UNIT - Earnings call transcript Q2 2018

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Operator

Welcome to the Uniti Group Second Quarter 2018 Conference Call. My name is Michelle, and I will be your operator for today. A webcast of this call will be available on the company's website, www.uniti.com, beginning August 9, 2018, and will remain available for 14 days. At this time, all participants are in a listen-only mode. Participants on the call will have the opportunity to ask questions following the company’s prepared comments. to actual that from results in statements. like forward-looking remarks those would these and statements, could company remind today's you include projected The differ materially discussed cause SEC. to The with actual that company's filings could differ factors are in the the results

afternoon Discussions slides Chief financial posted with financial this can financial will current include during go we Please the the website on non-GAAP dated like to materials to most Gunderman. those Executive measures reference principles. measures Mr. Form refer Reconciliation accounting not ahead, accepted certain accordance Group's to call the generally on you to found directly will today. company's prepared Officer, that during comparable the Kenny turn remarks our GAAP and would now over to those measures Our encourage this Gunderman. in were in I call. X-K be call also of report Uniti

Kenny Gunderman

for in Thank Please transactions you. Good joining. we announced the presentation. afternoon, that slide our are to demonstrate two continued turn we afternoon, everyone momentum This and thank experiencing. you X

The transaction transaction our the acquiring purchase first leaseback fiber acquisition fiber with potential. and of provider a attractive is CenturyLink significant represents another from portfolio cable example previously first fiber Media. CableSouth announced transaction like the up with is This and of lease

call. the a these leasing Uniti lease with speak and later Fiber of to specifics on Uniti portfolio lease today a Dark the existing fiber. the portfolio transactions of potential. The its is second This announcing of I’ll growing in we transaction MSO our agreement more leasing’s are up value national reinforces

deals up Fiber core CableSouth lease both However, M&A were and I in of Uniti’s Dark highlight one proprietary reinforced business. MSO want lease and which our to transactions competitive advantages and that negotiated

up usage allow fiber foreshadowed, customers. our to structure and This provide structure for acquisitions. These to to set residential retain acquire expands we've interest partner fiber operating priced our valuable to OpCo/PropCo while see infrastructure continue our greatly unique rights, use increasing continues attractively to also lease structures service in Uniti including we As REIT opportunity customers structures.

an sales X.XX bookings leasing were for carriers, update and MRR the bookings Uniti from wireless XX% four and XX% local government, during of in for results a second primarily to the and were XXXX. enterprises, quarter over bookings bookings came Dark just quarter XX% from tower. fiber increase wholesale MAR, national provide on prior our now Wireline million from sales for schools. second the the Fiber our to of the sales me Let operational quarter. quarter XX% the

part the is demand big It deals. We that our our continue a from in quarter cells is and to bookings all wireless somewhat small pursuing markets. quarter backhaul to see as important robust anchor large to carriers small fluctuate for note activity will business backhaul our of cell

permitting ready them related as and delays small of rings Fiber large as MRR our installed with remains we first in funnel relate delays for The the sales fiber a the of of compared when and to cell X.X upgrades installed Fiber transactions second to levels types these XX% and projects. some bulk the not of our customer as of half the construct we MAR strong to relating to Uniti projects. on as Dark quarter be higher expect bandwidth backhaul year during second Dark being half. Our of a accept XX% well to bookings some million XXXX to and sites result

Dark Dark majority Fiber and small that our cell moving However, of of previously projects as are all expected. important of emphasis these existing with cell it Fiber are Also, small half to the and expect we year XXXX the by the and deployments we is these completed forward projects will to construction projects in revenue second still contractual. be now associated and accelerate vast this

now be be the they will though even delayed, recognized So they may in near future.

fully in run was and monthly revenue represent revenue. deployed rate for million X.X of churn the contracted basis quarter XX approximately rate million Total X.X%. a XXX Our million these of of projects resulting churn

Fiber half We expected elevated disconnects in the somewhat [indiscernible] be churn to we to the scheduled and work first year as of through Dark conversions.

expect in So return will of the range year. X.X% we continue leading churn of monthly the second industry to half the to

the reducing markets networks. on fiber further in by We the alternate circuit continue to legacy interconnecting southeast make progress costs

synergy early X project We million XX.X the target expenses complete expect over annual when in original in beyond XXXX. is of our and above savings

our strategy cell progress attractive capital continue on focusing expected is and previously projects, Dark about our Uniti million experienced we and our of half the of remain to Fiber of Tier-X fiber dynamics. with $XX we small at and Tier-X two be with we pleased credit some a Despite a markets project on the As and delays mentioned to investment with years. for temporary have payback this

to activity Turnings in the we continues towers ramp completed U.S. quarter. our to during as new the XX development towers,

towers Latin stands total towers. XXX at We combined the tower America in Mexico in and now also our five count added U.S. and

of to continue see and co-location leases and U.S. tower We portfolio Mexico up both our lease of our remain on activity the pipeline strong.

wireless infrastructure five call agreement term of small over cells looking now macro Mark. within to I that carrier the be locations the on and belief mass excited we this the recently a turn will the vendor release our industry towers. diversify partnership this co-locate towers major years. it will particularly tower carriers multi-product our our further highlights of signed to reiterates We're cell small macro their With about agreement wireless that fiber, and to equipment it including example, the in an and their national U.S. are offering As with a relationships value and initial

Mark Wallace

on for opportunities long good afternoon continue of infrastructure. array Industry capitalize the present Thanks investment be an to across to all cycle and our and dynamics with healthy Kenny, everyone. businesses term us of communication

PLR favorable as rents are a from a weeks receive we our ruling that from the significant The few earnings to maximum qualifies quarter income We with a our our is of efficiency second this strategies private confidently that and were structuring to portion IRS pleased execute real reported ago us tax the growth solid afternoon property. substantial organic establishes with expectations. results creativity. TRS as clarity in allows that and confirming letter it recent our mentioned consistent M&A As release

certain detail in a start our in guidance let period. quarter our through you impact transactions from I'll full-year to of these While future as XXXX fiber with will were we but mentioned, in the the favorably me reduced Kenny and walk moment, timing delays, deployment contractual closing related more second these items revenues results.

the from million adjusted X.X Net mark unrealized on of AFFO after Slide XXX or been to $X.XX revenues These XXX attributable per agreements. AFFO quarter Turning reported five, net X.X loss for of integration had adjustment we $X.X per share was to common share both diluted of related EBITDA charges common attributable common to market quarter consideration million share. the loss and included consolidated EBITDA. cost AFFO our adjusted million for of diluted of cost Net shares related to transaction and transaction and XXX related consolidated $X.XX. excluded million, contingent and loss million to the million,

network million capital improvements of revenue for and million our XX% Our million cell the directed our for EBITDA the high of by was their include X.X million. during of success by adjusted made X.X Uniti realized XXX.X reduced realized quarterly Uniti XX.X over. the churn million million approximately to of the representing was cost rate million an reported of deployment incremental under $XX and small improvements. margins just annualized million million quarter. cumulative our of over and CapEx XX.X quarter fiber of were second and leasing with off achieving $XX quarter. to Dark The margins results the major we X since adjusted with delays cell amount Uniti given spin based Fiber segment revenues $XXX adjusted net savings XXX.X Fiber EBITDA which small bringing Windstream run adjusted Fiber towards revenues These capital EBITDA Dark XX% projects. aside EBITDA million million XX.X

related quarter in quarter the principally X.X net of of Mexico. CapEx the was revenues. encourage during XX X Maintenance We also off for is savings towers Uniti incurred U.S. X% initiatives. CapEx or the in of integration X.X million million our to contraction Towers which and the completed

In Uniti we January acquired U.S. addition Uniti development tower we for to loss completed development in quarter. included one at Mexico items was and negatively $XX.X XXXX. Towers revenues total towers completed quarter million second quarter. closed in of EBITDA XX since X.X completions Latin and for XXX bringing in XXX million end quarter on Uniti approximately the in second development. and had two a NMS service acquisition of Towers various X.X the XXX and adjusted the towers of NMS stages XXX results impacted the the Towers America quarter. during in CapEx of total for towers in reported the that of million

is the non-cash The reported U.S. calculated period include a to rent only operations. initial in accounting charge $XXX,XXX over a freightliner periods. was to freightliner arranged related of First renewal and previously correction not which term for adjustment our a confirmed

million. projects bringing by off costs to date development total wrote customers of canceled $XXX,XXX year we were $X.X our to to Second, related that charges

costs that mentioned we believe some As these are last quarter, recoverable. of we

we until to regarding have an we come However, costs of agreement the these with amount customers all charged reimbursement. our of

X updated items, for Excluding to breakeven. second slide guidance. million our have the and quarter XXXX and Please adjusted these would EBITDA Towers and will I cover near two $X.X Uniti revenue turn been

updated transactions the for We expected based current have and close our Fiber on Dark XXXX outlook lease CableSouth dates.

of outlook at estimated expectations, on Leasing factors. transaction, other of changes the regarding the the team tranche and TPS has Uniti been fiber based the assets timing impact operations up of current lease California and fiber addition, the our deployment assumptions date in adjusted close In

allocation is future market transaction could acquisitions, costs. to our presentation. current and earnings the current our of and other results acquisitions statements. and materially transactions, outlook outlook factors. excludes to A release included forward-looking capital is reconciliation subject price these finalization Our any our in adjustments outlook to Actual in purchase later based this on our guidance related from prior Furthermore, differ

a our for Uniti midpoint of rate with XXX over million outlook at Starting of full-year segment. full-year represents Our includes the levels. following each growth pro X% range, guidance Fiber, current our XXXX forma of outlook revenue the

rate be XQ approximately quarter. and fiber full the approximately the Adjusted XX% at XXXX range year core the to EBITDA a million margins core to for midpoint Our annualized revenue fourth for long-term expectations our with expected be the with annualized of for consistent XXX revenue XQ XXXX should growth X% is margin of growth. XX%

run annual rate realize year off savings XX and savings to aggregate exit expect of with cost about including cost this We million $XX will an million. of XXXX net

We million year Uniti years XXXX. be projects. invest integration about XX CapEx over Dark CapEx about million small be next Fiber expect the Net also at should and million will about success this XXX in in to Fiber towards $XX for three midpoint XX% cell directed the of which including rate

X, to revenues Slide about to XX reported Turning million. Towers of X we adjusted with EBITDA now expect XXXX million about in be

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

complete construction to towers Towers this about Uniti the expect year. XXX of We

Our guidance million is million. Uniti capital XXXX Towers XX spend to XX

today, basis. X. the California Turning to EBITDA of South close adjusted on EBITDA and we $XX Fiber close the and combined respectively and midpoint. million assets CenturyLink, assumptions the Uniti Dark add $XXX million at CableSouth to Uniti TPX lease slide revenues transactions million the adjusted on expected timing announced XXXX TPX, Cable $XXX regarding revenue adjusted $XX Based now to and an are to regarding million be of expect updated on The the expectations the and transactions Leasing year Leasing full our we of to

EBITDA For about expected and will $X on up. lease adjusted in these million as revenue reported closing transactions date XXXX based and add respectively

to Turning X. Slide

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

the and lease expected $X.XX on at including have pro TPX, transactions to XXXX, X, share. increased midpoint would CableSouth close CenturyLink $X.XX diluted January by our forma per that AFFO Assuming up about

XXX.X assumes guidance XXXX shares. common of Our for share average weighted outstanding million

for key reminder our our the are guidance in appendix to a of ranges presentation. components As included outlook

current well XX, deployments Turning provided California most as small our XXXX due to a midpoint XXXX combined of related TPX XXXX timing equivalents our assets in date agreement. as Fiber reconciliation cash change estimated of our other out of to quarter outlook have to we and end, of pushing have lease capacity last, is the our $XXX cell Slide under Uniti to prior and outlook, we million midpoint Dark guidance delay and unrestricted the cash closing within undraw And approximately the Leasing. credit and the ups revolving at

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

partners from Our opportunity and these capital discussions Kenny private considerably mentioned favorably has progress continued with our expanded set has as discussions. to

will partner back discuss Our one confidence to the that the today's in successfully more more future. to increased I'll Kenny to investment able transactions be And announced turn that with certainly has depth. of now opportunities on call in

Kenny Gunderman

Mark. Thanks

with into Mississippi. in call, is Turning in CableSouth a earlier Slide XX, a internet, held telephone services leaseback cable, provider to which we privately the Louisiana fiber, entered Arkansas, sale with as and agreement I mentioned and

for XX-year in and minimum miles lease Uniti will $X.X a leverage X% plus master chest the rent lease. rent annual ratio million strand net coverage is that a XX,XXX well Uniti protected $XX into over acquired covenant in triple enter will and annualized later. included million a with simultaneously pay We maximum

to margins will create the Our yield flow The generate X.X% investment EBITDA XXX%. will unlevered initial structure XX% triple over starting lease term. adjusted lease net free over and at increasing cash of nearly cash

network In Uniti Uniti become savings be as will of Arkansas, to mostly is strand exclusive southern currently CableSouth Louisiana, Fiber, Fiber’s fiber miles there which is off-net X,XXX adjacent to across so footprint. immediate that provider will on-net. Mississippi have traffic will and Uniti use addition, an

OpCo/PropCo acquire will as serve to strategic pursuing a This targets CableSouth allow partner Uniti Uniti customers. taking on fiber and in other to non-exclusive structures. valuable acquisition will Importantly, additional without residential

close in third this transaction We year. the of expect to quarter this

two the XX, Moving route XX,XXX fiber. national to years XX,XXX Uniti Fiber slide delivered XX,XXX fiber XX,XXX related strand of X Dark tranches. for XX $XX existing from this and lease will miles. agreement almost this Altogether agreement remaining The MSO we've quarter miles delivered strand approximately in represents year miles upfront term annual on total miles fiber in is to the executed million Leasing cash a approximately fiber lease of payment the fiber million. customer a With strand covers the of with in revenue XXXX. with be The and early this fourth or a of

of will fact six and the fiber contract see see over strand million Uniti On updated as of revenue of we very over work. network well in network, have you Uniti Leasing’s the miles sales for XXX which to in We Uniti Uniti Fiber’s Including demand and slide continue funnel strong our now months value footprint million Leasing and in TPX million and as CenturyLink transactions XX, Leasing XX annual for than less transaction. our CableSouth in includes from from X.X have service. fiber development

of Turning assets the unique telecommunications slide portfolio a and infrastructure. own we to segments growing fastest of to XX, some

cost attractive our business yields all capacity leaseable is classes. incremental across tenants drive units our of all of we and relatively new asset small, of have can significant adding We across because incremental

even take because are that from PLR as ranging industry set. repositioning ready valuable discussions opportunity The think position We now it's has partnerships time. In organic and I sustained OpCo/PropCo of us. joined expect these outreach to as capital assets strategic plethora participants will well transactions expanded an portfolio led years. creatively currently to closing with growth that ranging question. increasing operator, commercial number our strategic emphasize has to certainly M&A want will recent to portfolio value we our private for of Group the about and options With Uniti available The to we for be from over many

Operator

[Operator Cusick first from question of comes Philip JPMorgan. Instruction] Our

open. Your line is

Philip Cusick

the start I wonder the by the discussion asked conclusion? the was IRS expanding extent and if what you on of of on Thanks. was being the can PLR, exactly what

Mark Wallace

that property. of Phil, Mark. arrangements the their we are case this concluded contractual from in different each the the that on rents asked those fiber. to us fact in generated In revenue types real is IRS And PLR the five to related give arrangements PLR from are guidance

specifically to is all circumstances it of say ruel use would believe have use facts of the their specific contractual but general that portion the presented of we that submission is, say a the get So of they PLR systems. and fiber first - outside revenue fiber the too would do as this one request, what would the route. fiber they and the contractual I capacity the common over in to the all where for I of [indiscernible] say that's that exclusive arrangements first involved I specifically, limited arrangements addresses use into the five but cases, the to right a want I'd is generally five I all of of a tenant the that has be dedicated characteristics don't

provides is not operate and Secondly, third, fiber. that each connection own in provide each leasing it permitted And a in REIT say the then generally would otherwise I that the in by case operated to case tenant. TRS services any would equipment with customary is

that's summary I So the give can you point. best at probably this

Philip Cusick

Pretty that said of new Was with existing comprehensive, wireless was second, And deal. signed carrier, macro on that okay. all towers for your or That's deal tower helpful. with towers, the just a existing you a you then some all subset.

Kenny Gunderman

Kenny. it’s one, that take I’ll Phil,

our growing the as on discussions towers a of and existing of I is towers to fiber we're ours so the this portfolios. tenant think co-location number growing doing work in good large that's and applications a And all, of tower, have led First a lot an very partly them on existing doing customer customer the job they to a are on of already for we're co-location MLA. U.S. for They

it MLA of comprehensive a a we discussions. small us on of to logical the eventually the of discussion existing fiber, and between to backlog because because about the cells relationship added the two led So

all So, already them, because of one macro cells pleased about relationship had particularly we're which wireless covering - tenants they're for. been it which of some the on previously deploying covering towers relationship small all covered that is it’s our a small cell comprehensive this for deployments comprehensive we not and carrier

the So, and for that we the be now three small small is for. I the carrier fourth this were that we will work deploying in doing mentioned of four think past we cell cells

Philip Cusick

Dark possession. can, the sounds why I then, building some to God – on you if understand of time? not don't really I background Fiber or there? ahead in take you delay it were you understood. ready And were was customer build lastly building that were give like the me you it Can schedule

Kenny Gunderman

of Phil. a bit both, Yeah, little

So single the we’re is particular largest this projects of that project the X referencing.

small construction build $XXX This that there's it's project eight particular is So over - projects, was basically Dark Fiber started year is one cell ago. million a of those.

ready the the and sites isn't as on And doesn't can and this not you to when customer a year terms into and so two always of it's little a may build our the a essentially on ahead we're up ahead, make-ready site. behind. if case, perfectly the so same with bit the permitting the in And carriers, available at packages our we're times bit the imagine, ready capital cycle, match having getting largely half time at the there times just being in sides adding timeline time, at little be procure

of just been given combination those. ultimately a it, some and but and we're the there's different So delays of it's working project of through size complexity the things, the

Operator

of Our from Flannery Stanley. Simon next question comes Morgan

is line open. Your

Simon Flannery

but into leverage, be good sheet, like about obviously Mark, what you just thinking look options and kind the some Thanks. the are CapEx to talk do the of the is that? here, committed that, about for could got of balance in where how you liquidity you you’ve various your with some flow in what for funding the XXXX are orders of backlog want cash

Mark Wallace

and line kind now capital even as we and on will been as also good We and certainly mid-term do acquisitions public that to around indicated good indicated point, that. X.X structure and eventually fluctuate capital your our target. markets then have before, net some to turn and access access out And I X we capital to place. permit capital So, have we’ll sources we've wise number very of smaller that’s private in I but financing said had as very well. leverage funding to the recently, take I've have the that will the down times,

a look So can when very think an capital place as manner put from execution standpoint. we permit do we the to and it’s in in sure we’ll I’m appropriate structure well efficient that

guidance into carry finish. got In, Fiber and we've got getting XXXX, along I've that earlier small that projects, start without XXXX projects we’ll into too the we've said couple early will into Going as the large XXXX, a to much Dark cell XXXX. over

to Uniti a basis down do and capital levels call go expect to I from eventually would what XX% I down in So revenue standpoint. of that Fiber the XXXX normalized on intensity maybe should go intensity starting capital a

Simon Flannery

towers the On side?

Mark Wallace

be on Well, time tower to business. $XX five thought that we margins And the consistent last be revenue our peer easily we scale, side, with grow cash additional years over tower million business the tower flow certainly group. could with the could next indicated

kind same are depends pace in now XXXX that - I would the expect at So we five-year on to right build period. really on we currently build or I’d say towers of but it say would that the

forecasting expect five let’s still least the to say XXX year us to are next build at years. I build towers per over So or

the So, probably build given rates. capital fiber will the think I stay intensity same of the business

you know, to their start as well. come then with as come towers on those tenant will up start lease and additional to anchor However, all with also up

cash additional coming flow on. maybe there So

Simon Flannery

detail more there? on resolution you line do the Can explain to issues, those of delays, you some I deployment sight you think can have permitting you and just referenced in clarify

Kenny Gunderman

Kenny, that Hey one. Simon, will I it’s take

markets. are first tier-X small of of first many we're markets, cells. And issues related So, to the really largely our permitting all, in in deploying cells those markets, ones the small

to advancing technology, explaining cetera. And towers, what the the et there's deployment really analogies some educating new time municipality is. on the lead the – the ball fiber analogies just with product so associated to the on And

So, lot go I that of that explain in The off the eventually contributed these But XG, the that having made. think municipalities. explain we're when conversations what light small has that a you conversations new delays. the fact and really progress to cells benefits of are you bulbs is

important to with is are respect now that forward all we markets. thing your most the question moving of in these so, And

So, we've worked time delays through now and real we're the progressing.

Operator

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

is line Your open.

David Barton

I a lines. couple guess I've along similar

Mark XQ that just was So, going is consistent outlook now was in be is going and out we or to ten we said growth expectation. the think trying I to XQ I be ten really to you said the over going to outlook. you figure were of that that kind about XX with X% versus before growth for looking and of your new eight back delays the kind about and lowered just the we're was

the The have contracted. second contracts, delays on said one these when you was just revenues again

fiber on of about instance to it system PLR, even been the that same And SonicGear and revenue mean Phil's start that confirm to does the gets working out there's Thanks. that REIT tenants it's last to not rumors I of to just just about well. that the total for attached that question the there of qualified though someone to not the but it kind recognizing you're revenue about question going the amount back of then will remain as been kind on has jump just the that income. does or electronics being ready going So shifted part back? PLR your wanted PLR really that touched is on mean

Mark Wallace

this Mark. in Dave, to is order. these I’ll take try

range on was First, of communicated year year the growth X% we be XX%. of core rate thought would that the fiber already over kind to what we’ve kind

think otherwise just is delays I midpoint Dark is that - we would of XXXX. decrease had in kind and at so previous we related solely the of we Fiber be So what small to really XX% from communicated cells

it's to been range delays discussed changing the is what no, by year, outlook in of we So, terms year think we've just earlier. we're that not that our impacted we've

is intend simply revenue say revenue-ish turning total question contract not we're value is be the really site the revenue so delayed, is and will that to On it starting the shifts say we under the other over we be the part what may when it point and but about our the the your contract, - so the to recognition saying revenue we to that are contractual, activation, what prior - will the recognized. I PLR really property but owned regarding the rent question your of that it terms as the to in that to from real PLR PLR, own regarding revenue our the contract we the regarding over deemed And still be so being then with said deal with the be PLR, and we what equipment, TRS. equipment the be associated what any and agreed that would in total had

at fiber from holding is you the equipment coming while say - the off the that value know relatively itself coming So leasing relative TRS the revenue the of the revenue to equipment really and addressing as the nominal. of

David Barton

partnership coming trigger you – on as the at or the something of kind one it’s expecting of quarter least like of been said, future. the of kind kind rest pulling or into like or be a, sounds guess to coming in off happened was this the that kind your, future? one feel in well, And the that deal, just my you capital year I last and of like Should kind quote just and near we sounds you’re close the like brought up of exercise last then that the private it you going quarter you’re this

Mark Wallace

more. active it’s And I one be discussions. comments, So said certainly I’ll in I’d my not as or say we’re off into the say, in it could future. very

it’s be said, Kenny X X, than I’d very there certainly as not think I at opportunities think, here. So realistic are it, or we’ll year. quarter this don’t I But about talking but think that if more next so, numerous I know it’s least if

So as well it’s probably this year as as well. next year

Operator

Our from Niknam comes Bank. with next Deutsche question Matthew

Matthew Niknam

if One Just on the M&A could. pipeline. I two

if just Wondering a talked past, the and you in can think us secondly, getting are get acquired target. give the mentioned to there. you you’ve fiber then timeline to diversification there Fiber you you about, the of MSO held lease? terms I wanting leasing. when within part lease, of XX% in anticipate Kenny, Dark that any updates Uniti part Is was as And that the Windstream of revenue

Kenny Gunderman

I’ll take of those. both

said the grow. to get – still and our still ability XX% still on our working opportunity diversification in set there. The that’s and in continues target, So our towards to we confident target, we’ve that, feel XXXX still,

partly related in it’s so the residential asset to some we’re and addition that OpCo/PropCo about our may requiring companies. increase together partnerships been The more operating structured type portfolios partners. is So these deals, acquiring opportunity partly, to be type partner set an where acquiring talking companies and leasing structures just of we’ve Uniti in

you get about that can number of it companies, types businesses that, be [indiscernible]. the greatly of with but it think fiber order could we fiber just in to transact If expands not pure

have led So the that more transactions we’re types one on we the lots and of a interested space couple transactions. in these to industry needle of move transformative very that’s on. big a of in focusing of or focusing assets tremendous also is amount can way There discussions capital transaction capital opportunities the where in a there and infrastructure the private on type

Windstream. our So the is priced opportunity assets the lease, to do we to and about and good not attractively are MSO respect to there so the all leasing assets there say, we’re up reach get that XX% target capital that that assets feel question some those include still help your think that to exclusively currently available we we us leasing are diversification to there. about With

portfolio. we So these acquired up separately Uniti have now are that leasing that the met, that make assets the

Operator

Frank from next comes James. Louthan of Our Raymond question

Frank Louthan

other With inherently different sale for in maybe give XX that, to MSO your easier us business in X on is some, that that an more a for one likelihood from anything how a leaseback, there learn next another closing color or structured other anything maybe can the versus process there telco and little leaseback, working little with MSOs make cable of you months? you with additional the is the that fiber pitching

Kenny Gunderman

structured about protections that’s help The improve on With to previous answers technology how us, the, we’ve relative lease lot. to I absolutely that on continued ourselves, the comment your can learned leases. the the protections Mark I’ll of respect would comment comment short learned our a let how to and we’ve what say but for is, that. we’ve and and some

as not that companies. think about nationwide particular which in The lease I The of but reflection with some of opportunity. public, just conversations this itself. now is in a cable and for is transaction, and time, we’ve having we’ve been MSO talked

a more a is conversations And and think one to the So deal that I of a cells these valuable be, small ultimately, is backhaul. come. and like indicative as for could will they fiber of it embedded lot utilized on ourselves as especially completely in some be company think takeaways of CableSouth that not are being reflection businesses of are there principal that focused of the is I

for used metro So, to markets what we X, think for fiber there of to usage us X deployments. optimize that XG of markets, in be call tier opportunities is are metro we tier lots

Mark Wallace

a to of Frank, structure, in other mean, we’re in that mean, of to other terms the will may some of and transaction, different us that of negotiating these different the real I agree even of structured do broadly leaseback in are transaction restructure, kind of of see we’re elements evolve elements you have counterparty, leases additional we’re from future, I cases, we or spaces. elements in picking really some way what that kind Kenny choosing kind and what sale or with potentially how and you start I see starting time things estate leasing we every with kind any said the and

based So terms and needs we’re of our terms that also sure of counterparty’s in adapt trying we’re protected needs downsized in we’re to making trying on adapt, to scenario.

Operator

Our next from Brett Sachs. question comes Goldman Feldman of

Brett Feldman

I streams support go think when I of to you practical the indicated optronics answering revenue remain that that will significance of back TRS. the were Dave’s some the would you in question, PLR, the those

how that the into QRS, you And just So M&A improve forward point? converting is guess that are operationally, the your flexibility? taking and does and then it an from actually income this standpoint, going I

Mark Wallace

Yes.

think migrate need say, ability we I the assets more what TRS versus is I in to we to overtime, to things should we and in those TRS so I fact what certain qualifying are assets be today us So income. more going the organically in currently M&A, couple terms think both as their have of have a give one, assets about income in specifically the and it's what is of mean,

evaluate So from certainly, us non-qualifying us and the question to standpoint, entity whether move it when qualifying those or have a QRS. the out figure when them allows we to the at from to be to confidence and are is close assets we to we allows of revenues then it's and also a or the decisions and an -- the the assets. in move and not income, data TRS what the M&A level income into also the to once the the target right have, place close then the and what make certainty And not and necessarily assets over it later again, that certain

say, think lot I'd it a, the us with So happy is, just we're say, PLR I gives I a very we're do ruling. it think of,

a think valuable both today very over will to very it it's be time. I us, -- and

So consider a be be with to we've very good very what got we’ll that. ruling I'd we and say, good

Brett Feldman

correct? a about still to making ask looking I question. there for think if And decline adjust could are items. had talked follow-up tower in a you Is your that at if we release, adjustment that, the revenues, And I rents. Even sequential if tower all the was one-time the some what's I because a behind you so, that? are you

Mark Wallace

through that goes line to that is the the – related So I rents revenue adjustment line. actually the rent revenue the, goes believe so -- so on run straight -- through believe I actually tower

be that's So would depressing actually revenues.

Brett Feldman

there of some revenues the a there is because line quarter, were were but So that like the made, that straight last in looks it point? step down, you adjustments

Mark Wallace

we rent, also include getting periods including when you and some we cases, In over leases were entire the renewal is periods, which renewal – the you're escalators, anchored shipment when calculated were we of therefore were then amortized -- period. being Yeah. a period longer

so the to had we was adjustment So correct to that. --

Brett Feldman

availability, ready one, some range to were quite on caused does and were of lease you of clear, in customer reasons financing to this that building, their order walking commence that the take thought a last the sure sort complete payments of wasn't I to need said delivery make to One or I comment. that capital you you through customer I’m that a fiber misunderstand I just

Kenny Gunderman

Kenny. It’s

You just capital, need and carrier complete capital financing. access a available, around it's whether but really national a that of don't is large it’s capital. wireless This timing the to more there's of with to they but prioritization projects didn't very a it's various a not mishear, of got country they've the question

predominant it's So, reason experienced. but think I that's we've for that the delay, one don't the

Operator

There Kenny closing are back call over like remarks. I’d for no questions. turn the to further to any Gunderman

Kenny Gunderman

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

Operator

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

Uniti (UNIT) 9 Aug 182018 Q2 Earnings call transcript