Uniti Group Windstream plans could include selling capacity on fiber currently leased exclusively to Windstream to other carriers, said Uniti Group President and CEO Kenny Gunderman at an investor conference today. From Uniti Group’s point of view, the goal would be to decrease the company’s reliance on Windstream for revenues. Uniti Group essentially wants to generate non-Windstream revenues from Windstream assets.

“There may be an opportunity to monetize [the fiber] in [partnership] with Windstream,” Gunderman said. Whether Windstream would agree to these plans is unclear.

Originally known as Communications Sales & Leasing, Uniti Group was created as a telecom real estate investment trust that was spun out from Windstream in 2015. The agreement between the two companies currently calls for Uniti Group to lease Windstream fiber assets back to Windstream on an exclusive basis. But Uniti Group is currently exploring three other options with regard to Windstream, Gunderman said.

Other options under consideration include purchasing certain assets outright from Windstream without a leaseback agreement and selling capacity on underutilized Windstream dark fiber that Uniti doesn’t currently own.

Uniti Group Non-Windstream Revenues
Uniti Group always planned to diversify its revenue beyond Windstream and already has made considerable progress on that front by making additional acquisitions. But 70% of its revenues still come from Windstream – a number that Uniti Group hopes to reduce to 50% within 20 months, Gunderman said.

Uniti Group has been under extra pressure to minimize its reliance on Windstream since August when a decrease in Windstream’s stock value drove an equivalent decrease in Uniti Group’s value.

While Uniti Group continues to explore additional acquisitions, it also is looking at how it might tap Windstream assets to generate non-Windstream revenues.

Gunderman pointed to the 80 wireless towers that Uniti Group purchased from Windstream as an example of the type of asset that Uniti Group might acquire outright from Windstream. The tower assets generate revenues from all four major wireless carriers and receive greater focus within Uniti Group than they did within Windstream, Gunderman said.

“There are other assets like that within Windstream” that Uniti Group might be interested in acquiring, Gunderman noted.

As for underutilized Windstream dark fiber that Uniti Group doesn’t currently own, Gunderman said such assets “could roll into our fiber operator business” and would be sold to other customers, not Windstream.

That idea and the idea of Uniti Group selling capacity on fiber that it already owns but currently leases only to Windstream raise some interesting questions. A key one would be whether Windstream salespeople would also be able to sell connectivity and if so, how the two companies would deal with potential conflicts between salespeople from the two different companies.

A look at Windstream’s web page shows that it already sells dark fiber on a wholesale basis, along with wavelengths and lit connections.

Gunderman made his comments at the Wells Fargo Securities 2017 Media & Telecom Conference, which was also webcast.