Uniti Group ((UNIT)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Uniti Group’s recent earnings call painted a generally positive picture, showcasing strong quarterly performance and significant advancements in fiber expansion. The sentiment was buoyed by positive developments in the merger with Windstream, contributing to an optimistic outlook despite minor challenges such as non-recurring revenue delays and broader economic risks.
Strong Quarterly Performance
Uniti Group reported mid-single digits top-line growth and high single-digit adjusted EBITDA growth, reaffirming its full-year revenue, adjusted EBITDA, and AFFO guidance. The company achieved consolidated revenues of $294 million and an adjusted EBITDA of $238 million, highlighting its robust financial health.
Significant Progress in Fiber Expansion
The company made notable strides in fiber expansion within the Kinetic footprint, aiming to double the number of homes passed to 2 million by the end of the year, achieving this milestone two years ahead of schedule. This expansion is a key driver of Uniti’s growth strategy.
High Lease-Up Success
Uniti’s lease-up rate reached an impressive 72%, nearing company records. This success was significantly bolstered by contributions from hyperscalers, underscoring the strong demand for Uniti’s fiber infrastructure.
Positive Market and Regulatory Developments
Favorable regulatory changes at the FCC and NTIA are supporting fiber infrastructure growth. These include relaxed rules on retiring copper networks and streamlined permitting processes, which are expected to benefit Uniti’s operations.
Merger with Windstream Progress
The merger with Windstream is progressing well, having received shareholder and PUC approvals. With approximately 97% of shareholders supporting the transaction, the merger is expected to close by July or August, marking a significant milestone for Uniti.
Improved Cost of Capital
Uniti’s cost of capital has improved significantly, with debt yields decreasing from over 12% to around 7.5% over the past two years. This improvement enhances the company’s financial flexibility and ability to fund growth initiatives.
Non-Recurring Revenue Delay
There was a delay in a $4 million fiber sale to a government customer, leading to lower than expected non-recurring revenue for Uniti Fiber. This represents a minor setback in the company’s otherwise strong performance.
Capital Markets Volatility
Despite resilience in the ABS market, broader capital markets remain volatile, posing potential risks to Uniti’s financial strategy. The company remains vigilant in navigating these uncertainties.
Tariff and Economic Risks
Potential tariff changes and increased recession risks pose challenges, though Uniti expects minimal direct impact on its operations, maintaining a cautiously optimistic stance.
Forward-Looking Guidance
Uniti Group maintains its guidance for full-year revenue, adjusted EBITDA, and AFFO, despite broader market volatility. The company anticipates mid-single-digit top-line growth and high single-digit adjusted EBITDA growth for the year. The merger with Windstream is expected to close in the second half of 2025, with full-year consolidated revenue and adjusted EBITDA projected to remain within expected ranges.
In summary, Uniti Group’s earnings call conveyed a positive sentiment, driven by strong quarterly performance and strategic advancements in fiber expansion. The merger with Windstream and improved cost of capital further bolster the company’s optimistic outlook, despite minor challenges and economic uncertainties.