Uniti said yesterday that it will begin offering nationwide dark fiber services on 2.2 million fiber strand miles miles spanning 35 states in Tier I, II and III markets. The company said it has “full ownership and use of this fiber network,” through a previously announced settlement with Windstream.
Uniti was originally created several years ago through Windstream’s spinoff of fiber and copper assets into a real estate investment trust, originally known as Communications Sales & Leasing. The spinoff created tax benefits that provided Windstream with capital for investment. The initial plan was for Windstream to have exclusive use of those assets, for which it entered into a long-term lease arrangement with CS&L/ Uniti.
Windstream’s 2019 bankruptcy disrupted those plans. The bankruptcy was triggered by certain liabilities that the company incurred as a result of the spinoff and ultimately led to a settlement agreement earlier this year between Windstream and Uniti.
In that settlement, Windstream agreed to transfer certain dark fiber indefeasible rights of use (“IRU”) contracts to Uniti and relinquish its rights to use 1.8 million fiber strand miles currently leased by Windstream that were either unutilized or utilized for the dark fiber IRUs being transferred.
Also in the settlement, Uniti agreed to purchase certain Windstream-owned fiber assets, including certain fiber IRU contracts and 450,000 fiber strand miles.
If you add the 1.8 fiber strand miles referenced in the settlement to the 450,000 strand miles also referenced, you arrive at the 2.2 million strand miles that Uniti now has on offer.
The 2.2 million strand miles represent 31,000 route miles, Uniti said.
There was some downside for Uniti to the settlement with Windstream, of course. For example, Uniti had to sell stock to certain Windstream creditors, with proceeds going to Windstream. Nevertheless, the settlement with Windstream appears to have been viewed positively by Wall Street, as Uniti’s stock price has climbed since the settlement.
Investors had long been concerned that Uniti was too reliant on Windstream, whose lease payments continued to represent the majority of Uniti’s revenues, even though Uniti made other acquisitions and did some dark fiber network and other infrastructure construction of its own.
Depending how successful Uniti is in leasing its new fiber assets, it should see its reliance on Windstream continue to decrease. The fiber contracts that Windstream transferred to Uniti in the settlement also should help with that equation.
According to the Uniti press release about the dark fiber plans, the company now has over 3 million strand miles available for lease or for IRU (indefeasible right of use) arrangements.