Q2 2024 Uniti Group Inc Earnings Call

My name is Lucy and I will be your operator for today.

Speaker Change: Today's call is being recorded and a webcast will be available on the company's Investor Relations website, investor Dot unity dotcom, beginning today and will remain available for 365 days at this time all participants are in a listen only mode participants on the call we will have the opportunity.

Speaker Change: To ask questions following the company's prepared comments it.

It is now my pleasure to introduce Bill Ditullio Unity, Vice President of Investor Relations and Treasury. Please begin.

Good morning, everyone and thank you for joining today's conference call to discuss <unk> second quarter 2024 results.

Speaking on the call today will be Kenny gunderman, our CEO and Paul Burlington Unity CFO.

Speaker Change: Before we get started I would like to quickly cover our safe Harbor statement.

Please note that today's remarks may contain forward looking statements.

Yeah.

First kinetic in unity have invested a substantial amount of capital and its network with over $2 billion invested since 2015.

These historical investments include backhaul fiber and ultimately fiber to the node.

In fact prior to starting the fiber to the home program in 2019 close to a 100% of all broadband customers that kinetic we're already served by fiber back these labs.

Each of these dis labs as a minimum one gig backhaul linked to the market level Central office and a minimum 10 gig link from that C O to the network core.

This historical investment helps enable kinetics, approximately 650 per home passing cost as we estimate that backhaul equates to roughly 20% of the total cost of building fiber to the home for others.

I'll speak more on our pending merger shortly but to complete our earnings discussion I will now turn the call to Paul.

Thank you Kenny.

I Didnt network benefiting from years of investment.

And Ironically incumbents are now share takers with fiber to the home after many years of playing defense against cable and wireless.

Thirdly over 50% of kinetics footprint is located in the southeast we.

We believe the southeast is a terrific place to invest from our competitive and demographic point of view as evidenced by our success at Uniti fiber.

Speaker Change: Just as importantly, 75% of kinetics footprint is 20000 or fewer households, enforcing our focus on tier two and three markets.

Speaker Change: Kinetic is also building fiber passing is a what we believe to be an industry, leading cost of $650 per passing.

Speaker Change: As I highlighted earlier, the historical GCI TCR investments of giving kinetic a head start from a cost and network quality perspective.

Our enhanced balance sheet and cash flow generation will support growth, increasing our ability to expand the fiber the home builds.

Looking ahead this combination will deliver additional value accretive opportunities through meaningful synergies and M&A optionality.

With that we'd be happy to take your questions.

Thank you to ask a question you will need to press star one on your telephone to remove yourself from the queue. You May Press Star one one again, please limit yourself to one question and one follow up to allow everyone the opportunity to participate.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question.

He comes from the line of Greg Williams of T D Cohen.

About those opportunities.

But equally importantly, when you when you hear what the hyper scaler say publicly about the opportunity around AI, they're extremely bullish on it.

Speaker Change: <unk> ranging from.

Speaker Change: There is greater risk to under investing than there is to over investing in raising capex guidance and materially higher capex related to AI next year for example, so.

Speaker Change: Just think that we just think that the opportunity is meaningful.

Speaker Change: It will persist for some time and we expect to achieve our at least our fair share of it, especially given we continue to hear a trend of the Hyperscale is looking to grow into markets that have less stressed power grids and less stressed distribution grids.

Speaker Change: We're interacting more and more with our.

Speaker Change: Achieving positive free cash flow goal in 2026, particularly the capex outlook and how fiber extension plans might impact the current outlook. Thank you.

Speaker Change: Good morning shift.

Speaker Change: The first one and then Paul you can take the second I think.

Speaker Change: A lot of information in there for sure pro forma financials.

Speaker Change: Which obviously you folks have been asking for it so I think that should be a focus area and there shouldnt be any surprises.

Speaker Change: And we look forward to engaging with the market and answering whatever questions arise from that but we still feel very bullish and confident in the forward trajectory of the trajectory of the business and Paul will comment on that as it relates to the bridge to free cash flow positive.

Paul: We never sit on our hands when it comes to having strategic dialogue.

Paul: We're we're regularly constantly engaging with the market and even when transactions aren't being announced publicly which up until recently there hadn't been any.

Paul: From our perspective.

Paul: We would always say that we were very active regardless.

Paul: That's important to note because it's hard to flip a switch off and on on M&A, you need to stay engaged with the market and Thats always been a core tenant of ours and I think something that will persist going forward.

Paul: Paul you want to take that.

Speaker Change: This is Paul I'll take your second question.

Paul: Yeah. So.

Paul: What they are today.

Speaker Change: And then.

Speaker Change: Also for that Windstream business, continuing to drive efficiencies drive tdm cost out of that business, which is a big part of their plan.

Speaker Change: Over the next couple of years.

Speaker Change: Great progress with regard to doing that we saw some nice efficiency gains in their costs this quarter.

Speaker Change: <unk>.

Speaker Change: The results that were just published today in our 8-K saw some good efficiency gains in that business. So continuing to drive that through so it's really just executing on that plan.

Speaker Change: That's in front of both of our companies that we are executing.

Speaker Change: Executing on today.

Speaker Change: One on your telephone again Thats star one one to ask a question.

Speaker Change: Our next question comes from the line of Frank Louthan Raymond.

Speaker Change: Raymond James.

Rob: Hey, guys. Good morning. This is Rob on for Frank He might have spoken to this earlier. So I didn't catch it are you expecting to do any builds for bead within uniti fiber not within Windstream in 2025 or is that more likely to be a 2026 event at this point.

Speaker Change: Okay.

Speaker Change: Good morning, Rob So we're currently not.

Speaker Change: Having conversations related to bead at unity, the bead related conversations are entirely at kinetic.

Speaker Change: As an aside gives us the ability to communicate.

Speaker Change: Directly with Windstream about that as opposed to being competing bidders.