Q2 2025 Uniti Group Inc Earnings Call
Good morning and welcome to today's conference call to discuss unity's second quarter 2025 earnings results.
My name is Gigi and I'll be your operator for today. Today's call is being recorded and a webcast will be available on the company's investor relations website. Investor.org beginning today and will remain available for 365 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. It is now my pleasure to introduce Bill dulio unity's senior vice president of investor relations and treasury. Please begin.
Good morning everyone and thank you. For joining today's conference call to discuss unity's second quarter 2025 results.
Speaking on the call today will be Kenny gunman our CEO.
And Paul Bullington, Unity CFO.
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,
These statements include but are not limited to statements regarding unity's fiber Bill strategy.
The business's growth potential.
Efficiencies from the debt silos combination.
You need these 2025 Outlook and other statements that are not historical facts.
Numerous factors could cause actual results to differ materially from those described in the forward-looking statements.
For more information on those factors, please see the section titled Safe, Harbor statement in the accompanying presentation and the risk factors section.
In our filings with the United States Securities and Exchange Commission.
With that, I would now like to turn the call over to Kenny
Thanks Bill. Good morning, everyone. And thank you for joining
We're very pleased to have closed, our merger with Windstream.
When we announced this combination in May of 2024, we talked about how fiber is the mission. Critical connective tissue for all current and future Broadband delivery.
Since then, we've not only seen a validation of that thesis, but an acceleration of positive themes that reinforce our views.
Since our announcement, for example, for the largest Wireless carriers in, North America have begun investing heavily in fiber to the home and we believe that investment will continue.
With Kinetic, we own 1 of the most strategic, independent fiber to the home platforms remaining.
And with a focus on tier 2 and 3 markets. Our footprint has substantial first mover advantages with fiber.
We've also seen the dramatic e of the hyperscalers as massive bandwidth Hogs.
And unity is 1 of the few truly, National Wholesale providers, able to support their growth in scale.
Importantly with our close to 5 million connected. Fiber endpoints by 2029, we will be substantial beneficiaries of the AI inference phase, which is fast approaching
Lastly, since our deal announcement, we've seen a material Improvement in the regulatory backdrop for fiber providers, including copper to fiber. Conversions
So with that we cannot be more pleased with our transaction. And how well positioned we are as a premier Insurgent fiber provider.
Before jumping into the quarter, we want to spend a little more time on prepared remarks than normal. In order to give a refresher of new Unity.
Starting on slide 4. First we are going to accelerate our investment in fiber and expect to pass 3 and a half million homes with fiber within the kinetic footprint by the end of 2029.
And we have no plans to stopping there.
We also expect that that about 75% of our total revenue will be fiber-based by 2029.
That conversion to fiber will further fuel, the strong core, fiber, revenue and ibid dog growth. We saw during the second quarter.
The Proven success of fiber-based products, especially when you build first or early in a market, like we're doing at kinetic and uniti fiber allows for predictable, steady growth with increasingly improving churn
Our aggressive management of Legacy products and services will allow us to eventually achieve stable, Consolidated revenue and adjusted evida growth.
We Believe long-term Blended penetration of 40% is not only achievable but looks increasingly conservative
Slide 5 shows key metrics, we plan on presenting each quarter.
We currently pass 1.7 million homes with fiber within our kinetic footprint. And we expect to be at 2 million homes by the end of this year and 3 and a half million homes by the end of 29.
Even before taking into account, our enhanced build plan, our percentage of total revenue on fiber is already around 40%.
And we expect that to increase to roughly 75%.
Also the percentage of total revenue that comes from our Core Business. Kinetic, and fiber infrastructure is 80% today and growing to 90% providing a substantially future-proofed business.
As demonstrated on slide 6, the growth in each of our core fiber. Lines of business has been very strong and we expect that to continue giving the indisputably superior nature of fiber.
Given this pace of growth fiber will soon overtake Legacy Services as the majority of our revenue and evida.
It's important to highlight on this page that we will face headwinds from Legacy services that will weigh on Consolidated revenue and iodine.
With that said, I'd like to highlight 3 points.
first these services, in no way, diminish the value of our core fiber business
Secondly, within a relatively short period of time, the mix shift to higher fiber Revenue will make the Legacy Services increasingly in material.
And thirdly in the meantime, these services are generating predictable, free, cash flow.
In order to grow, we have to take market share and our Insurgent. Mentality is reinforced by very strong, NPS scores as shown on slide 7.
We're upset with customer satisfaction. And as a result, our industry-leading churn is our super superpower.
On a go forward basis. As we transition, the majority of kinetics footprint to fiber
Will also start to see material improvements in insurance.
Finally, we believe we have the right leadership team in place to capitalize on the opportunity ahead as highlighted on slide 8.
Our collective experience spans successful copper to fiber conversion stories, like Frontier and ziply as well as wholesale and Enterprise fiber.
And of course, we have substantial strategic and m&a experience for the exciting road ahead.
Going forward. We will we will report our results in 3 segments. The first is kinetic, which is our fiber to the home platform. Second is fiber infrastructure which includes uniti fiber. Unity leasing plus Windstream wholesale.
And our third segment is Unity Solutions, which is the business formerly known as Windstream Enterprise.
Starting with fiber infrastructure on slide 10. You can see we had a solid quarter of proforma unity and Windstream consolid bookings, of 1.2 million of mrr.
As we foreshadowed Wireless, bookings have been a highlight up 30% in the first half of 2025, compared to the first half of last year.
Our anchor lease up strategy within the fiber infrastructure segment will not change, going forward. And in and in fact, the economics, when combined with winnstream wholesale track right in line with our expectations,
Importantly, the hyperscaler deals we are pursuing on a Consolidated basis, are not only in line with these economics, but are tracking ahead of our expectations.
As demonstrated on slides, 11 and 12. We have terrific potential in this segment.
Our new combined wholesale, fiber platform. Not only has an expansive High strand, count network to sell with unique, Metro markets, and inner city routes.
We're also now have capabilities to sell a more robust product set of lit and dark fiber.
As you can see on slide 12 12, we have an immediate and materially enhanced set of customer msas to now sell that larger product set into
In fact, on August 1st winnstream, signed a 20-year iru with a major hyperscaler that spans approximately 500 miles on existing inner city Network.
The total contract value is approximately hundred million dollars.
This, this is a deal that we've been working on together for some time and would not have been possible without unity's network, and Windstream's relationship with the customer.
This cross-selling opportunity is exactly the type of deal. We've been foreshadowing and we expect to see more in the near future.
That's a great segue to our wholesale sales, funnel on slide 13.
On a combined basis. Our hyperscaler funnel represents about 1.5 billion of total contract value.
at Unity alone, hyperscalers have increased as a percentage of the total final from less than 15% a year ago to now 40%,
And that's on a total funnel, that's increased 80%. Since 2q 24,
the activity of both companies alone has been very strong, but the closing of this deal is an accelerant and we expect a nice ramp in the second half of 25 and certainly into 26.
Turning to kinetic this segment will now include all consumer wholesale and Enterprise customers that are located within the Alec footprint.
The slide 15 illustrates consumer represents about 60% of total revenue is and is expected to grow to about 75%.
And although, fiber-based Revenue within kinetic, today represent represents a minority share of total revenue by 20.
29. We expect that to be about 85%.
As I said earlier, this shift to fiber will result in growth lower churn and therefore predictable Revenue in iodine.
Slide 16 shows the Cadence of our accelerated fiber build.
As a reminder, kinetic has built a substantial amount of fiber to the note over the past 10 years and building. That last mile can be done, both both cost efficiently and in a timely fashion relative to many of our peers.
Also it's important to point out that the 3 and a half million homes that were passing does not include be nor any of that. Any out of territory bills.
We think there's a terrific opportunity to build fiber to the home utilizing our existing Metro Rich, uniti fiber footprint.
And taken together, we see a clear path to up to 4 million fiber homes over time.
More to come on that in the future.
Turning slide 17 as we've now demonstrated at Unity over the years. If you build fiber first or early to tier 2 or 3 markets, you have the right to win for many years into the future. And that same strategy is being implemented at kinetic.
80% of kinetics footprint is either 1 competitor or less highlighting the competitive dynamics of tier 2 and 3 markets.
I mentioned it earlier but kinetics footprint represents 1 of the last remaining scale platform opportunities to be first with fiber.
Also, as you can see, only 60% of the footprint has a national cable provider. That's offering a fixed mobile bundle. We believe that's 1 of the real highlights of our footprint.
Speaking of the bundle.
Turning to slide 18 is we've talked about in the past. We think a wireless bundle at kinetic. Today is a nice to have but not a must-have.
as this slide demonstrates, we're seeing terrific success thus far with our existing Wireless bundle partnership with AT&T with 18 times quarter over quarter, fiber, subscriber growth and approximately 50% Improvement in churn for those subscribers that bundle
So while we do not think of bundle is critical, it does demonstrate the benefits of the conversions theme we're seeing in the industry.
And we think this provides tremendous upside by combining kinetic with a more robust bundle in the future.
I mentioned the favorable regulatory roadmap earlier at the FCC but that's also true of our state pecs.
Of the 18 states. Comprising, kinetics footprint 9 have eliminated colar obligations with deregulation and expanded access to Advanced Technology.
In the remaining 9 states with coar obligations, we have the flexibility to provide voice services using the technology of our choosing such as fixed Wireless or fiber-based, VoIP Solutions.
So a slide 19 highlights by 2029. We believe that over 95% of our customers will be on fiber to the home directly or through alternative Technologies, like fixed Wireless that leverage our substantial fibre to the node investment.
This is 1 of our key competitive and strategic advantages and we'll elaborate more on that in the future.
Turning to slide 21 before I turn the call over to Paul, I want to talk about Unity Solutions which is a robust Nationwide, managed services provider to Fortune, 100 Enterprise customers across the country.
As I mentioned earlier, this business is is not part of our go forward, fiber, infrastructure, strategy. But is it still a very good business that generates substantial amount of predictable, cash flow?
While both revenue and IBA are declining, Weighing on our Top Line. As I mentioned earlier, a critical part of our strategy is to retain the most profitable part of this business, while maximizing cash flow,
We will largely exit TDM by the end of this year.
And we believe many of the customers. We plan to retain will be huge, bandwidth users from AI generated products. When the infraspace begins giving us a potential opportunity to move these customers to fiber.
Also, we believe some of the managed services products within this segment can be cross-sold into our Uniti Fiber Enterprise base as well as into the Kinetic Enterprise base.
Taking together, we believe all these things will flatten the decline of this business about 2028 resulting in an npv of over a billion dollars of Enterprise Value.
With that. I'll now turn the call over to Paul.
Thank you, Kenny.
Starting on, slide 23.
15 months ago, when we announced the plan merger with Windstream. We laid out our key pre-close priorities through the dedication and collaboration of our combined teams we have completed nearly all of those objectives, including
Our go forward, operating plan, the collapsing of the debt silos and the full redesign of the kinetic fiber to the home build plan.
And we are now set to hit the ground running at full speed as 1 company.
Please turn to slide 24 and I'll touch on some of the key second. Quarter highlights for both kinetic and our fiber infrastructure segment. As a reminder, our 5 of the home platform will continue to be branded as kinetic. Fiber infrastructure will include our current uniti fiber and unity, leasing segments along with the Windstream wholesale segment. All of which are highly complimentary and will combine to create a premier fiber infrastructure company with both National and deep Regional capabilities.
We are also now referring to the Windstream managed solution segment as Unity Solutions.
Both unity and Windstream make good progress. This quarter on several different fronts.
Starting with Kinetic, we expanded our fiber Network to pass an additional 52,000 homes with fiber. Ending the quarter with 1.7 million homes passed kinetic. Also added 19,000, fiber subscribers during the second quarter ending the quarter with 483,000 total fiber subscribers. A 15% increase from the prior year period.
As Kenny mentioned earlier, total, fiber revenue for Unity and winnstream increased. 10% year-over-year during the second quarter with Kinetic consumer, fiber, Revenue alone, growing 27%, which is consistent with the growth rate we've seen for multiple quarters now.
This growth is being driven by strong adoption of our fiber-to-the-home product, bolstered by the performance of our fiber-fast Dart and fiber-forward initiatives at Kinetic. The target is our newer and more seasoned cohorts, respectively.
At fiber infrastructure unity and Windstream combined to record Consolidated. Bookings m.
Approximately 1.2 million dollars with unity contributing 0.8 million of mrr to that total this level of bookings, that Unity is consistent with the past, several quarters.
Slide 25 highlights the sustained momentum we are seeing within kinetic. Fiber. Fiber penetration was up, 20 basis points, sequentially and 120 basis points year-over-year, while fiber, rpu increased 6%, sequentially and 11% year-over-year.
Turning to slide 26. I'd now like to cover Community Standalone results for the second quarter. Unity reported Consolidated revenues of 301 million Consolidated. Adjusted Eva Dove 243 million afo attributed to Common shareholders of 96 million and affo for deluded common share of 36 Cents, all of, which were ahead of our expectations.
As we mentioned previously, analysts consensus estimates for Standalone Unity were too high for the second quarter and 2 low for the second half of 2025.
At Unity leasing. We reported segment revenues of 226 million and adjusted IBA of 220 million representing an adjusted IBA margin of 97% for the quarter.
During the second quarter, Unity leasing net success. Based capex was $1 million as GCI funding for the calendar year 2025 was fully satisfied during the first quarter.
Adjusted EBITDA of $29 million during the second quarter, resulting in an adjusted EBITDA margin of 39%.
Unity 5 or net success, based capex was 21 million in the second quarter which represents a net capital intensity of approximately 28%.
We also incurred about million dollars of Maintenance capex during the quarter.
In addition to these Standalone, Unity results. We also wanted to provide a ProForm of view of new Unity Consolidated performance for the quarter slide. 27 provides this preform of view of new Unity Consolidated. Second quarter results,
Consolidated proformer Revenue was down approximately 6% year-over-year during the quarter primarily driven by the continued decline in Legacy TDM services and in unity Solutions, however Topline growth and other parts of the business was strong with fiber infrastructure growing 7% year-over-year and kinetic. Fiber-based Revenue inclusive of consumer business and wholesale Services. Growing 19% year-over-year,
As we continue to execute on an accelerate, our fiber overbuild plan, we expect fiber services, that kinetic will continue to deliver consistent. Strong growth quarter over quarter.
Please turn the slide 28 and I'll Now cover our 2025 outlook for the combined company.
We have provided 2 views of estimates for 2025 on this slide. 2025 as reported Outlook includes 7 months of Standalone, Unity results, plus 5, months of combined unity in winnstream. This is our formal guidance for 2025 and matches what was included in our earnings release that was filed earlier this morning
We have also provided a pro form of view for 2025 similar to what we have provided in Prior quarters, both the as reported and preform of views for 2025, reflect the completion of the re segmentation work at Windstream that has been in progress over the past couple of quarters and also reflects how we plan to present the different segments going forward, the following comments. On our 2025 guidance will be based on the as reported Outlook View.
beginning with Kinetic, we expect revenues and adjusted, EBA to be 945 million and 385 million respectively at the midpoint
We expect to deploy $510 million of net capex at the midpoint of our guidance, primarily related to the continued buildout of fiber within the Kinetic footprint.
At fiber infrastructure, we expect revenues and adjusted evida to be 1.1 billion dollars and 735 million respectively at the midpoint for full year 2025.
Although we are no longer providing separate formal guidance for uniti fiber and unity, leasing our 2025 outlook for both of those segments is unchanged from our prior guidance.
Our outlook for net capex at fiber. Infrastructure this year, is 310 million at the midpoint of our guidance and represents a capital intensity of approximately 30%.
As a reminder, both kinetic and fiber infrastructure consists of a highly predictable core, recurring Revenue base, that continues to grow and yield attractive margins.
turning to Unity Solutions which we refer to in the past as managed Solutions our Windstream Enterprise
We expect revenue and adjusted EBITDA of $320 million and $155 million at the midpoint.
Altogether. We expect Consolidated revenue and adjusted Heba of 2.2 billion dollars and 1.1 billion dollars at the midpoint of our 2025 Outlook with Consolidated net capex of 875 million.
Using the Legacy Unity shares outstanding that is on the cover of our most recent 10q filing and excluding the impact of the warrants that were issued to winnstream shareholders. As a part of the merger. Total shares outstanding for the combined company is approximately 238.6 million.
As we've mentioned multiple times already this morning, we are on a multi-year journey to overbuild, the majority of the kinetic copper network with fiber and we are greatly accelerating and expanding that fiber build plan accordingly. Slide 29, lays out our key targets for kinetic. This year, we expect to reach 2 million, homes passed with fiber. By the end of the year, reaching 45%, fiber coverage within the kinetic footprint. We also expect to add approximately 530,000 fiber subs and realize approximately 500 million dollars of consumer, fiber, Revenue in 2025 an increase of roughly 25% from the prior year.
in terms of cost per passing kinetic has historically achieved a cost for passing on strategic non-subsidized bills of approximately 650,
$150 range. Giving us a blended cost of $150 to $850 per passing over the life of the fiber build program.
Finally, I'd like to provide some brief comments on our capital structure slide. 30 illustrates how unity's cost of capital has improved significantly over the past 2 years. If you go back to this time, 2 years ago, when we launched our 10 and 1.5% secured notes, offering our secured and unsecured debt was yielding over 12%.
Fast forward to today. And our debt is currently yielding around 7% on a blended basis of 550 basis. Point Improvement in 2 and a half years.
Slide 31 provides an overview of our outstanding debt maturities.
Over the past year we have done meaningful work to extend our debt maturities reducing our combined near-term maturities in 27 and 28 from over 6 billion dollars a year ago to just over 3 billion dollars a day.
Most recently in June, we issued new unsecured notes using the majority of the proceeds to redeem a portion of our 10 and a half percent. Secured notes due in 2028.
Going forward, we will continue to be opportunistic in our approach to continue to push out near-term maturities and drive significant interest expense out of the business.
Also want to highlight that yesterday, we successfully completed the steps to collapse the Legacy. Unity in Windstream debt silos into 1 un structure completing. This debt collapse was a critical part of our strategy as it greatly simplifies, our capital structure unlock significant opportunity for ABS on the winnstream assets.
And sets the stage for optimizing. Our combined capital structure going forward.
Combined, net, leverage at the time of our merger closing is around 5.5 times.
And we expect to end the year with a combined net leverage of between 5.5 times and 6.0 times consistent with the target we set for Standalone Unity.
With that. We'd be happy to take your questions, operator.
Thank you as a reminder, to ask a question. Please press star, 1, 1 1 on your telephone and wait for your name, to be announced to withdraw your question. Please press star, 1 1 1 again.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Gregory Williams, from TD Cowen.
Uh, great! Thanks for taking my questions. Um, the first one is just on, you know, Kenny. As you move to the inference phase, how do the deal constructs change? I imagine it's a lot more lease up, uh, better margin, maybe lower upfront costs for you guys, but maybe there'd be more competition as well.
And you know what would the yields be compared to the you know, training data center yields. Um, second question, just on the funnel you mentioned. I think you said the wholesale funnel represents a billion and a half dollars of total contract value. What's your typical win rate on on a funnel? Thanks.
Good morning, Greg good questions. Um, I'll start with you a second 1. When
When when it and you specifically asked about the billion and a half of hyperscaler deals. And I would say, as we've said, consistently over the past, probably 18 months, our win rate, when we go after a large hyperscaler, deal is very, very high. Um, we are
Being very disciplined about which deals. We pursue. We're not we're not looking to go after every single hyperscaler deal, we hear about we're not going after deals that are built out in the middle of nowhere, that are not either contiguous to or strategic to, and some other way. Our Network, we're very focused on deals that are either in an existing Metro or near an existing Metro or deals that connect our, in our, our Metro markets to others or that are relatively close to our Network and give us the ability to expand. It strategically. And so we're we're being selective on the deals that we pursue. And and and despite that we still have a very sizable
Funnel. You know, the billion and a half. I'm, I'm pretty sure that's the first time we've shared that number publicly and, and when we go after those deals, we tend to win. And, and as I've said before,
Manageable. I think they like to have partners that they can go back to on a regular basis. So long-winded way of saying our our win rates pretty high, we haven't set up percentage on but I'd say it's it's it's very high.
With respect to your first question.
Inferences exciting to us. It's it's more exciting than this phase that we're in. Now, frankly, with the hyperscalers. And, and we're, we're doing lots of great deals. We're building. Lots of new network that we haven't been able to build in years. We're, we're connecting metros that we've needed to connect over the over the years. And we're now using hyperscalers as as anchor customers in order to to do that. Which is terrific but where we're really going to start to see uh a pickup in recurring revenue and ibida is when the inference phase starts in Earnest. And you know previously we said that would probably be 3 or 4 years out but I think that's increasingly looking conservative. It looks like it's going to be earlier and earlier I also think it's going to be harder to predict what's inference versus not. I think AI work streams are are getting more and more infused in in all all other work streams. And it's and it's hard to distinguish between the 2, which is fine.
But I think for us what we really need is is to have more uh distributed fiber endpoints that serve as on-ramps to to serve that, inference phase. And and so we talk about our 3 3 and a half million fiber homes for example, in our uh uh million plus buildings, data centers, and and fiber, and small cells that are on, uh, that are that are connected. And all of those things are going to, we think see as as an improvement in, in demand, as it relates to inference. And, and, and and, and that's all coming from non-. Hyperscaler customers. By the way. Uh, so we're really looking forward to that. And, to your question, Greg about the types of hyperscalers that, uh, deals that we expect to see going forward as it relates to inference. I think you you hit it. You're right. It it'll be more lease up as opposed to Anchor Greenfield builds and in fact the the deal that we that we highlighted and that Windstream signed uh
Last week at the end of, you know, right before the deal our our merger closed that's a lease up deal. Uh very attractive, uh transaction 20-year iru on existing infrastructure using existing strands with minimal capital, and Opex required. So very, very high margin and low Capital intensity and and that deal came with. I think it was 296 strands and there's a row for on incremental strands on top of that, which by the way, is also exciting, right?
Because, as we've said before, we've got hyperscalers taking these very large strand count, uh, deals from us and then they're coming back for the second deal. Uh, and in this case, this, this particular hyperscaler has has, has asked for a row for on another 432 strands on top of the 296 again, all lease up. So I do think again. Sorry for the long-winded answer, but I do think, once inference really kicks into high gear. You're going to see uh higher margin, lower Capital, intensity deals coming from the hyperscalers and a lot of of of we think it's an improvement in mrr just across the base in in general.
Great, thanks.
Thank you. 1 moment for our next question.
Our next question comes from the line of Frank laen from Raymond, James and Associates.
Great, thank you very much. Um, what is the time frame for the uh for the the 1 and a half billion funnel? What are what are those deals over? And then as far as the kinetic buildout going forward, how much of that 20% of your footprint that doesn't have any cable. Competition is economical to build. And, and how much of their 40% penetration goal is, is reliant on being able to construct in in that part of the, uh, of the footprint. Thanks?
Hey Frank. I'll start on both of those and Paul you might want to join in on the second 1, but on the funnel, I first of all, we I I I'm always a little bit reluctant to show funnel information because
Been the largest customer segment for us in the funnel. And so we really just wanted to show those themes.
Um to your question Frank usually when when something's in a in the funnel it it usually takes something like 12 to 18 months for it to to to come out. I mean the sales cycle
And and and it could be a lot less, right? It could be anywhere from a month up to I'd say 12 months, maybe maybe a little longer and and so, but with this what what's in the funnel today, the billion and a half. I I, I expect that over the next, you know, 6, 12, 18 months, most of that will will have worked its way through, but it hopefully will be regenerate regenerated by additional demand, uh, coming behind that. And and we do see that I I think that, you know, what's in the funnel are actual deals that have been qualified by us and, and our customers. But we hear about much more in just private conversations. And we certainly think based upon public comments being made by the hyperscalers that there's that there's just a commitment to investing in this space for for for years into the future. Um so very excited about that with respect to the 40% of the footprint that does
doesn't have the so-called Cable Bundle and really just to your question in general about how much of the footprint is economical to get to
Look I think as we said you know, 3 and a half million homes is roughly 75% of the footprint and beyond that. We think we can get to a large percentage of what's left with fixed Wireless or mult, alternative technologies, that are building off of that, fibre to the node investment over the years. And so, I, I, I do think it's 1 of the real highlights of the kinetic footprint, that, that, that gets lost that while it is a rural footprint. And it is, um, uh, the, the, the average Market is less dense than, than a, than a than a large Metro. For example, there's a lot of fiber that's been pushed out into this network and so that, you know, 650 to 700 costs per passing that we've talked about, historically, is real. Uh, and as Paul mentioned, in his prepared, remarks going up to a blend of 750 to 850 on the build over the next number of years. It we're we're getting to the the less dense markets with that with that still very economical build.
Based upon the historical fiber investment that has been made, um, and by the way, that also includes a blend of we're starting to work more and more with third-party contractors. Uh, historically, we've done the vast majority of it in-house, but we're starting to bring in more and more third-party contractors to give us the ability to have a more predictable cadence.
Definitely an uptick in in, in the, in the, in the, in the bill itself. So, with all that said, Frank, we we feel very confident about getting to 75 80% of the of the, of the, uh, of the footprint, uh, with direct fiber to the home. And then the rest really serving it off of that fibre to the node investment. That's that's been made so Paul. You want to add anything? Yeah, I um. Hey Frank, it's Paul. I would just add that.
Um, to, to specifically your question about how much of our bill is focused on that portion of our of, of the kinetic Network. Um, with with, without a a cable competitor that portion of our footprint tends to be very rural and so, um,
It's certainly an area of our footprint, where we'll be where we're building fiber, that fiber tends to be more subsidized, um, builds in nature. So it tends to be more Ard off or PPP or maybe even bead going forward. Uh, but it's definitely a part of the plan. Uh, and and through those subsidized bills, uh, in those more rural areas of the footprint, um, we are able to to to, to build fiber but it tends to be more of the subsidized projects that are in that category overall.
All right, great. Thank you very much.
Thank you as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please. Press star 1 1 again.
Our next question comes from the line of Michael Rowland from City.
Thanks and good morning and thanks for all the details, um, in some of these slides. Um, curious if you could turn back to slide 28 and when you look at the proforma for um, each of the new segmentations kinetic, fiber infrastructure, Unity Solutions. Certainly if you could give us perspective of aggregate growth for each,
Work in the case of solutions, you know, potential declines and and then try to think about the multi-year progression of margin, uh, for each of those pieces. And then I have a follow-up on kinetic, uh, after that, thanks
Um, yeah. So so
Michael good, you know, good question. I mean I think, you know, on our on the fiber infrastructure. So on on those segments, from a
Uh, from a top line growth standpoint, I think, you know, from a fee on the fiber infrastructure business. I think it's we expect that to be very much in line with the fiber infrastructure business that that Unity has run over over the years. So we're, you know, we're talking about their, you know, that kind of mid single digit growth, um, on on a go for basis on the top line and similar growth on, on the bottom line, um, on the I line. So, I mean the the Windstream wholesale business
Uh, does have some Legacy Services, you know, that, uh, some TDM there that um, is is being.
As being, uh, being run off, uh, um, so that does weigh a little bit on on the growth there. But I would expect that sort of mid single digit, um, growth with regard to, to that business, uh, on a go forward base basis, um, at at kinetic. Um,
That growth year-over-year. There's a little, there's a, you know, we've been doing some reefs segmentation as as you know, Michael and so as muddy, the water is a little bit from a comparison standpoint uh that's would be much more stable on a go forward basis, but
We're we're reuniting all of the the unity. I'm I'm sorry, the kinetic.
Um, wholesale and kinetic business into that kinetic. Um, that kinetic business segments, it's not just the consumer segments. So there's a little bit of TDM coming in there, so you you, you may see that a little bit Weighing on, on that kinetic business, um, uh, more so than it was when it was just sort of isolated to the consumer business for, uh, for Windstream, uh, more recently, but we would, we would look to see that business really
Um, start to, to make the turn, uh, in the, in the near future into a, into a growth business, as well as we drive fiber. So, you know, that kind of flat to to low single digit growth as well, is what we're driving toward, um, you know, over the next, um, the near-term period. Um, and and then on on Unity Solutions.
I mean Drew do you want to do you want to to jump in? We've got Drew Smith with this morning as well just on kind of
The the uh, the outlook for Unity solutions from a uh from a top line, an Eva to a standpoint. Yeah, thank you Paul and good morning. This is Drew Smith when you think about Unity Solutions. Uh, today they're still really 2 things kind of happening within that business. Um, there's a large portion of the revenue that is our go forward Revenue, uh, really based on technology and connectivity when we're selling our managed services. But there's also a component of TDM that is is being exited. Um, as we've communicated at Wynn stream and we'll continue to communicate a Unity. Uh, we will be fully out of the TDM business as it relates to Unity Solutions, uh, by the end of this year. And so, when you look at really kind of the go forward, um, we're still seeing some revenue losses but good margin, uh conversion as well as free cash flow conversion. I think right now, we're seeing revenue losses of around, mid mid teens. I think that should be somewhere in the near term. Um, a long term. I think we see stability, and
Then we're really focused on supporting the customers, uh, the larger customers within that base.
Thanks and some, you know, going back to the kinetic, fiber business, the slide 25. So the R2 trajectory, um, from what um, reading, I think that excludes the modem rental charge of 1099. So when you add that back to the fiber hard to it, suggests that you're over.
Eighty dollars of R2 and just curious, you know, if you talk about the strength of arpu, what what is driving that all in strength and spend from the customer, and how you see the opportunities to continue to grow uh, that uh, customer bill over time?
Yeah, Michael. Oh, sorry with that 1. I think. Um,
I think you characterized the slide correctly. I think you're reading it, right? And I think you're right that we've got a very
Solid arpu and that's been growing.
Relative to our competition in the market. Uh, and and when you do that and you look across the cable codes and and any other small cable companies, or or if there's an overbuild, or which there aren't very many in our markets, but when, when we compare across all those things and fixed Wireless, we're we're, we're right in line with where the competition is. So we're not we don't have, uh, arpus or or pricing plans that are, uh, in in excess of our competition. And I think what that really gets to is these are markets where there is a little bit more pricing uh uh uh uh Power for the providers in those markets. And and we're I'd say taking advantage of that but we also recognize that it that there is competition and over time
We've got to be mindful of that, and we will be. And so when we look out and forecast, our poo growth in our various irr models. And, and we sensitize those models, we're I, I'd say conservative with respect to our our expectations there. And so, uh, I I, we certainly don't want to give any forward guidance on our poo growth at this stage, but I do think, uh, we're, we're mindful that. It's a, that it's a, a robust. Uh, number today. And, and over time we we expect that it will continue to be but but I think that that we're we're also mindful that that that that there could be some some pressures over time. And ultimately I think that when when you, when you think about how do we continue to grow
That number. It's not just, uh, pricing power. It's also upselling customers to to higher speeds, uh, today, uh, I'd say 20%, maybe 25% of our base are actually taking Max speeds that are available to them. And so we think that's a terrific upsell opportunity over time especially as we start to get into the inference phase of AI, for example, and more and more, uh, people need higher bandwidth, uh higher bandwidth at at their home.
Thanks.
Thank you.
This concludes today's conference call, thank you for participating. You may now disconnect