Summary of Uniti Group (UNIT) Conference Call - August 12, 2025 Company Overview - **Company**: Uniti Group (UNIT) - **Event**: Eleventh Annual TD Cowen Communication Infrastructure Summit - **Key Speaker**: Kenny Gunderman, President and CEO Key Points Industry Context - The telecommunications industry is experiencing a convergence of fiber to the home and AI-driven demand in commercial fiber business, which are seen as significant growth drivers for Uniti Group [4][5][6] Financial Performance and Guidance - The company reported a weaker-than-expected earnings performance, with a $60 million shortfall compared to models [3] - Guidance was lowered due to several factors, including slower builds and subscriber penetration from the Windstream acquisition, increased costs associated with fiber builds, and competitive pressure on DSL services [10][11][12][14] - The company is transitioning from a REIT to a C Corp, which has implications for its shareholder base and may lead to volatility in stock performance [7][8] Strategic Initiatives - Uniti Group is pivoting to focus on unsubsidized builds to increase home coverage and improve penetration rates [12][13] - The company is onboarding third-party contractors to enhance build predictability and efficiency, which is expected to help catch up on build plans by the end of the year [14][19] - The Fiber Forward initiative aims to optimize market penetration and improve the overall build strategy, focusing on densification and clustering of existing markets [28][31] Legacy Services and Transition - Uniti Group is actively managing out of legacy TDM services, with expectations to be virtually out by the end of 2025, while still generating positive cash flow from these services [23][24][27] Subscriber Growth and Pricing Strategy - The company is optimistic about ARPU growth, citing opportunities for upselling higher-speed plans and the introduction of new pricing strategies tailored to local markets [36][39][40] - The current pricing for fiber services is competitive, and the company believes it can maintain or increase ARPU despite market pressures [38][39] Wireless and Commercial Fiber Business - Wireless bookings have increased by 30% year-over-year, driven by densification efforts and upgrades to rural towers [72] - The commercial fiber business is expected to benefit from new hyperscaler deals, which are anticipated to enhance cash flow and growth potential [64][66][67] M&A Activity and Market Outlook - The company remains open to M&A opportunities, particularly in the commercial fiber space, as the market shows signs of increased activity [79][81] - There is a growing interest in fiber businesses, especially those that own their networks and demonstrate steady growth [83][84] Tax Implications - As a result of the merger, Uniti Group expects to benefit from a step-up in tax basis, reducing the likelihood of becoming a cash taxpayer in the near future [88][89] AI Integration - The company is leveraging AI to improve operational efficiency and customer experience, with a dedicated team focused on AI innovations [94][96][97] Additional Insights - The company is confident in its ability to navigate current challenges and capitalize on future growth opportunities, particularly in the fiber and AI sectors [18][71]

Core Points - Uniti Group Inc. will have its President and CEO, Kenny Gunderman, present at the TD Cowen 11th Annual Communications Infrastructure Summit on August 12, 2025 [1] - The presentation is scheduled for 2:55 PM MDT / 4:55 PM EDT in Boulder, CO [1] - A live webcast of the event will be available on Uniti's Investor Relations website, with a replay option for a limited time [2] Company Overview - Uniti is a leading fiber provider focused on delivering mission-critical connectivity across the United States [3] - The company serves over a million consumers and businesses, offering a wide range of fast and reliable communications services [3] - Uniti's services are provided through various brands, including Uniti Wholesale, Kinetic, Uniti Fiber, and Uniti Solutions [3]

Group 1 - Uniti Group's stock experienced a significant decline of 10.4% following the announcement of its second quarter financial results for the 2025 fiscal year [1] - The company operates in the telecommunications sector, which is currently facing challenges impacting shareholder value [1] Group 2 - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and growth potential [1] - Subscribers to Crude Value Insights gain access to a stock model account, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2]

Financial Performance - Uniti Group reported quarterly funds from operations (FFO) of $0.36 per share, missing the Zacks Consensus Estimate of $0.70 per share, representing an FFO surprise of -48.57% [1] - The company posted revenues of $300.73 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.04%, compared to year-ago revenues of $294.95 million [2] - Over the last four quarters, Uniti has surpassed consensus FFO estimates just once and topped consensus revenue estimates only once [2] Stock Performance - Uniti shares have lost about 11.3% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The current consensus FFO estimate for the coming quarter is $0.60 on revenues of $935.6 million, and for the current fiscal year, it is $2.49 on revenues of $2.44 billion [7] Industry Outlook - The REIT and Equity Trust - Other industry, to which Uniti belongs, is currently in the top 40% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in estimate revisions, suggesting that industry performance can significantly impact stock performance [5][8]

Financial Data and Key Metrics Changes - Uniti reported consolidated revenues of $300 million and adjusted EBITDA of $243 million for Q2 2025, with AFFO attributed to common shareholders at $96 million and AFFO per diluted common share at $0.36, all exceeding expectations [30][32] - Total fiber revenue for Uniti and Windstream increased by 10% year-over-year during Q2, with Kinetic consumer fiber revenue growing by 27% [29][30] - The pro forma view of new Uniti consolidated performance showed a revenue decline of approximately 6% year-over-year, primarily due to the decline in legacy TDM services [32] Business Line Data and Key Metrics Changes - Kinetic expanded its fiber network to pass an additional 52,000 homes, ending the quarter with 1.7 million homes passed and adding 19,000 fiber subscribers, a 15% increase year-over-year [29] - Fiber penetration increased by 20 basis points sequentially and 120 basis points year-over-year, while fiber ARPU rose by 6% sequentially and 11% year-over-year [30][32] - Uniti Fiber reported revenues of $74 million and adjusted EBITDA of $29 million during Q2, resulting in an adjusted EBITDA margin of 39% [31] Market Data and Key Metrics Changes - The hyperscaler deals have increased as a percentage of the total sales funnel from less than 15% a year ago to now 40%, with a total contract value of approximately $1.5 billion [17][56] - Kinetic's consumer segment represents about 60% of total revenue and is expected to grow to about 75%, with fiber-based revenue projected to reach about 85% by 2029 [18][30] Company Strategy and Development Direction - The company plans to accelerate its investment in fiber, expecting to pass 3.5 million homes with fiber within the Kinetic footprint by 2029, with 75% of total revenue anticipated to be fiber-based by that time [8][10] - The strategy focuses on being an insurgent share taker with industry-leading NPS scores and a commitment to network quality and customer satisfaction [9][12] - The company aims to transition the majority of Kinetic's footprint to fiber, which is expected to result in lower churn and predictable revenue and EBITDA growth [18][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the regulatory environment for fiber providers, noting a more favorable stance from the FCC regarding copper retirement and communications regulations [7] - The company anticipates a significant increase in demand for fiber services as the AI inference phase approaches, with expectations for higher margin, lower capital intensity deals from hyperscalers [49][51] - The outlook for 2025 includes consolidated revenue and adjusted EBITDA of $2.2 billion and $1.1 billion, respectively, with a focus on expanding fiber infrastructure [37][38] Other Important Information - The company has successfully collapsed legacy Unity and Windstream debt silos into one unified structure, simplifying its capital structure and unlocking opportunities for asset-backed securities [40] - The company expects to achieve a blended cost of $750 to $850 per passing over the life of the fiber build program, with a historical cost of approximately $650 per passing [38][58] Q&A Session Summary Question: How did the deal constructs change with the inference phase? - Management indicated that the inference phase is expected to bring more lease-up deals with better margins and lower upfront costs, while also acknowledging potential increased competition [42][49] Question: What is the timeframe for the $1.5 billion funnel? - Management noted that deals in the funnel typically take 12 to 18 months to materialize, with expectations that most of the current funnel will work its way through in the next 6 to 18 months [54][56] Question: How much of the Kinetic build-out is economical? - Management stated that a significant portion of the footprint without cable competition is economical to build, with expectations to reach 75% to 80% of the footprint with direct fiber to the home [58][60]

Financial Performance & Targets - Total revenue decreased by 6% from $947 million in 2Q24 to $887 million in 2Q25[11] - Total revenue is projected to decrease by 7% from approximately $3.775 billion in FY2024 to approximately $3.5 billion in FY2025[12] - The company is targeting approximately 75% of total service revenue from fiber by 2029[7] - Kinetic consumer fiber revenue grew approximately 27% year-over-year in 2Q25[75] Fiber Expansion & Penetration - The company aims to reach approximately 2 million fiber homes by the end of 2025 and approximately 3.5 million fiber homes by 2029[7] - Year 1 cohort fiber penetration is at 28%, with Year 2 cohort fiber penetration improving to 31%[7] - The company is targeting a long-term consumer fiber penetration of 40%[7] - Homes passed with fiber increased from approximately 1.6 million in FY2024 to approximately 1.7 million in 2Q25[8] Fiber Revenue Mix - Total fiber revenue increased from 31% of the revenue mix in 2Q24 to 37% in 2Q25, representing a 10% growth[11] - Total fiber revenue is projected to increase from approximately 30% of the revenue mix in FY2024 to approximately 40% in FY2025, representing an 11% growth[12] Wholesale & Hyperscaler Opportunities - The combined Uniti and Windstream hyperscaler funnel represents approximately $1.5 billion of total contract value[43] - Hyperscaler contribution to Uniti's sales funnel increased approximately 5x from 2Q24 levels[43]

Core Insights - Uniti Group Inc. has completed its merger with Windstream, creating a significant fiber provider with approximately 240,000 route miles, poised to benefit from trends in communications infrastructure, including convergence and Generative AI [2][10]. - The company reported a solid second quarter in 2025, with core recurring strategic fiber revenue growing approximately 5% compared to the same quarter in 2024, and an Adjusted EBITDA margin of approximately 81% [3][4]. Financial Performance - Consolidated revenues for Q2 2025 were $300.7 million, with a net loss of $10.7 million and Adjusted EBITDA of $242.6 million [4][5]. - Uniti Fiber contributed $74.3 million in revenues and $28.8 million in Adjusted EBITDA, while Uniti Leasing generated $226.5 million in revenues and $220.1 million in Adjusted EBITDA [5]. Financing Activities - On June 24, 2025, Uniti issued $600 million of 8.625% Senior Unsecured Notes due 2032, using proceeds to partially redeem $500 million of its 10.50% Senior Secured Notes due 2028 [6]. - At the end of the quarter, the company had approximately $740.7 million in unrestricted cash and cash equivalents, with a leverage ratio of 5.75x based on net debt to annualized Adjusted EBITDA [7]. Merger Details - The merger resulted in Legacy Uniti shareholders receiving 0.6029 shares of Uniti common stock for each share held, leading to them owning approximately 62% of the combined company [11]. - Windstream shareholders received approximately $371 million in cash and preferred stock with a $575 million liquidation preference, along with non-voting warrants for up to 6.9% of the common stock [11]. 2025 Outlook - The company expects the merger to contribute approximately $1.0 billion in additional revenues and $160 million in Adjusted EBITDA for the five-month period following the merger [13]. - The consolidated outlook for 2025 includes projected revenues of $2,215 million to $2,265 million, a net loss attributable to common shareholders of $(125) million to $(75) million, and Adjusted EBITDA of $1,110 million to $1,160 million [15][36].

Core Points - Uniti Group Inc. has successfully completed the merger with Windstream, resulting in both Legacy Uniti and Windstream becoming wholly owned subsidiaries of Uniti [1][2] - Following the merger, Legacy Uniti stockholders received 0.6029 shares of Uniti common stock for each share held, leading to them owning approximately 62% of the combined company's outstanding common stock [2] - Uniti plans to combine the indebtedness of Legacy Uniti and Windstream into a single organizational silo, expected to be completed around August 4, 2025 [3] Company Overview - Uniti is a leading fiber provider in the U.S., focused on delivering fast and reliable communication services to over a million consumers and businesses [4]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Uniti Group Inc. reported increased revenues but a sharp decline in net income for H1 2025, driven by higher interest expenses [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased as of June 30, 2025, with a continued significant shareholders' deficit Condensed Consolidated Balance Sheets (Thousands) | Balance Sheet Item | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | **Total Assets** | **5,543,531** | **5,282,145** | | Property, plant and equipment, net | 4,366,790 | 4,209,747 | | Cash and cash equivalents | 240,727 | 155,593 | | **Total Liabilities** | **7,987,519** | **7,733,985** | | Notes and other debt, net | 6,064,751 | 5,783,597 | | **Total Shareholders' Deficit** | **(2,443,988)** | **(2,451,840)** | [Condensed Consolidated Statements of (Loss) Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20(Loss)%20Income) Q2 2025 net loss and year-to-date net income decline were primarily driven by a substantial increase in interest expense Condensed Consolidated Statements of (Loss) Income (Thousands, except EPS) | Metric ($ thousands, except EPS) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | 300,732 | 294,947 | 594,641 | 581,365 | | Interest Expense, net | 160,784 | 127,475 | 298,771 | 250,686 | | **Net (Loss) Income** | (10,729) | 18,281 | 1,491 | 59,629 | | **Diluted EPS** | $(0.04) | $0.07 | $0.00 | $0.25 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Stable operating cash flow and increased investing/financing activities led to a higher net cash increase for H1 2025 Condensed Consolidated Statements of Cash Flows (Thousands) | Cash Flow Activity ($ thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 183,495 | 174,338 | | Net Cash Used in Investing Activities | (245,587) | (182,284) | | Net Cash Provided by Financing Activities | 176,838 | 77,173 | | **Net Increase in Cash** | **114,746** | **69,227** | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the pending Windstream merger, customer concentration, capital commitments, and recent debt restructuring activities - Uniti entered into a merger agreement with its largest customer, Windstream, with an intended closing date of August 1, 2025; post-merger, Uniti will cease to be a REIT[31](index=31&type=chunk)[38](index=38&type=chunk) - Revenue from the Windstream Leases constituted **68.2% of total revenue** for the first six months of 2025, highlighting significant customer concentration[42](index=42&type=chunk) - The company has an ongoing commitment to reimburse Windstream for up to **$1.75 billion** in Growth Capital Improvements through 2029, with **$1.2 billion** reimbursed to date[118](index=118&type=chunk) - In Q2 2025, the company issued **$600 million** of 8.625% Senior Unsecured Notes due 2032 and used the proceeds to partially redeem higher-cost secured notes[88](index=88&type=chunk)[95](index=95&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Windstream merger, Q2 2025 revenue growth, increased interest expense, and liquidity for operations and merger funding [Overview](index=39&type=section&id=1.Overview) Uniti, an internally managed REIT, is merging with Windstream, terminating its REIT status and integrating fiber infrastructure - The company is structured as a REIT with two primary business segments: Uniti Leasing, which acquires and leases mission-critical communications assets, and Uniti Fiber, which provides infrastructure solutions like cell site backhaul[135](index=135&type=chunk)[136](index=136&type=chunk) - A definitive merger agreement with Windstream was signed, with an expected closing date of August 1, 2025; post-merger, Uniti will cease to be a REIT and become an integrated telecommunications company[139](index=139&type=chunk)[140](index=140&type=chunk)[146](index=146&type=chunk) - In June 2025, Uniti issued **$600 million** of 8.625% Senior Notes due 2032, using proceeds to redeem a portion of its 10.50% Senior Secured Notes, resulting in a **$31.9 million** loss on extinguishment[147](index=147&type=chunk)[153](index=153&type=chunk) [Results of Operations](index=43&type=section&id=2.Results%20of%20Operations) Q2 2025 total revenues increased by 2.0% due to Uniti Leasing, but a net loss resulted from a significant rise in interest expense Revenue by Segment (Thousands) | Revenue Segment ($ thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Uniti Leasing | 226,478 | 218,286 | 3.7% | | Uniti Fiber | 74,254 | 76,661 | (3.1%) | | **Total Revenues** | **300,732** | **294,947** | **2.0%** | - The increase in Uniti Leasing revenue was primarily driven by higher cash revenue from Growth Capital Improvement (GCI) reimbursements and non-cash revenue from Tenant Funded Capital Improvements (TCIs)[162](index=162&type=chunk)[163](index=163&type=chunk) - Interest expense for Q2 2025 increased by **$33.3 million** year-over-year, mainly due to a **$31.9 million** loss on the partial redemption of the February 2028 Secured Notes[167](index=167&type=chunk) - Transaction-related costs rose to **$13.5 million** in Q2 2025 from **$11.0 million** in Q2 2024, primarily due to expenses associated with the pending merger with Windstream[177](index=177&type=chunk) [Non-GAAP Financial Measures](index=55&type=section&id=3.Non-GAAP%20Financial%20Measures) Adjusted EBITDA and AFFO increased in Q2 2025, reflecting operational growth despite a GAAP net loss Non-GAAP Financial Measures (Thousands) | Non-GAAP Metric ($ thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | EBITDA | 223,540 | 221,237 | 448,912 | 457,918 | | **Adjusted EBITDA** | **242,563** | **236,659** | **480,393** | **465,287** | | FFO attributable to common shareholders | 46,301 | 72,409 | 114,571 | 149,871 | | **AFFO attributable to common shareholders** | **96,483** | **92,254** | **188,784** | **179,880** | [Liquidity and Capital Resources](index=57&type=section&id=4.Liquidity%20and%20Capital%20Resources) Uniti maintains strong liquidity for operations and the Windstream merger, with significant capital expenditures in H1 2025 - As of June 30, 2025, the company had total liquidity of approximately **$798.6 million**, consisting of **$298.6 million** in cash and equivalents and **$500.0 million** of borrowing availability under its revolving credit facility[211](index=211&type=chunk) - The company expects to fund the **$425 million** cash portion of the Windstream merger consideration using cash on hand and borrowings from its Revolving Credit Facility[220](index=220&type=chunk) Capital Expenditures YTD 2025 (Thousands) | Capital Expenditures YTD 2025 ($ thousands) | Amount | | :--- | :--- | | Success Based (incl. GCIs) | 241,222 | | Maintenance | 3,582 | | Non-Network | 1,394 | | **Total Capital Expenditures** | **246,198** | - The company has suspended dividend payments, except where necessary to maintain REIT status, until the consummation of the Merger with Windstream[228](index=228&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures have occurred since the most recent Annual Report on Form 10-K - There have been no material changes to the company's market risk disclosures since the last Annual Report[234](index=234&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[236](index=236&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[237](index=237&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 11 of the Condensed Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 11 of the Condensed Consolidated Financial Statements[239](index=239&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the Annual Report on Form 10-K - No material changes to the risk factors discussed in the Annual Report have occurred[240](index=240&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company withheld 534 common shares during the quarter to satisfy employee tax obligations from restricted stock vesting Shares Purchased to Satisfy Tax Obligations | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 12 | $4.80 | | May 2025 | 522 | $4.21 | | June 2025 | 0 | N/A | | **Total** | **534** | **$4.22** | [Other Information](index=64&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[243](index=243&type=chunk)

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