UNIT - Earnings call transcript Q4 2017

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Operator

Welcome to Uniti Group Fourth Quarter 2017 Conference Call. My name is Michelle, and I'll be your operator for today. A webcast of this call will be available on the company's website, www.uniti.com, beginning March 01, 2018, and will remain available for 14 days. [Operator Instructions]. The company would like to remind you that today's remarks include forward-looking statements, and actual results could differ materially from those projected in these statements. cause filings to with could in are that company's the the factors actual differ results discussed The SEC.

would those comparable those found you Our Gunderman. slides remarks X-K conference will in call directly the Accounting regarding not the will refer also encourage Please responding that financial on the that Generally Accepted Group prepared Kenny the posted Uniti now reference Windstreams’ to to company's measures Executive current Gunderman. the over of to to Officer, I a as questions financial call go most were on our dated not include Principles. Chief like Discussions this website non-GAAP and report Form not call to to this Mr. company today. afternoon during measures to materials GAAP is The can turn during ahead, during Group's will in financial be Uniti measures current litigation with call. certain we party be Reconciliation litigation. accordance

Kenneth Gunderman

joining. afternoon, thank and you everyone, for Good

exit success. XXXX remarks on to are trends presentation. slide us Year, of strategies I’d have how begin reflect my on As we industry a briefly and to well website our positioning I’ll our and begin sustained New like four focused

for fiber top the demand First, theme. infrastructure continues at to Telecom be

densification their deployments the expect we have first wireless and in carriers launched be to network plans in and fixed those mobility intensified select While XXXX. XG markets

pattern and technology and and and national lead X.X require wireless level small the Uniti requires carriers inventory. market quickly XG,XG small fiber to expect miles a XG the rollout to cells trials strand XG of the XG million cells fiber and leaseable will deployments owns changes. similar We for

levels inventory and As acquisitions coming grow expect organically enter the year through throughout and the to year. we

our a elimination investment legislation, positive create merger their network of recent the to generated increase operating overhang have we the offerings. tower wireless businesses spending expect infrastructure carrier in bundled recent capital Sprint’s the benefit announcement and tax that and Sprint-T-Mobile fiber tailwind both for reform for Second, and opportunities will

expansion in the the will in XXXX towers. U.S. opportunities network wireless up create a network suite space of first of ground tower build lease Third, Red new both Compartida of the and breaking Mexico on border to the the continued wholesale sides for and and

Our carriers wireless strong of capitalize. Mexico the position relationship national U.S. us well and both should to with

including telecom industry through of the the infrastructure innovative fiber shared Lastly, is idea now transactions. embracing sale-leaseback

full proforma pact segments. in Uniti acquisitions the very vision our our Uniti transaction route Recently fiber MAR share up stage and relating small to owned for MRR that XX% now. of of communications XX% will primarily with and year pick backhaul XXX unlimited quarter of fourth projects. wireless provide seeing lease quarter sales leasing and but of prospects see XX% million half we to for resulting leasing we carrier installed active strong in tower XX installs from is bookings permitting markets now bookings have will different three a quarter model. quarter reach the update three and were lid small X.X driven part on future churn all schools. the later were and as I came X.X K our the to wireless Our TPx XXXX. four from monthly to the to wholesale the disconnects XXXX Fiber's we government and bookings driven an were for fiber, all Atlanta the did trust other the to that was lease expected during the another cells and more backhaul as network. carriers be installations. fiber fourth backhaul. in rate will fiber by real call. feature cells of quarter of cloud. infrastructure spread could data in diverse proof a network with on it’s sprawling and of All-in-all shared of plans our the and Total are customers are a more awarded anchor eventually XX% fiber for markets. bullish bookings that Small focus activity the from in reflecting is of PEG efficiently our solely cell sales our fourth Wireless X.X% from our for in year fiber churn to second for backhaul miles the we coming local tower state on Uniti quarter small that assets asset results carriers, were dark the that fiber dark to dark into the as fourth of the activity million XX% Wholesale Dallas upgrades investment national a create details were this XX,XXX days convergence have over the us fact announcement through sales very focused sale carriers of RSP and business our for for relatively and and during the related I bandwidth fiber and to of the enterprises, set carriers enterprise today the further by across allow $X.X fiber transaction fiber the and TPx during existing is the for tower Southern operational our on million Light Hunt will for customer

new expansion first lit Southeast new make eight two in in are completed markets in EBITDA up $X school to further adjusted quarters offices range following generating past focused $X sales of XXXX. the new to services We sales XXX return few force $X fiber returning used be off-net million churn integration. anticipate the approach to Hunt. in than networks. project and expect continues in X.X% We as disconnects net successfully expect of sales fiber before integration to to add districts $XX EBITDA million following will the Uniti to the quarter million very reduce is government integrating these sales. will be revenue dilutive to by the Uniti rates XXXX the enterprises, take by on new a The salesforce on it increase add quarters. recently that expenses by and as local less adjusted approximately we and capital progress reps ramp markets of for and projects in to expected higher our about million the Light monthly the legacy Southern approved local good cost remaining the will and be selling to expansion a local go-to-market The five markets, We

in by In cloud, circuit PEG, further fiber legacy interconnecting Southeast Light addition, we Southern tower markets reduce started the networks and a cost the off-net project to of Hunt.

annual $XX We a expect to our with early of over target complete $X and million synergy years. expenses in payback will in when $XX.X above save capital XXXX. million million X.X original require a investment of project beyond The

one the our of integration industry. We operational and performance with has fiber Uniti us the positioned efforts are in operating of platforms the with best fiber pleased

now XX to XX that activity We fourth the to excellent towers, co-location quarter existing tower in leases and an to lease be we we co-location the have coming in see Turning continue tenants our added up towers on to quarters. additional added in expect portfolio Mexico.

we will about towers research excited build built this be also forecast new U.S. the we construct anticipate to atleast are the growth. to towers. Recent We capture opportunity approximately the coming over X% XX,XXX years market can investment and new see five [ph] of in

thesis XX% is on ranging earning for option the lease, X% to investment wireless to tower customers anchor flexible tenant. Our while from create a yields our

increase cells a the building We to in Constructing expect will to leverage BTS XXXX. our solutions suite towers lit and and bundle in fiber us fiber U.S. of dark backhaul XX% began carrier relationships the with to sell our cross the products. and XX%. second allows small our current towers We tenant to wireless product customer to adds yields

trend ample already industry believe to traditional co-location from the build to we making our owned real backhaul including estate expect providing towers with stick continue. we’ve towers greater the the tower received and first future. as the owning orders tenants and architecture bundle small, are of an in is application further fiber in backhaul enhancing We the We distributed by we size value for sample this the for optionality treating macro own towers. tower second here, potential enhances estate the customers and the the fiber tenant to anchor real Although for to up believe lease

Towers had call the our and Mark. the will tower over BTS revenue strong We component of future tower key that, and in expect a segment will in Uniti I add We momentum revenue investments years. expect turn by now approximately could $XX the With be growth diversification to of million XXXX.

Mark Wallace

Thanks, Kenny, results in Please with good presentation; of turn last everyone. to slide our afternoon I’ll for the review the start year. five

EBITDA. and several million consideration re-measure lower non-cash structure reorganization line quarter income an at diluted tax million, included resulting $X.XX. fourth the us was XXX included cost consolidated diluted adjusted tax change with non-cash in operating from million consolidate deferred These common contingent from release, million key reform shares non-cash for AFFO of share income our for attributable into again our share. was Uniti deferred allowances our non-cash in and of million consolidated income million a tax common $XX with million for Our our items of per fiber valuation about agreements fourth $XXX and Net benefits. that fair revenues of performance liabilities income internal The which $XXX the AFFO for of excluded value after or Net the from new non-cash for and expectations d transaction allowed to included $XX and the tax to adjusted shares $X.XX quarter entities of to quarter $XX benefits both quarter AFFO common EBITDA of impacted related of expense arrest $XX.X a tax the integration combined items net $X.X were the rates. attributable of million

Our on basis $X during million network and the $XX savings over achieving EBITDA cost rate $XXX.X and we attributable from These capital made benefited just quarter we quarter with million million to during Net capital consistent success-based about million since X.X% of of by improvements Southern savings of was for XX% our quarter adjusted with Leasing million fourth $XX XXXX. and deployment which segment Hunt and results Windstream acquisition fiber million. the revenues our of both adjusted annualized had of nearly Fiber the or of prior completed their the EBITDA were adjusted directed Maintenance of to $XXX EBITDA of revenues $XX $XXX.X exited million dark $XX.X cumulative million our a CapEx reported million include the with towards of Uniti for the run realized was over quarter small improvements with $X.X of XX% Windstream. spin-off margins of tenant guidance. for CapEx quarter projects. cost was revenues. major our Light cell XXXX to $XX.X

received revenues the acquisition towers. Our towers XX due total CapEx the success-based guidance turn cover prior service. development of about and for timing quarter, ground the $X.X Towers NMS investments. Uniti CapEx on was $XX.X the slightly was Uniti reported upfront guidance. America during our and XXX be Uniti to XXXX. some million quarter. fourth completed Fiber at expect X quarter XXXX for $XX U.S. of fourth towers to development including that million in closed had completions above and slide At for now adjusted towers to fourth of early our XXXX in as NRC bringing we of to year-end, towers Uniti XXX [ph] net now $X.X XXX payments lease the in Latin completed customer higher towers the than of Please breakeven six Towers EBITDA with total in million million a quarter, the in-service I’ll

future any interaction preference that our that to noting activities the include TPx closing does me remains outlook market Let or include it and capital M&A subject does conditions. not by XXXX not

Our the s current following outlook each for segment. includes

XXXX of guidance of the expect $XXX growth our fiber revenues We million million rate Uniti contribute to XXXX. our represents over of EBITDA levels. million for full and of to $XXX At to of proforma million $XXX $XXX revenue range, XX% midpoint $XXX forecast a adjusted year million

Our XX% expectation be XXXX term. rate annualized consistent year. annualized approximately full be fiber XX% which is XQ should margin would to XQ the for about for with Adjusted XXXX EBITDA growth revenue revenues core our long

in then early other the approximately lower to spend run average quarter. cost in That integration couple throughout announced our and $XX.X on expansion market slightly months of Hunt synergies minutes for certain XXXX cost be closing. utilizations in $XX to timing synergies fourth and XX% front cost by XXXX rate Light savings trend than We the slightly expected factors. rate run want a earlier, and initially margins Kenny you XXXX improved million EBITDA XX that were the lower of in update adjusted expect I of We million the to cost Southern full year early result of disconnects, the savings the in of loading investments of year reflects discussed to and to one initiatives. within combination

relate annual primarily savings the by to date savings million XXXX. and to legacy to as networks achieve now increased inter-connect of we $XX.X off-net The ultimately expect $X estimates synergies million the by in Southeast. those increasing are We

As we million integration three of in invest about this the Kenny expect in those on $XX CapEx including XXXX to to the next achieve noted, benefits. million $XX slide over reflected already years order

realize XXXX annual with XXXX, run of we rate million. $XX.X expect aggregate During savings of million savings will cost $XX.X we and exit cost to

at underway. Uniti We currently of to at be dark Uniti million be revenues $X success fiber in dark our CapEx $XXX the projects. greenfield related $XXX or between will or to guidance about fiber X% have expect the for to seven range million fiber and Net $XXX projects about XX% small million CapEx cell based million to midpoint major midpoint XXXX maintenance We should XXXX range. fiber of of directed which

All XXXX. be projects Florida to except projects North this completed Coast are completed of year be these will Gulf for the scheduled and in which

in major projects by cell being completed six balance year year have XXXX. and We the end of should deployed this be one small which

approach are We fiber’s normal capital to intensity completed. projects levels expect these Uniti once

drive to MAR visibility we core growth XX% seven, MRR slide good would Turning of have revenues and that XXXX. into we expect during

for dark XXXX to to install the $XX million $X and to disconnect year disconnects. quarter lit X.X%, annualized expect upgrades. million including and lit bandwidth of churn the for be the year about and expected first is frontloaded cell services MRR small fiber $XX backhaul the forecasted timing Monthly a Dallas of of is during for million We the $XX MAR connections, for due be churn Atlanta anticipated the to into and million

long the of Uniti revenues provide and of nearly next Over of one entered XX% fiber’s billion business revenues small customer years. good with wireless activated dark as know characteristics into $XXX term sight you the contracts million of including tenants. fiber line XXXX that As and under with three of fiber is [ph] backlog attractive expected contract deployment XX% under of $X.X contract revenues. of carriers to be future anchor offer cell backlog over the Uniti

about XXXX Turning to million revenues to $X adjusted in of Uniti with million. EBITDA we slide Towers range million $XX.X to $XX.X eight, expect between

towers development XXXX. be early NMS XX in to acquired expect We completed and

Mexico in expect win the Towers to additional towers build-to-suit year. U.S. Uniti and both this for opportunities We

Our Uniti towers million guidance year. that $XX to capital million with expectation approximately we XXXX is can the towers $XX XXX this shrug spend

adjusted year Turning and now goes Adjusted rent to leasing revenue. segment straight includes full revenue increase on annual leasing by and basis, million of including May increases nine, EBITDA transaction that $X.X $XXX million $X of revenues of for $X.X escalator year, January million. to use slide X.X% on million $XX On of EBITDA basis, we be which $XXX this rent closed of Windstream are line $X.X X the cash cash non-cash non-cash into should in by expected TPx X revenues. would this segment a proforma the On assuming year million. approximately be million effect a our million in

slide to XX. now Turning

just outlook. and expect and expect and $XXX to range per For million XXXX billion EBITDA of over common be to share. $X.XX the full AFFO midpoint year we basis, share revenues million per $XXX of a between between $X.XX we our million midpoint $X $XXX with at to range a $X.XX On or diluted diluted adjusted consolidated

our $X closed $X.XX have TPx million by to share per diluted on Assuming EBITDA X, million would January increased consolidated AFFO transaction share. per or and $X.XX and revenue that $XX would have XXXX by proforma adjusted increased

full stock should cost our amortization. expense including million business margins approximate with be EBITDA prior based expect discount interest Consolidated bring compensation segments $XXX adjusted and for average to consumer million $XX of $XX to $X allocated should CLEC approximately including We to excluding XX% should million revenues million with consistent SG&A Corporate million business the $XX of $XX financing approximately trends. amounts million related our year debt, expense.

Our weighted million average common year outstanding during the of shares guidance shares. assumes XXX

a market integration our future any include XXXX transactions related capital or reminder, As outlook acquisitions, in not transaction cost. future does

back the call over discuss to our turn sheet moment. me balance I Kenny, Before let a for

Our liquidity end, under continues credit nearly quarter to revolving unrestricted and cash undrawn agreement. million capacity of shape. million At our good be of and we in $XXX had equivalents cash $XX

under quarter stands annualized Our on end to adjusted leverage ratio agreements our X.X based times debt net debt EBITDA. at at

into continues diversification head our to and priority M&A. XXXX, organic be we As driving growth through

of sources active several structures. are previously a mentioned, opportunities of transaction we range we with a As and private in capital variety different discussions on

Kenny and call back can’t these While may the on ongoing opportunities we predict outcome, of these one are turn I’ll execute over now more we in in discuss TPx or discussions XXXX. to more to the depth.

Kenneth Gunderman

Thanks Mark.

I’d and managed we is with California, in the to announced Nevada, and this network like held provider sale a review slide Texas fiber Massachusetts. transaction afternoon. centers pact to service data TPx XX lease Turning privately

facilities based our enhanced Over services CLEC the provider. strategic last made few a has to years, managed from shift an TPx

selling and the their and X.X% credit miles Uniti $XX of for fiber excess the XX,XXX a acquired value million unlock they will pay Strand entered interested net annual plus to lease in profile. improve result network annual $X.X their into in leverage simultaneously master a XX-year We the were triple fiber escalator. and As capacity that of fiber rent

and covenance This view minimum We protected ratio growing starting generate the of or lease business services X.X% five fast XX% credit provider to fiber will data lease that are margins underlying segment. managed the initial EBITDA center TPx XXXX with flow to to Uniti net strand and in triple tenant markets adjusted leverage at our right our create use to cash access in has lease over unused in well and structure are Uniti yields and in miles cash a test fiber term. rent maximum coverage a The growing the embedded will strong network. lease and fiber Southern Unity exclusive as of investment adjacent Texas over XX%. worthy metro

combined add were In and has impact strands the of sub-lease year. with is approximately California share strand shared. to of AFFO being first The $X.XX marketing XX,XXX into and for TPx and unused provisions sales during for behalf inventory accretive per miles in future agreement full entered with addition, leasing. fiber of these after The XX,XXX on TPx non-exclusive Uniti Massachusetts fiber immediately transactions add revenues

expected to second tranches. of close the to quarter XXXX. and XXXX Turning to non-California California transaction are to in expected the third quarter the two assets in are the The slide is XX, close of in assets close expected

with shared of mentioned excited infrastructure. telecom a I about remarks, my traction in deal have gaining the are opening is fiber this As industry concept and we very

XX% M&A. by XXXX, XX% add businesses and unchanged high remains any actual Our and on multiples focused call. to we growth assets. provided the so the acquiring in we summer last us confident development XXXX more network Valuation and for Tier relatively remain XXXX. The are X% of by X% fiber non-Windstream TPx on diversification both of the guidance revenue fiber X from on our take assets spent markets in XX coming We transactions are Corporate X Mark remains year-end adjacent will months. to and XXXX achieve and revenue there and are deal deals activity to further track adds before diversification strategy

some Turning now unique the of fastest-growing communication segments of telecommunications. assets XX, in in we to slide a portfolio own

we the towers, a With distance macro the with Our wireless additional leaseable the incremental classes. our tenant today asset to be small now products new have and deal, over sides sales TPx have miles within Uniti current nodes fiber customer ratios could monetized to Fiber relatively all potential pending and tower short of The only Network. low that have utilized cost a for fiber incremental backhaul tenancy which capacity Fiber future small yields across Uniti add of leasing million attractive and the from XX% draws actively on of sides X.X cell the network we strand fiber is significantly verticals in the we that plus all unused sell.

we're ready will question for assets strategic these sustained JPMorgan. now Philip first for take from Instructions] of Our questions. expect well years. growth comes We position [Operator Cusick us to organic many Operator,

Your line is open.

Philip Cusick

of Couple things.

say again I – I First, can what’s think wonder XXXX? if diversification by that you revenue XX% of summer you said

Mark Wallace

right, Phil. That’s Yes.

Philip Cusick

done now right it's deal on XX% count? And the

Mark Wallace

By XX%. the year it end the of the will deal with be

Philip Cusick

Okay.

what we’ve pretty years. of you happening pipeline What’s couple of that that’s from in gives kind acceleration that confidence? So huge seen for the a last

Mark Wallace

think really pipeline, Yes. in any developing huge have I I together I were deal company Phil, think it’s the XXXX. didn’t essentially and putting don’t really We in we the mean, activity a were at effectively the and we just XX% and and so move pretty through really this so year deal XXXX we’re announced. XX needle we’ve alone months the to organic XXXX, growth dramatically XX%, acceleration, already

just next pipeline months So based that we've what's we I out, fill developed the pipeline upon going how think feel we the think it’s to over the still we that still in play good feel the and work and target. about XX regular

Philip Cusick

funnel business, Thank said in that five the funnel you Good. tower could even now? Talk of right take the XX,XXX What And sort like of that years; you you X%. next then about does more if look business. your you. about talk could

Mark Wallace

pretty think good I the What I proxy is guidance – probably for would for say Yes. CapEx a the that. year

you the cost if XXX XXX,XXX that can roughly to this that build I anywhere Mark into number XXX,XXX from to back year. you towers is mentioned think tower consider

customers. we ramp we feel very dialogue with actually we the that our confident if choose think number upon up fairly dramatically based having we’re I that too, can that

So, I but capital, X% very that on number based targeting customer maybe we’re what terms dialogue of to. comfortable years the for number we in think year, feel of the terms confident next we would in of is with privatizing achieve this over the we’re chose reflective that several

Philip Cusick

the Is of Okay. last assets. on side, stone want What is Could those wouldn’t to that and talked the current sounds be negotiation, the level something you they or right feasible about that? sort market one stands the And the about you really where change some willing to one you to Windstream guarantees. more coverage that have handed you and something that lease that and that? be in to able assets

Kenneth Gunderman

following some I’m are of that you exist? not the your if you question. I’m sure Do talking Phil, unused about fiber – completely

Philip Cusick

exchange assets can the important that or lease I in wouldn’t current Yes. that that for we that? coming northeast is current willing down you apologize. investors of be and whether bring ways what still to or that be does I’m creative is think that do whether the something there's hear pricing going you from in to trying Thanks. you’d for revenue to we I’m reduce like that

Mark Wallace

clarifying. you Thank for Yes.

effectively monetize companies. could some fiber believe a there both and Uniti we the So, that that, unused interested We’ve of that together that to not we’re benefit continue before said ways are say lease definitely but to leasing in and that, Windstream could reducing at payment. work

we’ll there opportunities actually to over some So continue that time. pursue there’s

Philip Cusick

Good. Thanks guys.

Operator

from of of comes Our next David Bank question America. Barden

line Your open. is

David Barden

for Thanks taking questions. guys. Hey, the

Just a I few guess.

sales would parts the seem it. allocating three One with can TPx be respect is one the acquisition you back, those wondering I there the of right, just – to thought is was value marketing, one about First, guess Mark, kind parts. questions, that within I you to among be transaction, $XX how the to is million and one so two fiber lease

calculation. supports deal if is The the AFFO you structure second then that sorry. two I day I is get yields on what to it. that X.X% the capital part question X? lease more think so I is, about guess, this of accretive questions, guess And And

The third question just. was

been about be six But recognition, maybe Mark, being waiting for you’ve that’s while deferring there’s think this and last capital action. the your so Windstreams has how or capital been undue under the better a some think result I course that Over pressure, talked I raises might struggling, now its in to environment, you term with of and wondering this the coming spiking, of Windstream structures are about that waiting in of of phasing I LIBOR between dealing you T-Bonds kind kind the environment and if revisit spiking, the for hike rate we’re tradeoff rate of how deal. resolution terms was think under

Sorry, I last want I question fiber is just just on business. sure, the the to make understood.

the of guiding year XXXs, these things kind you’re closer grow mid and in fiber somewhere it, going talking. be if you that guidance because would churn to investment quarter. I to XX.X the quarter to if If that was business XX.X it’s the fourth end wondering million ratably upfront at closer high revenue, So the about XXX, EBITDA, XX for of I’m means have to next to and fourth at were we year all and

kind cadence through walk could you would that it If of us be helpful?

Kenneth Gunderman

your in those we We Texas fiber then a jointly our and the is those the what with and combination three paid its the Texas. ourselves of combination. to looked all of the we one. also attractive four trajectory of respect Kenneth. first of Texas if plus It’s for comfort the right, management start fiber, to the We fiber the then factors lease lease value the the metro the of roughly credit We things, No rate It company, TPx of think attractive rest keep company, what there’s we we acquisitions the definitely your vast at miss time the own we’re of its fiber you’re TPx monetize when improved and whether this while company, the back over surprise. on think to with the can in it rest valuation in release of fiber. David, we’ll lease-up I’ll look market. itself. questions, some viable areas. ability try the be think, effectively the was for at think hit majority field, the of exclusive or I paying And as in With the outside with and us we ultimately lease the rate. and fiber the its the looked a to is using but honest at components, of

value it buckets, was say, didn’t network of specifically was itself. predominantly but fiber it So three a the to combination to I things. attribute all We would related those the

Mark Wallace

Yes.

David, TPx your So, the financing. take can question on I

on the the that based TPx showed, X% that’s in – accretion or on at revolver. transaction So and we our financing increase we accretion on

And you uncertainty know And either. deals M&A market market capital conditions. our transactions as have as as outlook, in predicting -- any are as additional so on outcomes well or transactions on in that is you outlined as the the know there outlook due timing you’ll and that's I additional to any capital successful when

to to is terms which other where the continue us and is issuance in M&A time maintain market future about to that transactions kind be our or for outlook of design TPx additional including our leverage our on – in I'd today. be those inherently any revolver. be long said, to or That be our to targets, strategic any done transactions will assumes leverage transactions to connection at future equity with meet financed transactions So the capital are expect it of

day. this – I maintenance So an do I leverage, expect levels existing expect

as will previously said However I’ve fluctuate. leverage

permanent on capital we the on our appropriate As then put and at transactions like place take line the time. TPx in

David Barden

Windstream itself of capital versus the situation resolved on what's happening in waiting of And then, for just tradeoffs Mark between markets the generally? kind kind

Kenneth Gunderman

Yes.

conscious of be of I and of markets to litigation very obviously think to security we – want about that the an think very overhang of very to there's going our we’re So the we’re litigation Windstream. terms relative sort be in prices we about cost our capital accessing when disciplined at

in we’re position we soon. – anytime markets go don't capital that we to So need a to not until

the think market prudent future So on just we'll patient go based I be we when in on conditions. and

David Barden

guide XQ and ratable cadence the business that question, first closer the of a on maybe XXX growing to the a EBITDA in having of by about XXX only the fiber thinking more then maybe and next it EBITDA, about kind XX% of going in spacing And year, of be fiber fourth talking imply pressures that the that’s XX.X in the kind is of the -- then would or business just versus in to half kind flattish you’re half? second grow the

Mark Wallace

Yes.

as commission year the the XXXX, as and cost that in there’s the in well which first increase fourth of it XX% the is of So of of new increase fourth mentioned so to there’s XXXX. quarter quarter some we the in mentioned versus in margins we’ve also probably market kind right. the been think early plans half well in the half, of is as of Kenneth because the programs But mentioned full of some and earlier, into additional cost EBITDA of what had incentive for it increased as Relative costs XX% elevated as compensation to that but we the increases will year. some part this sales and the XX% I quarter said had I as are first second do cost some the expansion we that But that’s including churn adding – some cost well. exactly reflective healthcare that our

David Barden

Those Great. All guys. right. my Thanks questions. were Bye-bye.

Operator

our from next question Frank Louthan Raymond Ladies and gentlemen, James. of comes

line Your is open.

Frank Louthan

Great.

the company The more for more how little and TelePacific. much back And bit give with maybe you fiber sale-leasebacks on them be some take started elusive do then, some some you Just the more risk? and any the contract. come you do a been – and back maybe fiber-to-tower, some in of this us about question, builders to learned talk around what’s seen I’ve and at or replicate saw you over little some a can the bit lit particular have over able to of sale-leasebacks? problem color to others color you that Thanks.

Kenneth Gunderman

any Frank, another lost markets its being question, we take don’t I’ll see to your other those. Kenneth. On first carrier. major

the years look and don’t and or respect we are sale-leasebacks and we PEG two of and private half spent factored before our I’ve year, educating deal, With Atlanta model model. were really question, Tower coming your equity. knew we of the out my said -- work – I’ve underwriting educating expected a bankers, community, was into and and events second when the to our business were Cloud. even fact more types as were we In first in Dallas year market, coming. those as Those how so the see priming acquired just universe What they telecom, on -- remarks, we mentioned any both those

think believe And of as counterparties of and on as attractive the think interest coming that I well. transaction who work. that I all or it this of success believe lack particular a work And don't result we lack the of so really including our a more result And working that are. much so options through we ones are are was was educating this market year

Frank Louthan

you. Okay, great. Thank

Operator

comes Matthew question from next Our Niknam Deutsche Bank. of

is line open. Your

Matthew Niknam

Hey, taking Thank you questions. for guys. the

quick ones I if Just could. two

present? know just give using. color can on term? Fiber the near I Uniti have Kenneth being had XXXX the normalized intensity at that Thanks. Mark I just of sort open any early got XXXX fiber, some to an necessarily you intensity but I to look mentioned Windstream be to you’d levels follow-up of to after the on – then capacity First as average And think the the if what those curious are isn't whether back secondly, project some subletting of trending of and average prior think bigger type CapEx, you those maybe look on unused sort discussions capital past on going on question we like levels, you you capital mentioned,

Mark Wallace

Yes.

around levels capital normal – about means think I XX% intensity. probably the

contracts obviously be would it’s I of we I’d more what going consider win to about what normal XX% those deployed, level. would a but depend to Now or when say schedule

Kenneth Gunderman

Windstream mutually in question the opportunity And have we’re particular several years past been I for category. would put just that I about together say and we dialogue as on in with second regular would your beneficial ways this work to

Matthew Niknam

Got it. Thanks you.

Operator

Michael from comes question of next Rollins Investment Citi Research. Our

open. Your line is

Michael Rollins

leverage us in Hi. to XXXX, – in with back terms it’s XX, what as questions. I slide of of the Thanks. case just were you the taking could. immerge with Thanks scenarios happen you cited distress TelePacific, lease, over or some financially that net share going last lease if with their the to the protections company XX debt you can you of do future. the ratings the with in in constructed that share April Can the for worst are X, have month. they update credit And the in an maybe Two secondly, when us

Mark Wallace

that presentation, well. the invest partner here because I they we have and lease we they financial to share This share. unfortunately financials in which Yes. extremely we in about is use continue we as on to view what then coverage limitations and private just information their We Mark. stated positive proceeds, proceeds TPx and tell network because good have intent debt pay since is as for of company, they're that you a specific metrics can I’ll have down the the – all start. cannot will improved on very

it Windstream particular lease In level of highlight to our protections distinction. so operating suppose is well the a company entity in parent from and operating with I’d does [Indiscernible], assets is at to does that’s of regulatory is a guarantee. as several approval lease things. one this include a in guarantees that It the Windstream, terms which being conferences, mentioned One It from of as couple at this kind different relative subsidiaries the parent I’ve as are include lease company.

different we the well. do in also at limitations terms And lease payment some well. then debt – of financial second, we mentioned cross we As a we as number assets with have as in default provisions restricted then in have covenants have of also TPx, and

think I strong. lease So here very is the

think lease I that type net triple it’s future. structure of we’ve the lease talked the doing of in on about indicative transactions

probably I continue it’s transactions think we’ll good that do. to a template for

Michael Rollins

is sale the pipeline credit the of of opportunities. kind future worthiness in tier And leaseback opportunities, of or bifurcate there the weighted

looking maybe level you are credit? that of opportunities some a have certain versus at at some So credit lesser

Mark Wallace

of mentioned others. think is I one lease, number perhaps also mean proceeds as competitive component it as I Look, meaning their mentioned the use quality itself. as credit also position tenant. there financial mentioned companies There’s there’s an a structure whether important not of the enhancing credit a the factor, There’s to the the is is is I credit but and lease to there’s the key as as or of component is well. as both I the I that their position well

analysis, components quality is as in are credit the tenant other the important there So well. very but

Michael Rollins

Thanks much. very

Operator

question Our Simon comes from next Morgan Stanley. Flannery of

open. is line Your

Unidentified Analyst

taking Spencer the of from for question. Hi. Thanks It’s Simon. me. for Couple

your First, clarification a follow-up a and targets. on diversification

said I previously these won’t that think you issue you equity at prices.

any to rate order by improvement target today? could year get So stock that your here? XX% target next that Or in your is in does pricing assume stock reach the given assumption where you

Kenneth Gunderman

Yes.

maybe let plan kind of level. more to price question issue and the answer equity So our about directly just me

no would and need to-date issue saying support me expect strategic let M&A equity equity expect we in would by as predominantly future any said I have transactions. start we other So, earlier, soon. to issue any time of We

have referenced Sourcing capital we’ve that of are might private that and linked convertible that these if equity structured sources referenced may part also security. another equity a of instrument, include be –

So partners of variety transaction with capital turn in different there’s and we’re that a of how discussion just structures those variety we’ll different and private see up.

Unidentified Analyst

of then from outlook can standpoint? the on an your breakeven longer And when issue, get like something to second flow business, think Okay. plus tower that cash XX term cash burn you project business

Kenneth Gunderman

is Kenneth. this Spencer,

operating attractive yield, the of math give to starting we’re of it’s adding at how we wouldn’t pretty second once tenants looking those can mentioned going to second the investment starting the from XX% our perspective. flow under to it and with sort and that moving do towers lease-up tenant X% built. But assumptions at the economics yields we course, this upon dramatically you’re that cash think towers where you – get we’re I a really point and a specific like pretty a depends the I many because closely monitor want around so build I to which we we still target how its think very many ultimately, depending

Unidentified Analyst

Okay, great. Thank you.

Operator

Okay. There questions. no are further

any closing So I’d Kenny call back over remarks. the to for like turn Gunderman

Kenneth Gunderman

Thank you updating appreciate forward our And and you quarter. today joining on we in us Uniti next Group. all interest and progress you for to thank we look your

Operator

Ladies and disconnect. gentlemen, may great conclude And program. the thank have in you today's a This does day. Everyone you all for participating conference.

Uniti (UNIT) 1 Mar 182017 Q4 Earnings call transcript