Merging Arrows

Nine years after Windstream spun off certain network assets into a real estate investment trust (REIT) that came to be known as Uniti Group, the two companies said today that they plan to recombine.

On an investor conference call today, Uniti executives said the combined company will be an “insurgent fiber provider” focused on Tier 2 and 3 markets. The company is expected to make a considerable investment in fiber broadband in Tier 2 and 3 markets, with a goal of reaching 1.9 million locations by 2027.

That number includes current fiber passings to 35% of the company’s footprint, which will increase to 40% and that eventually could increase to 60%, the executives said.

The new company will be known as Uniti and will be led by current Uniti President and CEO Kenny Gunderman and Uniti Chief Financial Officer Paul Bullington. The deal is expected to close in the second half of 2025.

When the Uniti REIT was spun off from Windstream in 2015, the goal was to free up cash for investment in the Windstream network and to create tax savings for Uniti as a result of the REIT status. The combined company will not have REIT status, although Gunderman said certain business units might be able to qualify as REITs.

Windstream has been privately held since emerging from bankruptcy several years ago. Uniti is publicly held, and the combined company would be, too.

Competitive Advantages

Since the spinoff, Uniti has diversified its holdings through acquisitions and through fiber transport network buildouts. According to Gunderman, combining Uniti and Windstream will give the company attractive owner’s economics that will give it an “industry leading” $650 average cost per fiber passing.

“Uniti will own fiber-to-the-home, middle mile and backhaul,” he said, noting that backhaul comprises 20% of the total cost of deploying fiber broadband.

Windstream’s previous investment in fiber to the DSLAM to boost DSL speeds also will contribute to the competitive cost per passing. Gunderman called that investment a “jumping off point for distribution fiber.”

Competition in Tier 2 and 3 markets is less than in Tier 1 markets, which should enable the combined company to see strong take rates. Three-quarters of the company’s footprint is in markets with 25,000 or fewer households and in recent years, the company has seen fiber take rates of 29% by the second year after deployment, Gunderman said.

Source: Uniti and Windstream

The combined company’s transport network infrastructure will include routes between smaller markets that are unique to the company and that “will be attractive to hyperscalers,” Gunderman said.  

Source: Uniti and Windstream

Additional information about the Uniti Windstream deal can be found in this press release.

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