Uniti(UNIT)2025-02-21 16:05Financial Data and Key Metrics Changes - Uniti reported consolidated revenues of 239 million, and AFFO attributed to common shareholders of 0.35, with a full-year AFFO expected to range between 1.47 per diluted share for 2025, representing a 6% increase from the prior year [37][39] Business Line Data and Key Metrics Changes - Uniti Leasing reported segment revenues of 214 million, resulting in an adjusted EBITDA margin of 97% for Q4 2024 [30] - Uniti Fiber reported revenues of 31 million, resulting in an adjusted EBITDA margin of 43% [31] - The number of bookings related to fiber to the home carriers increased threefold in 2023 versus 2022, with further growth in 2024 [18] Market Data and Key Metrics Changes - Hyperscaler bookings now represent about 20% of Uniti's full-year bookings, up from a very small percentage in 2023 [19] - The total addressable market (TAM) for digital infrastructure is estimated to be around 15 billion being spent on fiber and network investments [21] - The company expects the TAM for both digital infrastructure and fiber investments to grow by three to five times in the next five years [22] Company Strategy and Development Direction - Uniti aims to focus on best-in-class execution and disciplined top-line growth of mid-single digits and high single-digit adjusted EBITDA growth [10] - The merger with Windstream is expected to simplify the company's operations and enhance its market position, with a target of reaching 2 million homes passed with fiber by the end of 2025 [12][46] - The company plans to build new fiber, especially in the Connecticut footprint, with Windstream targeting to double the number of homes passed with fiber in 2025 compared to 2024 [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the increasing demand from generative AI and the strategic value of fiber to home initiatives [10][49] - The company expects to generate positive free cash flow in 2025 and has a fully funded business plan [9][36] - Management noted that the competitive environment has been rational, with a focus on maintaining healthy yields despite market pressures [66] Other Important Information - Uniti's leverage ratio was reported at 5.8 times based on net debt to fourth quarter 2024 annualized adjusted EBITDA [38] - The company successfully completed its inaugural ABS transaction at a blended coupon of less than 6.5%, which will be used to redeem a portion of higher-yielding secured notes [39][40] - The shareholder vote to approve the merger with Windstream is set for April 2, 2025, with expectations to close the transaction in the second half of the year [12][52] Q&A Session Summary Question: What is the timing of the inference phase and opportunities in tier two and three markets? - Management indicated that the inference phase has already started, with expectations that it will grow significantly over time, particularly in tier two and three markets where Uniti is well-positioned [58][60] Question: How rational is the bidding environment with competitors? - Management believes the bidding environment has been rational, with a strong track record of winning deals at favorable economics [66] Question: What is the optimal mix of ABS versus other debt instruments? - Management stated that while they are open to increasing ABS funding, the optimal mix will depend on market conditions and opportunities for lower-cost capital [75] Question: What are the expectations for home builds and subscriber growth in 2025? - Management expects Windstream to build around 325,000 homes in 2025, nearly doubling the previous year's builds, and anticipates a corresponding increase in fiber subscribers [78][82] Question: How have hyperscaler needs changed fiber deployment strategies? - Management noted that hyperscaler needs have led to increased strand counts and capacity requirements, influencing their approach to new builds and maintenance [90][96]