those things together, incremental cost this year and not yet the benefit of those costs are what you’re seeing. So you’re seeing a little bit of a drag in that spend before you start to see the benefit of it. But really, Kinetic, over the past eighteen months, has focused on subsidized builds first as opposed to what we call strategic builds or unsubsidized builds. We’re changing that. We’re pivoting to unsubsidized builds immediately, essentially.

And what that means is you just get to more homes because you’re building to more dense homes as opposed to subsidized builds that are less dense. That will get us a lot more homes and a pickup. And secondly, and very importantly, we’re onboarding some third party contractors. And as you know, Greg, historically, Kinetic has built the vast majority of their homes internally, which is good from a cost perspective, but it also gives you a little bit less margin for error if you run into permitting delays or if you run into weather issues. If we’ve got third party contractors, we’ve got surge resources And we can move those resources around, especially if you’ve got good trusted partners, which I think we will have.

So that’s happening real time. That will give us more predictability on the build and definitely, we think, the ability to get caught up on the build by the end of this year. With respect to some of the DSL pressure, that’s just competition from fixed wireless predominantly and a little bit of satellite. And I think the wireless carriers continue to focus on fixed wireless as a product right now. And by the way, that helps us in our wholesale fiber business because that’s leading to more fiber to the tower upgrades.

But I think that’s going to change over time. I think eventually they’re going to be more focused on fiber subs as opposed to fixed wireless. And as we’re building more fiber and we’re transitioning DSL to fiber, that competitive pressure is going to take care of itself because we’re going have Right.

Greg, Analyst, TD Cowen: So fiber always wins over fixed wireless or not always, but predominantly versus fixed wireless against DSL, right?

Kenny Gunderman, President and CEO, Unity: Fiber is going to win. And I’ve said it before and continue to think those subs that we’re losing to fixed wireless today, I’d rather lose them to fixed wireless because we can go

Greg, Analyst, TD Cowen: get get some money on the back end for the wholesale.

Kenny Gunderman, President and CEO, Unity: Well, not only that, but we go get those subs back because at some point fiber outruns fixed wireless from a reliability and a latency point of view and we get those subs back two or three years down the road. So I think we’ve got the right strategy and plan in place to mitigate the pressure that we’re seeing for the balance of this year. And like I said, nothing has swayed our confidence in the future of the business.

Greg, Analyst, TD Cowen: Got it. And you mentioned the third party builders that you’ve contracted and that will take the cost per home pass up from your $650 per home to as high as $9.50 We talked about that, I think, at NAREIT and June and even our TMT conference in May. So is that happening now then? Is that acceleration in the cost per home pass going up? Can you help us with the curve of that build cost?

Kenny Gunderman, President and CEO, Unity: Yeah, it’s happening real time and I’m glad you remember us talking about that months ago because we foreshadowed that so as not to surprise folks. And look, at $6.50 per passing, we think that’s the best in the industry. And that’s because Kinetic has spent so much money over the years building fiber to the node. And so that last mile, so to speak, to the home is just less expensive. But because it’s so low and because we need those third party contractors, we’re willing to spend a little extra on the build to get that build accelerated.

And, yes, going to $8.50 to nine fifty in the coming year, year and a half is what you’re likely to see. But when you look at it over the life of the build, we’re still going be in that $7.50 to $8.50 range. And I think that’s best in the industry. And ultimately, we feel we have a lot of confidence in our ability to build within those ranges given a lot of our build is still going to be internal. And these third party contractors that we’re onboarding, we’re locking in rates for a period of time.

So predictability there, we’ll still have what I think is industry leading build cost, which gives us the ability to get to more homes economically, right? And when you’re building with confidence and at a low cost, Helps you’re able returns. It definitely helps

Greg, Analyst, TD Cowen: make some projects on the fringe doable.

Kenny Gunderman, President and CEO, Unity: Absolutely. Absolutely.

Greg, Analyst, TD Cowen: Your top line guidance was pretty good, but you had a lot of TDM in there, right, expected revenue from the legacy TDM services. When should we expect the TDM cost to largely be out of the business?

Kenny Gunderman, President and CEO, Unity: Yes. So as you know, Greg, we don’t like to have legacy services in our story. We’ve always managed out of those at Unity just so there’s a clear look at fiber revenue growth, top line and EBITDA. And right now, out of the gate with our merger, we don’t have that, right? We’ve got some legacy services, but we’re going to manage out of those aggressively.

And so there’s really two areas where there’s TDM today in the Windstream business. One is that managed services or what we’re calling Unity Solutions. And to your point, we’ll be fully out of that virtually out of it by the end of this year and a little bit may tail into ’twenty six, but it will be so small you won’t notice. The other place where there’s some TDM is in the Windstream wholesale business. So this is long haul transport, TDM, roughly $100,000,000 of that.

That will weigh on top line a little bit over the next couple of three years. We’re going to probably be fully out of that by 2028. So that will we’ll manage out of that. But like I said in the earnings last week, number one, those legacy services don’t impair our brand in any way, right? It’s not like we’ve got these laggard services that are weighing down the Unity brand or even the Kinetic brand.

Number two, they will they’re already an immaterial part of the business, especially from an enterprise value perspective from my point of view. And as we accelerate fiber and we manage out of the legacy services, they’ll become even more immaterial in a very short period of time. And thirdly, and very importantly, in the meantime, we’re generating good cash flow off of them. 40%, 45% plus cash flow generation from an EBITDA minus CapEx perspective. So it’s helping essentially helping finance the Harvest

Greg, Analyst, TD Cowen: the cash and use it for fiber builds.

Kenny Gunderman, President and CEO, Unity: Exactly. Got

Greg, Analyst, TD Cowen: it. Wanted to talk about your penetration curves and that fiber forward initiative I alluded to. On your second quarter call, you said terminal penetration of 40% could actually prove conservative, which is encouraging to hear. However, when you look at the pen curves today, it tells a little bit of a different story. You look at the twenty twenty two cohorts in the slide deck you provided.

Year one looks good. And then years two and three, you’re just a little over 30%. And I guess this Fiber Forward initiative should help that. Can you just provide more context of what the Fiber Forward initiative does and means and the cost that goes into that?

Kenny Gunderman, President and CEO, Unity: Yeah, great question. First of all, we’re extremely excited to be bringing some fresh talent and fresh leadership into the company with experience from Zipline, experience from Frontier. John Harobin is someone who’s going to be leading Kinetic Force going forward. And so bringing some good best practices from really successful copper to fiber conversion stories in the recent past is something that we’re excited about. And it’s one of the things that gives us the ability to make comments about 40% being conservative because we can see the upside and the opportunity that maybe up to this point we haven’t fully exploited at Kinetic.

So that’s number one. Number two, we’re doing a lot of things right. I mean, we grew fiber subs 15% year over year this past quarter, and we grew consumer fiber revenue almost 27%. So there is a lot of momentum in that business, but we think we can do better. And I think two issues that we know are there.

Number one, the build historically at Kinetic has been much more, I’d say, Swiss cheese in approach. So picking those lower or higher returning markets all over the footprint. And also, maybe not fully optimized, right, because we were in this propco structure where there was an incentive to focus on Windstream owned markets entirely as opposed to

Greg, Analyst, TD Cowen: Greenfield expansion

Kenny Gunderman, President and CEO, Unity: or the states where Unity owned the underlying network. And so the build itself was probably not as optimized as it could have been. And so over the past number of months, as we’ve gotten ready for this pivot, not only pivoting from subsidized builds to strategic builds, we’ve also refreshed the build plan itself. And this new build plan is much more focused on clustering. It’s much more focused on densification of existing markets, which gives you benefits of scale, whether it be from a sales perspective or marketing perspective or field techs, service delivery, you name it, you’ve got economies of scale like we have in Uniti Fiber for the past number of years.

And secondly, I think the build itself probably got a little bit ahead of the go to market at Kinetic in the past. And so building up the fiber fast start and fiber forward is part of what we’re doing and I think that’s part of why we’re a little bit behind at Kinetic today because that go to market was behind the build. And so to your point about penetration, yes, we when we build a market, our early penetration is very good because we have a very good DSL product and we’ve got a very good base to build off of. But then following through in year two and three really requires that insurgent go to market where you’ve got boots on the ground, you’ve got door to door, you’ve got construction permitting and sales all aligned and coordinated both before the market launch and during. And so ultimately, as we build up that go to market, you’re going to see better penetration.

And so right now, by the end of this year, we’re probably going to have 30% to 40% more homes under our Fiber Fast Start program, right? Because we just haven’t had the resources in the past couple of years to get there, but we’re ramping that up.

Greg, Analyst, TD Cowen: Got it. It’s interesting you mentioned that. So the Swiss cheese model, if you will, to take your term, now that you sort of have a new plan, can build the scale and you can build faster and then you can coordinate with marketing a lot cleaner. Right. Okay.

That’s you talk about Kinetics ARPU? On the second quarter call, you discussed that in the Tier two and Tier three markets that you’re in that your markets there’s a little bit more pricing power that you can take advantage of. Does it make sense for going after subscriber growth to maybe just keep the prices down? I mean, I think you’re at 80 or $90 for one gig plans. How does that compare, I guess, to the cable folks in your space and if you wanted to take trade P for Q, if you will?

Kenny Gunderman, President and CEO, Unity: It’s a good question. It’s definitely a debatable point and definitely an option. Yeah, Kinetic is like Uniti Fiber. We’re operating in Tier two and Tier three markets, so less competition. And to us, that doesn’t just necessarily mean fewer competitors.

It also means that you’re competing against national brands that maybe aren’t as focused on these smaller markets as they are the Tier one markets. And that’s a real advantage for a regional scale player that has nimble pricing power like we do at Kinetic. So definitely view those markets as less competitive. We definitely view fiber as the superior product. And I think that’s increasingly accepted among consumers, right?

Not just telecom geeks like us in here. I think just average everyday Joe on the street, when they see fiber coming into their neighborhood, it’s something that they aspire to have. And so that gives us a little bit more pricing power, those things. So as a result, yes, our ARPU is comparable to or slightly higher than our cable competitors. So yes, we could play around with P versus Q.

I think we may look at that, but really, we think there’s still ARPU growth in the business. Number 60% to 65% of our fiber subs are not taking full one gig speeds, right? There’s an upsell opportunity there. Number two, we haven’t really rolled out two gig more broadly yet. That’s an opportunity for us to do that over the next year, year and a half.

And I think that as we especially as we start to get into the inference phase of AI, I think fiber is going to become a more attractive product over time than it is today. And it’s already a superior product because people are going to want better latency. They’re going to want more broadband. And so all of those things lead us to optimism about ARPU. And thirdly, we have the ability to be more nimble in pricing.

We are today relative to our cable competitors, but I think we can be more market specific in our pricing as we’re doing in our door to door and our marketing. So those are all opportunities and we’re pretty excited about Got

Greg, Analyst, TD Cowen: Because that was my next question. If long term ARPU growth can be 3%, given you’re a little more elevated in some of your plans, but guess you just point out three reasons. Speed buy ups because 60% of the base doesn’t have the one gig plan and you haven’t really rolled out two gig and then just be nimble on sort of hyper local strategy.

Kenny Gunderman, President and CEO, Unity: Yes, exactly.

Greg, Analyst, TD Cowen: I wanted to talk about ACP risk. In the past, Windstream, when I spoke with them a couple of quarters ago, had 100,000 former ACP subs in the base and Windstream was still subsidizing them, even when ACP expired. So is that still the case and is there a risk here?

Kenny Gunderman, President and CEO, Unity: That is still the case. There’s around 70,000 ACP subs in the base today. I can tell you we’re actively looking at that subsidy and don’t want to get ahead of our market approach. So more to come on that in the coming weeks. I don’t think there’s a lot of risk, especially when you do the math.

That’s not a huge number. But I think there is an opportunity for us to get some pickup.

Greg, Analyst, TD Cowen: Okay. And it’s down to $70,000 Okay. Yes. I want talk to the AT and T bundle, if those mentioned on the call. You noted seeing churn and subscriber benefits by offering a $20 discounted bundle with AT and T.

I guess how many people take the bundle of the gross adds? And is this a discounted on your end, like who in the $20 bundle discount, like how is that sort of breaking out? I’ll stop there. I have another question.

Kenny Gunderman, President and CEO, Unity: Yes, yes. I’ll so the bundle is small today at So less than 50,000 subscribers take the bundle. But we wanted to start talking about it because we think it’s a really valuable potentially a really valuable tool for us and we think it validates the convergence theme that we’re hearing about in the industry. So to your point about the subsidy, the discount, we roughly split that fifty-fifty with AT and T. So that’s that.

Number two, that 50,000 less than 50,000 subs is growing pretty materially. So our attachment rate is somewhere in the 10% to 15% range. And so by the end of next year, we think we’ll be either at or above 100,000 subs. So we’re really excited about that growth that we’re seeing. But more importantly, the churn benefits are have been terrific, you know, the 50%.

And so as a result, we want to talk about it because it’s positive and the themes are good. But at the same time, we think we can start using that bundle more tactically, targeting markets where we might have a little bit more competition and using it as a way to be a competitive advantage in some of these markets more tactically.

Greg, Analyst, TD Cowen: It’s interesting, like why not go the full MVNO route that other fiber providers or I’m sorry, yes, fiber routers are getting wholesale wireless deals. But it sounds like you’re getting the bundle benefits anyway and the churn benefits. Like why get a comprehensive MVNO deal when you just bundle?

Kenny Gunderman, President and CEO, Unity: I think today what we’re doing works really well for us. I do think over time Kinetic having its own MVNO or being part of a broader wireless footprint makes a lot of sense. And that’s the reason we’re talking about these themes and trends a little bit more granularly and openly because we definitely see that as a possibility. Right now, we have a lot of opportunity in just the fiber footprint for the reasons we talked about earlier, right? The go to market really can be optimized.

So we don’t want to distract too much of that selling motion on fiber with an MVNO, which would be more complicated than the bundle. The bundle today is simple, It’s very easy to manage, whereas with an MVNO, you’ve got to have the back office in place and all those things. So right now, for us, I think the bundle is the right thing to do. But over time, there’s a lot of value to be had with an MVNO.

Greg, Analyst, TD Cowen: Right, right. So that makes sense. Go after that year two, year three penetration and not complicate it with an MVNO structure at this point. I want to shift gears and talk about Elliott who owns about 24% of your shares. There is a fear out there they could sell shares in the market.

They do have four appointed board seats now. So can you provide insights on the working relationship and the path forward with Elliott to the degree you can?

Kenny Gunderman, President and CEO, Unity: I definitely can. I’m glad you asked that question because that is definitely a question we’ve gotten a lot over the past week or so. We get it periodically, but especially over the past week or so with the deal closing and Elliott disclosing how many shares they’re actually going to own. We’ve been telling people 20%, 25%. So that’s not news, but I think when people see it’s now become a reality.

So we’ve gotten a lot of questions about it. And up to this point, we haven’t really answered the question because we don’t like to talk about our customers by name and we certainly don’t want to talk on behalf of our shareholders.

Greg, Analyst, TD Cowen: And the deal wasn’t formalized yet and closed.

Kenny Gunderman, President and CEO, Unity: Exactly. But now that it has, and literally had a conversation with our partners at Elliot at the end of last week, so I’m not speaking out of school by saying that, look, I think they view this investment more through a private equity lens as through their traditional activist lens, right? And so when people worry about that big block of stock and whether it may come to market, that’s not the way to look at it. Look at it through the private equity lens. And when you remember that they’ve been an owner of Windstream for 2020, they had an opportunity to really cash out in our merger, not entirely, but largely take some cash, some chips off the table.

And they proactively chose to roll everything into this deal. And they did that because they see the strategic value in the combination. And I think they also appreciate that in order for us to get to that strategic value, we need to be patient and we need to really optimize the build and all the other parts of Kinetic that we’ve talked about. So I think it is and I, again, don’t want to speak for them any more so than what I’ve already said, but I think it’s unlikely you will see equity getting dribbled out in the public markets. I think there’s a better way to optimize that value for that large of a stake.

Greg, Analyst, TD Cowen: Got it. Shifting gears just as the capital raises that you may or may not need, I’m just curious, to what degree in timeframe do you expect to access capital markets to continue to fund the fiber to the home build?

Kenny Gunderman, President and CEO, Unity: That’s a good question. We try not to foreshadow capital markets activity, Greg, as I know you appreciate. And so I won’t go too far into that. But I will say, this year’s the rest of this year is fully funded. We’ve got ample liquidity going into next year as well.

I think a lot of our activity over the past twelve, eighteen months in the capital markets has been more refinancing as opposed to adding liquidity. And we’ve got a lot of good tools. Know, ABS is tool that we’ve used at Unity and we’ve put an ABS in place on our commercial fiber business and there’s more to come there. I think we’re really just starting to scratch the surface there. But we really haven’t not really, we haven’t put an ABS in place yet at Kinetic and I think there’s a big opportunity there.

We’ve said 3,000,000,000 to $4,000,000,000 of capacity and we’re making a lot of progress in our work towards being in a position to actually execute on that.

Greg, Analyst, TD Cowen: Right. So you can now tap the Kinetic side of the house for an ABS raise because you did it on the commercial fiber side. In the past, when I think about big public companies doing those ABS raises, it took them a year, but I guess they could have paved a wider road for you guys to maybe expedite that process. Maybe you could describe like where you are in that process of eventual ABS raise securitizing Windstream Homes?

Kenny Gunderman, President and CEO, Unity: Yes, that’s great. And I that’s I a good question. Entities, right? These are bankruptcy remote, special purpose vehicles, so there’s a lot of legal work. The good thing is we’ve done it before, so we know how to do it.

And there’s a tried and true path out there for fiber to the home providers. And we started about six months ago.

Greg, Analyst, TD Cowen: So you

Kenny Gunderman, President and CEO, Unity: did So we’re well down the path. And I’d say highly confident that we’re vectoring in on the ability to push the button on it later this year, beginning of next year.

Greg, Analyst, TD Cowen: Okay. I want to switch gears to the commercial fiber business. It took us twenty Yes. Five years to get mentioned $100,000,000 deal, twenty year IRU on existing routes. It sounds great.

Should we think about should we think that this is like $5,000,000 a year because I just take the $100,000,000 and divide it by 20,000,000 And with that, that when I look at my model, that augments your growth by 1.5%. Is that the right way of thinking about that deal when you mentioned on the call?

Kenny Gunderman, President and CEO, Unity: It definitely is. And we get a lot of questions about how to account for the hyperscaler deals or how they’re going to impact the model. And so I’m glad you asked the question, Greg. And look, the reality is the economics of these deals really come down to the basic format we’ve talked about for years, which is the anchor lease up model. We have an anchor customer that comes in to help us build the network at high single digit cash flow yields, and then we lease up to incremental customers to get us well above that 10% cash flow yield, now approaching close to 30% blended yield on our projects.

The hyperscaler deals fit within that mold, but they’re just better from a returns point of view so far. And a big part of that is because NRCs or upfront capital are higher than what we’ve traditionally seen from anchor customers. And so there’s multiple ways to look at it and how it might impact your model. But ultimately, what you see is that anchor investment and then you see lease up And over so to the deal we announced last week, which is a terrific deal, and we highlighted it because we really wanted to show the synergy of bringing Windstream and Uniti together because that was a Windstream customer relationship and it would the deal couldn’t have happened without the Uniti network. So there’s more of that to come, by the way.

Greg, Analyst, TD Cowen: That was my next question. How many deals are in the funnel that are look and feel like that?

Kenny Gunderman, President and CEO, Unity: I would say a lot. And we’re excited about it. Don’t ever want to get over our skis. But we started talking about our hyperscaler funnel for the first time last week and we did that because we’ve got confidence in our ability to monetize that funnel. So we’re pretty excited about it.

Greg, Analyst, TD Cowen: And in that hyperscale funnel, some of it might shift eventually to enterprise because you could talk about the inference phase. You’ve mentioned before, it’s probably sooner than you think. How should we think about inference demand like in support of your mid single digit growing company? Is that like high single digits now? Like where does inference fit in?

What’s the total adjustable market for you?

Kenny Gunderman, President and CEO, Unity: Yes. We definitely think inference is coming sooner rather than later. When we all talked about AI a year ago or a year and a half ago, the hyperscalers would they were still hedging, I think, on the future of AI and they were making comments about it. There’s more risk to underinvesting than overinvesting. And there’s multi use cases for the AI infrastructure that they’re building just in case AI AI didn’t materialize.

But now their comments are substantially more bullish, you know. Demand is outpacing supply, for example, and AI infrastructure is mission critical. And the timelines on AI are usually they usually surprise the good versus the later. So these are all like almost verbatim comments from the hyperscalers. So we’re very bullish on inference and we’re very increasingly bullish on it happening sooner rather than later.

And Greg, I think I’ve shared before, but to your point about the growth, we’ve always forecasted mid single digit growth in our fiber business. If you look at our internal models, that starts to get up to high single digits, even double digits. And that’s before taking a more aggressive view of inference. And so you mentioned the 1.5% growth from that deal. The reality is that’s before any incremental lease up, too, right?

So And so you put all these things together, and I can go back to my opening comments. We’re just very bullish on where we sit today from an industry tailwinds perspective and that’s just one example.

Greg, Analyst, TD Cowen: Great. And on the wireless side, on the call you mentioned that the wireless bookings are up 30% year over year. Can you elaborate, is that fiber to the tower five gs we are hearing even today at the conference, a lot more densification. Just help us with, in general, where

Kenny Gunderman, President and CEO, Unity: this wireless demand is coming from? Yes. Last year, wireless bookings were flat to a little down ish. And we said, hey, we think 2025 is going be an up year. We didn’t think it was going to be up 30%.

So it’s been better than we expected. And I actually think the second half of the year might be even better based on what we see in the funnel. And what is it? It is densification. We’re starting to see small cells in a bigger way.

And we’ve talked for years about how we think small cells are coming to the Tier two and three markets. We’re starting to see more activity there than we’ve seen before. And secondly, there’s a lot more upgrading more rural towers, whether it be from one gig to 10 gig even increasingly talking about 25 gig. And there are still microwave towers in the general footprint. And so there’s now a lot of investment to push fiber to those microwave towers.

And we’re benefiting from all of that. And I think it’s all really a reflection of the carriers getting ready for continued broadband growth, whether you call it inference or just broadband growth And in

Greg, Analyst, TD Cowen: maybe in the rural side, maybe

Kenny Gunderman, President and CEO, Unity: some fixed wireless as they’re having success and they’re rolling that out as well. I totally agree. All right. On the flip side, what

Greg, Analyst, TD Cowen: challenges are you seeing in service delivery and meeting the demand so far?

Kenny Gunderman, President and CEO, Unity: Yeah, at Unity itself, we really haven’t seen any. You know, we’re staffed up. We’ve got good third party contractors and so we’re hitting our interval delays. I’ve always talked about ninety days as being that gold standard. We want to be below below that and we’re hitting that on a regular basis.

I think I think at Kinetic, like we talked about at the beginning, I mean, I know we’ve we’ve already moved on from that, but I think having those trusted third party contractors is important to be able to hit those timelines. And look, we’re not an AT and T or Verizon at that scale, but we are a scale business. And as a result, we’re able to promise good, steady business. And so we’re able to have partnerships with good scale, well known, well respected third party contractors and we’re excited to be on boarding them.

Greg, Analyst, TD Cowen: I want the M and A environment. M and A market seems open for business. We understand your company, you have your hands full with the integration of Windstream. But maybe down the road, help us with various M and A scenarios that would be attractive to you once you’re done with the integration of Windstream?

Kenny Gunderman, President and CEO, Unity: Yes. So we’ve done a lot of M and A in our history, very comfortable with it and have definitely used it as a way to unlock value. So fully expect to stay engaged there. You’re right. We’ve been busy for the past eighteen months getting ready for legal day one, focusing on integration, focusing on the build plan.

But we’ve never been too far removed from the strategic conversations in industry. And I think now that we’re past legal day one, I suspect certainly in the industry, we’re hearing of more and more conversations. We’re hearing just chatter picking up among the carriers and others. So I do think there’s going to be activity.

Greg, Analyst, TD Cowen: Is that on the commercial fiber side or the fiber to the home side?

Kenny Gunderman, President and CEO, Unity: I would say it’s commercial predominantly, but I also think there’s a growing sense of optimism around commercial fiber. And I think there’s a lot of capital in the data center space, third party capital coming into the data center space. A lot of people are getting educated on AI and what it means. And as we say, there’s no data center. A data center is a warehouse without fiber.

And so I think people are seeing the benefits of AI for fiber and I think there’s more and more enthusiasm for that space too. So I think over the next six, nine, twelve months, there’s going be a lot of activity.

Greg, Analyst, TD Cowen: And again, that’s and on the commercial fiber side, like what sort of multiples are you seeing for healthy companies? I know we saw the Crown deal and the Everestroom deal, but those are probably more one offs of more struggling fiber companies?

Kenny Gunderman, President and CEO, Unity: Yes. I mean, we’ve always talked about what we think the multiples are. And I think our view of those value ranges hasn’t really changed. I think there’s still a premium applied to fiber businesses that own their network, that have good quality network and are able to show good steady top line and EBITDA growth and reasonable capital intensity, which is exactly what we have at Unity. And I think over after a period of time of integration, we’ll get right back to that at fiber infrastructure.

And so I think, yes, the Crown business was probably sub optimized. Everstream was probably sub optimized. But even there, you had two pretty competitive processes where you had multiple buyers for those businesses, including private equity or infrastructure funds and strategics. And so I think there that’s just a leading indicator of the level of interest that’s out there for really well run businesses that actually own their network. So I think when you take that and you overlay what I think is going to be increasing interest in AI, there’s going to be a nice market in the next twelve to eighteen months.

Greg, Analyst, TD Cowen: Right. Because it sounds like the Everstream deal could have went, the stocking horse bid got up to seven to eight times. Yes. And with your company, AI coming at least nine, ten even north of that. I agree.

On the fiber to the home side, in the past there has been maybe fiber providers or copper to fiber migration stores that might have sold too short or too early in the process. What’s your thinking about, I guess it depends on the bid or the ask I should say, but does it make more sense to just continue to build more to extract more value on the fiber to the home side rather than sell a little early? Like how are you thinking about that?

Kenny Gunderman, President and CEO, Unity: Well, it’s a good question. It’s a debatable point. I think that it’s great to have the luxury to debate that point because I do think that we feel very strongly that the convergence theme is not going to go away, that we’re probably in the fifth or sixth inning of consolidation in that space. And so there’s still time for this to play out. And we have a terrific build plan at Kinetic, And you’re really going to see that build engine start roaring later this year, beginning of next.

And so we look at that and think there’s a lot of value for us to create organically and there’s a very clear path, right? We’ve got the frontier learnings, the Ziply learnings. On the other hand, if there’s a bid out there that we think hurdles that and derisks that execution and brings in that time value of money, that’s something we have to consider as fiduciaries of our business. But as I’ve always said, when it comes to M and A, the best thing you can do to prepare for M and A is have a well run business that gives you lots of options and that’s exactly what we’re focused on.

Greg, Analyst, TD Cowen: Got it. And I want to talk about the big beautiful tax relief. You were a REIT, so maybe it’s not as big in your world, but Windstream was a C Corp, but they had some losses, etcetera. But how might you realize any benefits from the tax bill that was passed? And were you expecting to be a cash taxpayer anytime soon?

Kenny Gunderman, President and CEO, Unity: Yes, good question. So yes, we were in the past a REIT, weren’t a taxpayer. As part of this merger, we are getting a nice step up. And so as part of that, we did not anticipate to be a taxpayer in a material way in the foreseeable future. That’s now even more true with the big beautiful bill.

So I don’t think there’s gonna be a lot of tax leakage in our model. I think where we really benefit, frankly, the big carriers.

Greg, Analyst, TD Cowen: Your customers and your carriers and potential suitors, if you will.

Kenny Gunderman, President and CEO, Unity: Well, yes, exactly. And I think that’s one of the reasons we’re seeing a pickup in wireless candidly because there is that incremental cash flow billion billion and Yeah.

Greg, Analyst, TD Cowen: Verizon 2,000,000,000. Yeah. 1.5 AT and T.

Kenny Gunderman, President and CEO, Unity: Absolutely.

Greg, Analyst, TD Cowen: But the last minute, I just wanted to discuss AI internally. We’ve talked about it how it’s helping your demand on the outside, inside your company on both the commercial fiber side and then on the kinetic side, you know, how is GenAI benefiting the businesses?

Kenny Gunderman, President and CEO, Unity: Yeah. We’re very focused on it. We have a we have an entire team within our IT group that’s focused only on AI and innovating AI for the use of our business. And I think we also have great partners. We work with Oracle.

We work with Salesforce. We work with some big name brand companies that are spending billions of dollars innovating AI for us, customers of theirs. So we’re very closely coordinated with them. And we’re a fast follower with people like Verizon and AT and T and T Mobile who are using it in their business. And so I would say I heard Zayo say they have 25 use cases.

Right. And I also heard Morley say he’s got 26. Well, we’ve got 27. Yes. But no, the reality is I couldn’t put a number on it.

What I would say though is we’re very focused on it and we’re optimistic that we’re going to get a lot of use cases from anywhere from fleet management to inventory management, certainly to customer experience and managing customer experience more efficiently, reading legal contracts. And imagine, we have hundreds and even thousands of leases that we manage for customers and having an AI oversight on leases, there’s a lot of benefits to that. So I could go on and on, but I think embedded in our business is no incremental efficiency from AI, but I think there is incremental efficiency from AI, not just from a cost perspective but also from a customer experience perspective.

Greg, Analyst, TD Cowen: Great. Well, with that, we’re about out of time. So thank you, Kenny.

Kenny Gunderman, President and CEO, Unity: Thank you, Greg.

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