Several years ago, Windstream and Uniti embarked on a bold new approach for broadband networks that transferred certain Windstream network assets to a REIT. That plan is now in total disarray, having been a key factor in Windstream’s bankruptcy. Now, the two once partners with a bold idea are headed to trial to settle their future together.

The two companies had been in mediation to try to rework a lease agreement, in which Windstream pays Uniti to lease the network assets that were transferred to Uniti, under a real estate investment trust (REIT). Terms of that REIT led to a lawsuit from a Windstream creditor, forcing the largely rural telecom operator into bankruptcy.

Mediation has failed and the two are now headed to trial, scheduled to begin in March 2020. The dispute arises from different interpretations of the terms of the lease agreement, which is subject to renegotiation while Windstream is in Chapter 11 bankruptcy.

Windstream wants to significantly reduce its annual $650 million lease payment to Uniti, arguing certain fiber and fixed wireless assets are not subject to the lease. Uniti begs to differ. While Uniti has been diligently working to reduce its dependency on Windstream, the company still derives most of its income from Windstream. Windstream today released a summary of the offers presented in mediation. They are obviously far apart.

“We were unable to reach a satisfactory agreement with Uniti. Now we are fully focused on pursuing our litigation claims to a conclusion,” said Windstream CEO Tony Thomas in a prepared statement. “Windstream will continue to serve our customers throughout the restructuring process and strategically invest to expand rural broadband access through 5G fixed wireless technology and fiber deployment, while transitioning businesses to next-generation products and services.”

Windstream Gigabit Broadband Plan
To Thomas’s point regarding fiber and fixed wireless deployments, Windstream also released a potential broadband investment plan for the carrier. That plan outlined Windstream’s broadband opportunity, which could potentially bring gigabit broadband capability to 60% of the 4 million households in the company’s footprint.

A combination of FTTP and 5G fixed wireless would provide this capability. Under this plan, roughly 46% of households could be eligible for FTTP, and 27% could be eligible through fixed wireless. Windstream says its current business plan through 2030 would reach 60% of these eligible households.

It’s not entirely clear what impact the litigation outcome between Windstream and Unity would have on this plan. A Windstream spokesman declined to comment.

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