Q3 2025 Uniti Group Inc Earnings Call
Investor Dot unity Dot com, 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 comment.
It is now my pleasure to introduce builder to be unity senior Vice President of Investor Relations and Treasury. Please begin.
Good morning, everyone and thank you for joining today's conference call to discuss <unk> third quarter 2025 results.
Speaking on the call today will be Kenny gunderman, our CEO and Paul Boynton Unity CFO.
Speaker #1: Today's call is being recorded, and the webcast will be available on the company's Investor Relations website investor.uniti.com beginning today and will remain available for 365 days.
John her Robin President of kinetic will also be joining us this morning during Q&A.
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.
Speaker #1: 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.
These statements include but are not limited to statements regarding <unk> fiber build strategy.
The business has growth potential.
Our 2025 outlook and other statements that are not historical facts.
Speaker #1: It is now my pleasure to introduce Bill DiTullio, Uniti Senior Vice President of Investor Relations and Treasury. Please begin.
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 sections in our filings with the United States Securities and Exchange Commission.
Speaker #2: Good morning, everyone, and thank you for joining today's conference call to discuss Uniti's third quarter 2025 results. Speaking on the call today will be Kenny Gunderman, our CEO, and Paul Bullington, Uniti's CFO.
With that I would like now like to turn the call over to Kenny.
Speaker #2: John Harabin, President of Kinetic, will also be joining us this morning during Q&A. Before we get started, I would like to quickly cover our Safe Harbor statement.
Thanks, Bill good morning, everyone and thank you for joining.
Starting on slide three we're very pleased to have closed our merger with Windstream during the third quarter and we're now well positioned as the premier insurgent fiber provider.
Speaker #2: Please note that today's remarks may contain forward-looking statements. These statements include but are not limited to statements regarding Uniti's fiber build strategy, the business's growth potential, our 2025 outlook, and other statements that are not historical facts.
We have a scaled national wholesale fiber footprint that puts us in rare company to win large scale fiber infrastructure deals and we're first or early with fiber to hundreds of tier two and three markets around the country, giving us the right to win for many years into the future.
Speaker #2: 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 sections in our filings with the United States Securities and Exchange Commission.
Our strategy is very clear and has the same simple winning formula that we've had at unity for years.
First continue to build fiber into unique locations, including by Overbuilding legacy networks, and moving customers onto our own fiber, while aggressively managing out of legacy products and services.
Speaker #2: With that, I would now like to turn the call over to Kenny.
Second providing operational excellence and third having an insurgent obsessive focus on the customer.
Speaker #3: Thanks, Bill. Good morning, everyone, and thank you for joining. Starting on slide three, we're very pleased to have closed our merger with Windstream during the third quarter, and we're now well positioned as the premier insurgent fiber provider.
This formula has led to industry, leading churn and NPS scores and predictable mid single digit growth at unity.
Speaker #3: We have a scaled national wholesale fiber footprint that puts us in rare company to win large-scale fiber infrastructure deals, and we are first or early with fiber to hundreds of tier two and three markets around the country, giving us the right to win for many years into the future.
Fiber is indisputably, a superior product and coupled with execution prowess. We're now firmly on the same path post our merger with Windstream.
Even though we've not yet had one full quarter of performance to report, we're starting to see strong improving trends.
Speaker #3: Our strategy is very clear and is the same simple winning formula we've had at Uniti for years. First, continue to build fiber into unique locations, including by overbuilding legacy networks and moving customers onto our owned fiber while aggressively managing out of legacy products and services.
We continue to add industry veterans to our leadership team, including with experience at frontier and Sibley among others and we've now fully on boarded and are ramping up key third party partners to accelerate our fiber build and go to market strategy.
We now have 115 active third party crews, which is about two and a half times increase from before the merger.
Speaker #3: Second, providing operational excellence, and third, having an insurgent, obsessive focus on the customer. This formula has led to industry-leading churn and NPS scores and predictable mid-single-digit growth at Uniti.
And we should have close to 400 by the second quarter of next year.
Thus, even though we were behind our plan at the merger close we fully expect to get caught up and beyond in the first quarter of next year.
Speaker #3: Fiber is indisputably a superior product, and coupled with execution prowess, we're now firmly on the same path post our merger with Windstream. Even though we've not yet had one full quarter of performance to report, we're starting to see strong improving trends.
From an operational point of view, we're very pleased and focused on improving our customer experience and are seeing early progress.
For example in October we had the highest first call resolution ever at kinetic.
Speaker #3: We continue to add industry veterans to our leadership team, including with experience at Frontier and Ziply, among others, and we've now fully onboarded and are ramping up key third-party partners to accelerate our fiber build and go-to-market strategy.
The lowest transfer rate in over two years and a record low dispatch rate and a record low for fiber repeat trouble tickets among other improvements.
New leadership with experience building and executing on a scaled fiber to the home strategy is focusing our field resources and go to market teams on what matters most to our customers in this new competitive environment.
Speaker #3: We now have 115 active third-party crews, which is about two and a half times increased from before the merger, and we should have close to 400 by the second quarter of next year.
We are now an insurgent share taker and have the right strategy leadership and assets to accelerate trends towards positive revenue and EBITDA growth.
Speaker #3: Thus, even though we were behind our plan at the merger close, we fully expect to get caught up and beyond in the first quarter of next year.
Turning to slide four during the quarter, we saw strong fiber revenue growth of 13% the.
Speaker #3: From an operational point of view, we're very pleased and focused on improving our customer experience and are seeing early progress. For example, in October, we had the highest first call resolution ever at Kinetic.
The highest number of fiber gross adds ever and the highest net adds in two years that kinetic.
Because of our historical fiber to the node investment we were also able to quickly and cost efficiently upgrade 85% of our fiber footprint to be multi gig capable great.
Speaker #3: The lowest transfer rate in over two years and a record low dispatch rate and a record low for fiber repeat trouble tickets, among other improvements.
<unk> greatly enhancing our upsell opportunities in the coming quarters.
And fiber infrastructure, we had an outstanding quarter of new bookings fueled by Hyperscale.
Speaker #3: New leadership with experience building and executing on a scaled fiber-to-home strategy is focusing our field resources and go-to-market teams on what matters most to our customers in this new competitive environment.
And we were named the best North American connectivity provider by capacity media.
The opportunity in wholesale fiber right now is generational in nature, and we are extremely well positioned with the right strategy leadership leadership in assets to capture share in dark fiber in waves.
Speaker #3: We are now an insurgent share taker and have the right strategy, leadership, and assets to accelerate trends towards positive revenue and EBITDA growth. Turning to slide four, during the quarter, we saw a strong fiber revenue growth of 13%.
As you can see on slide five we are making steady progress towards all of our key goals.
Almost 80% of total revenue today is from core fiber businesses.
Speaker #3: ads ever and the highest net ads in two years at The highest number of fiber growth Kinetic. Because of our historical fiber-to-the-node investment, we were also able to quickly and cost-efficiently upgrade 85% of our fiber footprint to be multi-gig capable.
While nearly 40% of our total revenue for the entire company and at kinetic is from fiber.
We also grew grew homes passed in fiber subs by 11% and 17% year over year and are well on our path to $3 5 million homes, and 1.25 million fiber subs by 2029.
Speaker #3: Greatly enhancing our upsell opportunities in the coming quarters. In fiber infrastructure, we had an outstanding quarter of new bookings fueled by hyperscalers. And we were named best North American connectivity provider by capacity media.
Slide six illustrates that our path forward is not only clear, but it's also reasonably predictable is the critical fiber inflections are already beginning.
Speaker #3: The opportunity in wholesale fiber right now is generational in nature, and we are extremely well-positioned with the right strategy, leadership, and assets to capture share in dark fiber and waves.
By the end of this year more of our consumer customers that kinetic will be on fiber than legacy networks.
Speaker #3: As you can see on slide five, we're making steady progress towards all of our key goals. Almost 80% of total revenue today is from core fiber businesses.
By the second quarter of next year kinetic kinetic consumer fiber revenue will exceed DSL revenue.
By the end of next year consolidated fiber revenue will exceed 50% for the entire company.
Speaker #3: While nearly 40% of our total revenue for the entire company and at Kinetic is from fiber. We also grew homes past and fiber subs by 11% and 17% year over year, and are well on our path to three and a half million homes and $1.25 million fiber subs by 2029.
Once these important inflections happen the flywheel starts to accelerate leading to total revenue and adjusted EBITDA growth year over year in 2026 for our core fiber businesses.
Setting us up for year over year revenue and adjusted EBITDA growth for the entire company beginning in 2027.
Speaker #3: Slide six illustrates that our path forward is not only clear, but it's also reasonably predictable as the critical fiber inflections are already beginning. By the end of this year, more of our consumer customers at Kinetic will be on fiber than legacy networks.
Turning to slide seven a vitally important part of our growth will come from our fiber infrastructure business.
There has never been a better time to be a wholesale fiber provider.
Broadband trends are accelerating across virtually all categories, especially AI driven use cases.
Speaker #3: And by the second quarter of next year, Kinetic's consumer fiber revenue will exceed DSL revenue. By the end of next year, consolidated fiber revenue will exceed 50% for the entire company.
As evidenced by another strong quarter of new bookings.
We are building substantial amounts of new new fiber, especially for the hyper scaler or scaled national footprint gives us terrific lease up potential driving our blended cash yields to 34% the highest we've ever seen.
Speaker #3: Once these important inflections happen, the flywheel starts to accelerate, leading to total revenue and adjusted EBITDA growth year over year in 2026 for our core fiber businesses, setting us up for year-over-year revenue and adjusted EBITDA growth for the entire company beginning in 2027.
And we believe theres more to come.
On slide eight our hyperscale or funnel has grown approximately 13% since second quarter with numerous large deals getting booked but being replenished with many more.
Hyperscale activity as a percentage of our total funnel at at Standalone Unity has improved materially year over year to around 30% of MRI.
Speaker #3: Turning to slide seven, a vitally important part of our growth will come from our fiber infrastructure business. There has never been a better time to be a wholesale fiber provider.
Importantly, when measured on a total contract value basis, hyper scaler arent, even higher percentage of the total combined sell funnel hi.
Speaker #3: Broadband trends are accelerating across virtually all categories, especially AI-driven use cases. As evidenced by another strong quarter of new bookings. Although we're building substantial amounts of new fiber, especially for the hyperscalers, our scaled national footprint gives us terrific lease-up potential, driving our blended cash yields to 34%, the highest we've ever seen.
Highlighting that the benefit of these deals are not always apparent in traditional bookings metrics.
Before turning the call to Paul I want to briefly provide an update on our outlook with hyperscale.
We now believe the total addressable market for AI and Hyperscale as per fiber providers as approximately 50% higher than what we originally estimated at the beginning of this year.
Speaker #3: And we believe there's more to come. On slide eight, our hyperscaler funnel has grown approximately 13% since Q2, with numerous large deals getting booked, but being replenished with many more.
Our conviction resonates from a strong new bookings, we're seeing our steadily growing qualified funnel and the bespoke conversations we're having with our customers.
Speaker #3: Hyperscaler activity as a percentage of our total funnel at standalone Uniti has improved materially year over year to around 30% of MRR. Importantly, when measured on a total contract value basis, hyperscalers are an even higher percentage of the total combined sale funnel.
Our customers continue to say to us both privately and publicly that investing in AI infrastructure is mission critical to their businesses demand constantly outpaces supply and quarter after quarter Capex assumptions go up.
For unity. The next few quarters will likely bring the largest deals we've seen to date and we have clear visibility into at least three years of strong value accretive deal flow.
Speaker #3: Highlighting that the benefit of these deals are not always apparent in traditional bookings metrics. Before turning the call to Paul, I want to briefly provide an update on our outlook with hyperscalers.
With that I'll turn the call to Paul.
Thank you Kenny starting on slide 11, I'd like to touch on some of the key third quarter highlights for both kinetic and our fiber infrastructure segment. As a reminder, our fiber to the home platform will continue to be branded as kinetic.
Speaker #3: We now believe the total addressable market for AI and hyperscalers per fiber providers is approximately 50% higher than what we originally estimated at the beginning of this year.
Speaker #3: Our conviction resonates from the strong new bookings we're seeing, our steadily growing qualified funnel, and the bespoke conversations we're having with our customers. Our customers continue to say to us, both privately and publicly, that investing in AI infrastructure is mission-critical to their businesses.
Fiber infrastructure will include our previous Uniti fiber and Uniti leasing segments, along with the Windstream wholesale segment and we are now also referring to the Windstream managed solutions segment as unity solutions.
Speaker #3: Demand constantly outpaces supply, and quarter after quarter, CapEx assumptions go up. For Uniti, the next few quarters will likely bring the largest deals we've seen to date, and we have clear visibility into at least three years of strong value-creative deal flow.
During the quarter, we continued to make solid progress on several fronts.
Starting with kinetic we expanded our fiber network to pass an additional 56000 homes with fiber ending the quarter with $1 8 million homes passed.
<unk> also added 24000, net new fiber subscribers during the third quarter ending the quarter with 507000 total fiber subscribers.
Speaker #3: With that, I'll turn the call to Paul.
Speaker #2: Thank you, Kenny. Starting on slide 11, I'd like to touch on some of the key third-quarter highlights for both Kinetic and our fiber infrastructure segment.
As Kenny mentioned earlier this was the second highest level of net adds in the past two years and total kinetic fiber subscribers grew 17% from the prior year period.
Speaker #2: As a reminder, our fiber-to-the-home platform will continue to be branded as Kinetic. Fiber infrastructure will include our previous Uniti fiber and Uniti leasing segments, along with the Windstream wholesale segment.
Kinetic consumer fiber revenue grew 26% year over year during the quarter and this growth is being driven by strong adoption of our fiber to the home product bolstered by the performance of the various marketing initiatives at kinetic that target, both our newer and more seasoned cohorts.
Speaker #2: And we are now also referring to the Windstream managed solution segment as Uniti solutions. During the quarter, we continue to make solid progress on several fronts.
Speaker #2: Starting with Kinetic, we expanded our fiber network to pass an additional 56,000 homes with fiber, ending the quarter with $1.8 million homes passed. Kinetic also added 24,000 net new fiber subscribers during the third quarter, ending the quarter with 507,000 total fiber subscribers.
At fiber infrastructure unity, and Windstream combined to record consolidated pro forma bookings MLR of approximately $1 6 million the second highest level in over two years.
Slide 12 highlights the sustained momentum we are seeing within kinetic fiber <unk>.
Fiber penetration of almost 29% during the quarter was up 50 basis points sequentially. The second best sequential improvement over the past three years and 130 basis points year over year.
Speaker #2: As Kenny mentioned earlier, this was the second highest level of net ads in the past two years, and total Kinetic fiber subscribers grew 17% from the prior year period.
Fiber or <unk> increased 10% year over year.
Speaker #2: Kinetic consumer fiber revenue grew 26% year-over-year during the quarter, and this growth is being driven by strong adoption of our fiber-to-the-home product, bolstered by the performance of the various marketing initiatives at Kinetic that target both our newer and more seasoned cohorts.
The slight sequential decrease in <unk> during the quarter was primarily driven by one time price adjustments and the acceleration of new fiber.
Subscriber net adds.
During turning to slide 13, the strong improvement in our cohort fiber penetration is being driven by various marketing initiatives, including our fiber forward efforts that we launched last year, we've seen a 200 basis point improvement in our 2023 cohort penetration levels from year, one to year, two and penetration levels in our year.
Speaker #2: At fiber infrastructure, Uniti and Windstream combined to record consolidated pro forma bookings MRR of approximately $1.6 million. The second highest level in over two years.
Speaker #2: Slide 12 highlights the sustained momentum we are seeing within Kinetic fiber. Fiber penetration of almost 29% during the quarter was up 50 basis points sequentially, the second-best sequential improvement over the past three years.
<unk> 2024 cohort that are on par with year to penetration and older cohorts, we expect to maintain or improve this trajectory going forward and the team is now focusing on executing the playbook to increase penetration in our older cohorts given our current trajectory we remain confident that achieving our 40 <unk>.
Speaker #2: And 130 basis points year-over-year, while fiber ARPU increased 10% year-over-year. The slight sequential decrease in ARPU during the quarter was primarily driven by one-time price adjustments and the acceleration of new fiber subscriber net ads.
Sent terminal penetration target is very achievable.
Slide 14 lays out our key targets for kinetic this year as kidney alluded to earlier, we now have a target of reaching one 9 million homes passed with fiber by the end of the year, which would bring fiber coverage within the kinetic footprint to 42% with respect to our previous target of 2 million homes as Kenny mentioned, we expect to fully.
Speaker #2: During turning to slide 13, the strong improvement in our cohort fiber penetration is being driven by various marketing initiatives, including our fiber forward efforts that we launched last year.
Speaker #2: We've seen a 200 basis point improvement in our 2023 cohort penetration levels from year one to year two, and penetration levels in our year one 2024 cohort that are on par with year two penetration in older cohorts.
Catch up in 2026.
We also expect to end the year with approximately 536000 fiber subs and realize approximately $500 million of consumer fiber revenue in 2025, an increase of roughly 25% from the prior year and.
Speaker #2: We expect to maintain or improve this trajectory going forward, and the team is now focusing on executing the playbook to increase penetration in our older cohorts.
In terms of cost per passing we continue to expect the costs going forward will likely be in the $850 to $950 range, resulting in a blended cost of $750 to $850 per passing over the life of the build program.
Speaker #2: Given our current trajectory, we remain confident that achieving our 40% terminal penetration target is very achievable. Slide 14 lays out our key targets for Kinetic this year.
Speaker #2: As Kenny alluded to earlier, we now have a target of reaching $1.9 million homes passed with fiber by the end of the year, which would bring fiber coverage within the Kinetic footprint to 42%.
Slide 15 provides a pro forma view of <unk> consolidated results for the third quarter consolidated pro forma revenue was down approximately 6% year over year during the quarter, primarily driven by the continued decline in legacy Tdm services and unity solutions. However, top line growth in other parts of the business was strong.
Speaker #2: With respect to our previous target of $2 million homes, as Kenny mentioned, we expect to fully catch up in 2026. We also expect to end the year with approximately 536,000 fiber subs and realize approximately $500 million of consumer fiber revenue in 2025, an increase of roughly 25% from the prior year.
With fiber infrastructure growing 3% year over year, and kinetic fiber based revenue inclusive of consumer business and wholesale services growing 17% year over year.
Speaker #2: In terms of cost per passing, we continue to expect the cost going forward will likely be in the $850 to $950 range, resulting in a blended cost of $750 to $850 per passing over the life of the build program.
As we execute on and accelerate our fiber overbuild plan, we expect fiber services at kinetic will continue to deliver consistent strong growth quarter over quarter.
In addition to the information provided in our earnings materials. We have also included additional supplemental pro forma financial information on our Investor Relations website.
Speaker #2: Slide 15 provides a pro forma view of Uniti's consolidated results for the third quarter. Consolidated pro forma revenue was down approximately 6% year-over-year during the quarter, primarily driven by the continued decline in legacy TDM services and Uniti solutions.
Slide 16 further demonstrates that the growth in each of our core fiber lines of business has been very strong and we expect that growth to continue given the superior nature of fiber as a product as Kenny mentioned earlier given this pace of growth, we expect fiber to overtake legacy services as the majority of our revenue by the end of <unk>.
Speaker #2: However, top-line growth in other parts of the business was strong. With fiber infrastructure growing 3% year-over-year and Kinetic fiber-based revenue inclusive of consumer, business, and wholesale services growing 17% year-over-year.
2026.
As a reminder, we will continue to face headwinds from legacy services over the next couple of years that will weigh on consolidated revenue and EBITDA with that said there are three important points I'd like to make.
Speaker #2: As we execute on and accelerate our fiber overbuild plan, we expect fiber services at Kinetic will continue to deliver consistent, strong growth quarter over quarter.
First legacy services are no way diminished the value of our core fiber business.
<unk> within a relatively short period of time the shift to fiber revenue will make legacy services revenue increasingly less material and thirdly in the meantime, unity solutions is generating significant and predictable cash flow.
Speaker #2: In addition to the information provided in our earnings materials, we have also included additional supplemental pro forma financial information on our investor relations website.
Speaker #2: Slide 16 further demonstrates that the growth in each of our core fiber lines of business has been very strong. And we expect that growth to continue given the superior nature of fiber as a product.
Please turn to slide 17, and I will now cover our updated 2025 outlook for the combined company.
We have provided two views of estimates for 2025 on this slide the 2025 as reported outlook includes seven months of Standalone unit results plus five months of combined unity and Windstream. This is our formal guidance for 2025 and matches. What was included in our earnings release that was filed earlier this morning.
Speaker #2: As Kenny mentioned earlier, given this pace of growth, we expect fiber to overtake legacy services as the majority of our revenue by the end of 2026.
Speaker #2: As a reminder, we will continue to face headwinds from legacy services over the next couple of years that will weigh on consolidated revenue and EBITDA.
Speaker #2: With that said, there are three important points I'd like to make. First, legacy services in no way diminish the value of our core fiber business.
We have also provided a pro forma view for 2025 similar to what we have provided in prior quarters. The following comments on our 2025 guidance will be based on the as reported outlook views.
Speaker #2: Secondly, within a relatively short period of time, the shift to fiber revenue will make legacy services revenue increasingly less material. And thirdly, in the meantime, Uniti solutions is generating significant and predictable cash flow.
Beginning with kinetic we continue to expect revenues and contribution margin to be $945 million and $385 million respectively. At the midpoint, we now expect to deploy $450 million of net capex at the midpoint of our guidance down from $510 million previously primarily.
Speaker #2: Please turn to slide 17, and I'll now cover our updated 2025 outlook for the combined company. We have provided two views of estimates for 2025 on this slide.
Speaker #2: The 2025 as-reported outlook includes seven months of standalone Uniti results, plus five months of combined Uniti and Windstream. This is our formal guidance for 2025 and matches what was included in our earnings release that was filed earlier this morning.
Due to the reduction in our homes passed target for 2025.
Fiber infrastructure, we expect revenues and contribution margin to be $1 $1 billion and $770 million, respectively at the midpoint for full year 2025.
Speaker #2: We have also provided a pro forma view for 2025, similar to what we have provided in prior quarters. The following comments on our 2025 guidance will be based on the as-reported outlook view.
The $35 million increase in contribution margin is related to a shift of expenses from the fiber infra segment to corporate expenses as accounting continues to be finalized for the merger.
Although we are no longer providing separate formal guidance for uniti fiber and Uniti 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 still $310 million at the midpoint of our guidance and represents a capital intensity of approximately 30%.
Turning to unity solutions, we expect revenues and contribution margin of $320 million and $155 million at the midpoint.
Altogether, we expect consolidated revenue and adjusted EBITDA of $2 2 billion in.
And $1 1 billion at the midpoint of our 2025 outlook with consolidated net capex of $805 million.
Finally, I'd like.
To provide some brief comments on our capital structure Slide 18 illustrates how <unk> cost of capital has improved significantly over the past two years. If you go back to when we launched our 10, 5% secured notes offering our secured and unsecured debt was yielding over 12% SaaS.
Fast forward to today and our debt is currently yielding around 8% on a blended basis at 450 basis point improvement.
Over the past several months, we have continued to execute on a number of planned actions to extend our debt maturities lower our overall cost of debt and drive meaningful interest expense savings with our most recent refinancing of our 10, 5% 2028 secured notes, we successfully pushed to $3 billion of debt out for.
Four to five years, and we will save close to $60 million in annual interest expense.
We also recently closed on our second ABS financing at unity.
<unk> fibers assets with a blended coupon of 567%, which represents the tightest spreads on a fiber ABS deal in almost four years.
Going forward, we will continue to take an opportunistic approach to refinancing our outstanding debt with near term maturities.
We also believe that ABS is likely to play a growing role in our capital structure given its comparative cost advantages to that end. We are working to establish a separate ABS program with fiber assets at kinetic with that said we are focused on maintaining a healthy mix of both ABS and non ABS debt and we will be balanced and.
Our approach.
At quarter end, our pro forma combined net leverage was 555 times and we still expect to end the year with a combined net leverage between five five times and six times.
Now I'll turn the call back over to Kenny for closing comments.
Thanks, excuse me thanks, Paul I'd like to close with a couple of comments on integration and some incremental growth areas. We're focused on.
First integration is going very smoothly and we've had virtually no system nor customer disruptions.
We're also well on our path to full integration and synergy achievement within 36 months, which is in line with our original expectations.
We're also excited about a number of budding growth areas, including cross selling <unk> products into our enterprise base at both Uniti fiber and kinetic.
Today, we estimate our managed services attachment rate to be below 3% at Uniti fiber for example, and we think it could rise to be materially higher over time.
Also as discussed numerous times before with the complementary combination of the unity and heritage Windstream wholesale products and networks were increasingly confident we can be a bigger share taker in the growing waves market.
Today, we estimate our market share to be less than 5% and with our scaled national network and unique routes, we believe our growth potential could be material.
Lastly at Qinetiq, we believe there is a sizable and untapped opportunity with multiple dwelling units within our footprint and there are seemingly attractive edge out builds off the kinetic fiber footprint and the existing uniti fiber dense fiber network.
We will have much more to say about these growth areas in the coming quarters.
All said Theres never been a better time to be a fiber provider and our strategy of unity is right for the moment.
With that we'd be happy to take your questions.
Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced and to withdraw. Your question. Please press star one again.
Our first question comes from Greg Williams with Cowen Your line is now thin.
Great. Thanks for taking my questions.
Just the first question you noticed.
In the slide that the total addressable market for fiber is booming if you will and we're seeing the same thing hearing hyper scaler or even prolonging training phase as they do Agi training now and some of these data centers can be hybrid inference and training data centers I'm just curious.
Three years of strong visibility to that Youre seeing if the deal mechanics are now changing or when will they change when will they go from more upfront NRC revenues to more of a lift services and lower Capex high margin structure.
Second question is on.
ABS deals Paul you mentioned that you are creating a separate vehicle for kinetic avs I think in the past you said theres over $3 billion of ABS capacity.
Within the kinetic assets.
Just curious what you would be doing with that ABS do you have.
This is fully funded for the <unk>.
Fiber to the homebuilder at this point and then at this case, the ABS deals before refining the debt stack and and and other projects.
Good morning, Greg all great questions, Yeah on the Hyperscale.
Scalar.
Incremental.
Tam.
Look when we estimated it back at the beginning of this year, we used all the data we had available we used internal estimates we use.
Consultant reports that we saw we saw we used some internal consultants that we were working with and we came up with those numbers and thought that they were fairly conservative at the time.
And when you fast forward to today.
I think the real takeaway from the page is not necessarily the aggregate numbers, it's really just the increase in.
The bullishness that we see for ourselves in that 30% to 50% is a good indicator of that because when we look at those aggregate numbers and compare them to the same kind of data points. We started with back at the beginning of the year. They look even more conservative so so for the industry both from a digital infrastructure perspective and from a fiber.
Perspective, they just look increasingly conservative everyday.
Based on what our customers are saying to both us privately and publicly.
Same comments over and over that demand is outpacing supply they can't keep up with the demand.
And that's really important and we've talked about this before Greg that we've sold Mega Strand counts 432 strand counts and we've had the same customer come back and ask for another 432 shrank counts. That's just a very bullish data point on demand outpacing supply they talk about how the AI infrastructure.
<unk> is mission critical to their businesses.
And so we're very excited about what they are saying and what they're doing and we're really well positioned forward at unity. We're one of the few scaled national fiber providers out there. Many of these builds are in tier two and three markets, where our network is naturally.
Good fit.
And so we continue to take.
A sizable share of the business that we see in our footprint and we're starting to look outside the footprint a little bit to grow the network strategically and to that point when we look out over the next three years. The funnel is full of deals that we've either already signed in books.
Or that are in the funnel with a high degree of confidence that we're in a in a really strong position to win those deals.
And really to your to the second part of your question.
Are the types of deals changing and I would say, yes, and no I think there is absolutely in our view.
A very gray line between the training phase in the inference phase, we started out talking about that as being sort of two distinct phases, but as we've gotten deeper into this it's very clear that they're not two distinct phases. There is there is training is going to persist for many years, we think based on conversations with our customers that.
These training models are going to need to be updated on a very regular basis, including with <unk> AI and all the other use cases that we're seeing and so we're really excited about the builds that we've put in place today.
To enable these training data centers and feel like there's going to be the second and the third and the fourth come back for additional fiber to enable those to enable those data centers.
So we think thats going to persist and we absolutely believe that once.
Is adopted on a mass scale among.
Not just the hyper scaler, but the super scalar and the neo clouds in large enterprises and eventually individual.
Retail consumers like all of us that are roughly 5 million connected fiber endpoints youre going to really benefit from that and I think the deals that we're seeing from Hyperscale as we've said Greg they've always.
Run the spectrum, all the way from Greenfield builds with very high Nrc's upfront and Rcs.
And we love those deals where we're building fiber thats strategic but also on the very other end of the spectrum.
We're selling we're selling.
Existing capacity or existing network, either in waves or dark fiber I or use or in leases.
And we think that's going to continue and I think it's probably going to err more towards the latter than the former as we get into more of the inference phase, but just as an example, the big deal that we announced last quarter.
The large hyperscale or deal that was all existing infrastructure and there was virtually no capital associated with that and it came in at a very high margin so and when we look at the funnel there's.
There is a very good mix of those in the coming quarters and when you look at that free cash flow yield page that we've shown for quarter after quarter for the past two years that the jump from 29% to 34% is really largely driven by.
By Hyperscale or deals being very high cash flow margin deals.
Sorry, I went long on that question.
ABS is over to you yes.
Hey, Greg It's Paul I'll take your question on the ABS. So we.
We aren't providing specific guidance at this point with regard to 2026.
Capital and.
Any financing.
Required in 2026 to fund the kinetic build plan in particular, however, we do expect to be in a period of investment at kinetic in unity generally, particularly it relates as it relates to the fiber build planet kinetic over the next.
Call It four years.
We will raise additional capital and during this period of investment we do expect our leverage to remain above our long term target of four to four five times.
We're selling we're selling existing capacity, or existing Network, either in waves, or dark fiber IUS, or in leases. Um, and, and we think that's going to continue. And I think it's probably going to are more towards the latter than the former as we get into more of the inference phase. But just as an example, the big deal that we announced last quarter, uh, the, the large hyperscaler deal that was all existing infrastructure. Uh, and there was virtually no Capital associated with that and it came in at a very high margin. So and when we look in the funnel, uh, there's a very good mix of those in the in the coming quarters. And when you look at that free, free cash flow, yield pays that we've shown for quarter after quarter for the past 2 years. The the jump from 29% to 34% is really largely driven by free by hyperscale or deals being very high. Cash flow margin deals,
But as Kenny has talked about this is the right strategic move for the business.
It's.
It's very similar to the strategy, we have deployed in the fiber infrastructure business sort of years ago building fiber, we think gives us the right to win.
Sorry, I went long on that question, Paul. I think ABS is over to you. Yeah. Um, hey Greg, it's Paul. I, I'll take your question on ABS. So we
And at kinetic once we have that superior product ubiquitous across across that network or nearly ubiquitous across that network. It gives us the line of sight.
we are providing specific guidance at this point with regard to 2026 and, um, capital and uh,
To that growth and to free cash flow over a period of time and to eventual deleveraging as well. So it's definitely the right right move for the business to make that investment and we're excited about avs. We think avs will definitely have a role to play with regard to financing the build plan at kinetic given the relative cost advantages.
Any financing, uh, required in in 2026, to fund the the kinetic Bill plan, in particular, however, we do expect U to be in a period of uh, of investment at kinetic and and unity generally uh particularly it relate as it relates to the fiber build plan at kinetic over the next.
ABS debt.
Long-term Target of 4 to 4 and a half times.
And like you alluded to.
There are significant avs capacity.
At kinetic in particular, the $3 to $4 billion capacity number.
Is what we've talked about historically and we still believe that that is true with that said, we're very focused on keeping the right amount in mix of assets in the leveraged finance credit box.
At unity, and we understand the long term importance of access to the high yield market for Unity and addition to avs. So ABS, we think is enhancing and a part of the solution, but certainly not the full solution for unities capital structure going forward and when we talk about the four times secured and six five times unsecured ratio.
As governors for.
For our capital structure.
But, you know, as Kenny's talked about, this is the right strategic move for the business and it's, uh, it's very similar to the strategy. We have deployed in the fiber infrastructure business sort of years ago. Building fiber, we think gives us the right to win. Uh, and, and at kinetic, uh, once we have that Superior product, uh, ubiquitous across across that Network, or nearly ubiquitous across that Network, it gives us the line of sight to to that growth. Um, and to free cash flow, uh, over a period of time and to eventual deleveraging as well. So it's definitely the right, right move, uh, for the business to, to make that investment. And we're excited about ABS. We think ABS will definitely have a role to play with regard to financing. The build plan at kinetic. Given the relative cost advantages of of of ABS debt.
Okay.
uh and and like you alluded to
That is something.
We.
That's that's on our <unk> are not on our non ABS assets I guess is the best way to put it that's what our non ABS assets in EBITDA and we think that's sometimes missed by the market.
Great. Thank you.
Okay.
And the next question will come from Frank Louthan with Raymond James Your line is open.
Great. Thank you what do you need to do to take more share in the wavelength market and who do you see your main competitors. There and then you've made some key hires in kinetic any any more positions to fill there do you think the teams.
There are significant ABS capacity uh, at at kinetic in particular, the the 3 to 4 billion dollar uh, capacity number um, is is, is is what we've talked about historically and we still believe that that is true. With that said we're we're very focused on keeping the right amount and mix of Assets in the leveraged Finance credit box um at unity and and and we understand the the long term importance of access to the high yield market for Unity in addition to ABS. So ABS we think is enhancing and a part of the solution but certainly not.
Rounded out for off of what you need to do.
Good morning, Frank ill start and then I'm going to ask John Robin to help on the second question.
The full solution for unity's capital structure going forward and when we talk about the 4 time, secured and 6 and a half times unsecured ratios as Governors uh for our capital structure.
um, uh,
Welcome to Jon. This is his first unity earnings call and first of many more to come hopefully so.
that is something. Um, you know, we we
Yes, Frank on the <unk> market as you know at unity.
Prior to the merger we were just starting to get into that market in a bigger way. The vast majority of our product set on the wholesale side was focused on dark fiber and we love that that product.
That's, that's on our, our, our, a, our not on our non-abs assets. I guess is the best way to put it, that's on our non-abs assets and ebit da. And we think that sometimes missed by the market,
Great. Thank you.
And the next question will come from Frank Laughlin with Raymond James? Your line is open.
The.
Lower capital intensity higher margin lower touch just are substantially lower churn, but we're starting to get into the ways market. Because we definitely began to recognize that there are unique routes on our network and we felt like lighting those unique routes could give us a just similar to how we target tier two.
Great, thank you. Um, what do you need to do to take more share in the wavelength market and who do you see your uh, your main competitors there? And then you've you've made some some key hires at kinetic, any any more positions to fill there or do you think the teams around it out for, uh, for what you need to do? Thanks.
Tier three markets targeting those less traffic routes could be an opportunity for us to take share, especially as more and more new fiber is being built around the country.
So that was kind of the beginnings of the thesis and now with the merger we've not only.
Good morning, Frank, I'll start. And then I'm going to add uh John Robin to help file on the second question and and a welcome to John. This is his first Unity earnings call and first of many more to come hopefully so yeah. Frank on the Waze Market as you know, at Unity.
What in more network to sell we've brought in.
People on the team who have a lot of experience selling waves. We've got engineering talent, we've got product talent marketing talent.
That is a terrific complement to what we previously had at unity. In addition to the fact that now we've got a lot more owned network to sell.
In the past I think the waves market has been really characterized by pricing competition, especially on the tier one routes, where you've got three or four different providers and we don't tend to like to compete in areas on price, we'd rather compete on infrastructure and where we've got unique infrastructure.
And really to the heart of your question why do we think Theres an opportunity for us going forward its kind of building. Upon the original thesis, which is we think theres going to be more and more wave traffic needed and less.
Prior to the merger, we were just starting to get into that market in a bigger way. The vast majority of our products set on the wholesale side was focused on dark fiber. And and we love that that product that, you know, lower Capital intensity, higher margin, lower touch, just higher higher and substantially lower churn. But we're starting to get into the ways Market because we definitely began to recognize that there are unique routes on our Network. And we felt like lighting those unique routes could give us a just similar to how we target tier 2 and tier 3 markets, you know, targeting those, uh, less trafficked routes could be an opportunity for us to take share, especially as more and more new fiber is being built around the country so that was kind of the beginning of the thesis. And and now with the merger, we've not only
Traffic to markets today, so more of the tier two and tier three routes.
And we think more and more of the hyperscale or another.
Clouds Super scale or are going to need waves and they don't tend to purchase capacity based on price they tend to purchase based upon.
Route diversity unique routes and reliability and the ability to provide good customer service all things that we're seeing on the on the build side with these customers. Today. So we think going forward, we've got the ability to capture some share there and not based on price, but based on those different characteristics and with respect.
Brought in more Network to sell, we've brought in, uh, people on the team who have a lot of experience selling waves. We've got engineering Talent, we've got product Talent marketing Talent, uh, that that it is a terrific compliment to what we previously had at unity. In addition to the fact that now we've got a lot more owned Network to sell. And in the past, I think the waves Market has been
To your question about where that share is going to come from and how big that opportunity is I'm going to hold on that question for now we're working on that will give you a more refined answer on that in the future, but but all that to say with 5% of the market. Today. We've got a long we think we've got a nice amount of upside relative to where we are today.
And look on the leadership question.
Very excited to have John and the team. He has been a terrific addition, not just to the leadership team on what he has already done at kinetic and importantly.
He has brought in some key additions to his team already and I think theres more to come and I'm going to let John comment on that.
Thanks, Frank good to be here and.
The kinetic team as it exists today is highly talented.
Their results and their resiliency going through a number of changes.
And the results that they produced during this changes is really a testament.
To their to their capability when it comes to team structure.
We first look at what's our strategy and what's our operating plan and that's what we've really been finalizing over the last few months, we finalized our build strategy now as our operating plan strategy will end November with that kind of top down in a way in a good spot and then it goes infrastructure and we've realized.
Routes and reliability and the ability to to to to provide good customer service, all things that we're seeing on the, on the build side with these customers today. So we think going forward, we've got the ability to to capture some share there and not based on price but based on those different characteristics. And with respect to your question about where that share is going to come from and and and how big that opportunity is I'm going to hold on, that question for now we're we're we're working on that. We'll give you a more refined answer on that in the future. But but all that to say, you know, with 5% of the market today, we've got a long, we think we've got a nice amount of upside relative to where we are today.
And, and look on the leadership question.
Early that we needed a couple key roles in the business, we've hired a growth leader, David Oliveira, who I've worked with at.
A couple of other companies and he is a spectacular leader with a long runway and career ahead of him.
20 years from now when we're watching the industry from afar he'll be running it and.
I'm proud to say that he is part of the team and making a large impact already we have an active search right now for a construction lead we've got some good people.
And that part of the business doing double duty as.
A few folks have exited that department and we expect to fill that soon with highly capable leaders.
Very excited to have John on the team. He's been a terrific addition, not just to the leadership team, but but on what he's already done at kinetic and importantly, um, he's brought in some some key additions to his team already. Uh, and I think there's more to come and I'm going to let John comment on that. Yeah. Uh, thanks Frank. Uh, good to be here. And, uh, you know, the kinetic team as it exists today is highly talented. Uh, the results and their resiliency going through a number of changes, uh, and the results that they produced, during those changes is really a testament, uh, to their, to their capability, when it comes to team structure. You know, we first look at what's our strategy and what's our operating plan. And that's what we've really been. Finalizing over the last few months we finalized our build strategy. Now it's our
As well and then as we look at other opportunities and our operating plan those probably going to be a few additions we need to make and refinements around capabilities that were not so strong at today or even new areas that Kenny mentioned before that are untapped and.
And the kinetic business. So when you when you think about that trajectory, we've got what we need now and.
The target.
Six months after the close so we've closed on 816 months after the close by February one we have the go forward in person highly capable team in place.
Great Great. Thanks, John I appreciate that thanks Kenny.
Right.
And the next question will come from Michael Rollins with Citi. Your line is open.
Thanks, and good morning.
I wanted to ask about slide 15, a little bit more sense. Thanks for sharing this pro forma outlook, both for revenue and EBITDA and <unk>.
Operating plan strategy will will end November with that kind of tucked in, in a way and a good spot and then it goes into structure. And, you know, we realized early that we needed a couple key roles, uh, in the business. We've hired a growth leader, David Oliveira who I've worked with at, uh, a couple other companies. And uh, he is a spectacular leader with a long Runway and career ahead of him, uh, 20 years from now when we're watching the industry from afar, uh, he'll be running it. And, uh, I'm I'm proud to say that he's part of the team and making a large impact already. We have an active search right now for a construction lead. Uh, we've got some good people, uh, in that part of the business, uh, doing double duty as uh, uh uh uh, a few folks of exited that department. And uh we expect to fill that soon uh with highly capable leaders uh as well. And then as we look at other opportunities uh in our operating plan, those probably going to be a few additions. We need to remake and refinements around.
If you could just share with us how to think.
That these trends going into 2020 in terms of the type of growth for fiber infrastructure.
Capabilities that we're not so strong at today or even new areas that Kenny mentioned before that are untapped uh, in the kinetic business. So,
You talked about the tailwind in kinetic.
Yes that youre seeing for this year and just trying to understand maybe some of those headwinds and then finally on the EBITDA side of that chart.
When you, when you think about the trajectory, we've got what we need now. And, you know, the the the target, uh, is 6 months after the close. So we close on 81 6 months after it closed by February 1st, we have uh the go forward. Um, in person highly capable team in place.
Revenue move for each of these buckets.
Great, great. Thanks, Sean, appreciate that. Thanks honey.
Frank.
Segment buckets, how do you think about the operating leverage are the incremental margins that you can extract.
And the next question will come from Michael Rollins with City. Your line is open.
The revenues evolve and each of those pieces and then just secondly.
Just curious if you have an update on the strategic front.
Yes.
Quarter in the slides I think you referenced.
Starting a review for the acquired assets and just curious if you have any updates on how youre thinking about optimizing your portfolio of assets. Thank you.
Yeah.
Good morning, Michael.
I think I wrote down all the questions. We will try to hit hit most of them and I'll start and Paul you can comment on some of the trends and then I'll come back on <unk> question and really Michael on the trends, we don't want to get too much into forward guidance at this point.
Other than what we've laid out in some of the key inflection points for next year and how that sets us up for going into 2027, and so but we'll have obviously more to come on guidance. When we when we come back together in February of next year, but on the businesses I'll start with fiber infrastructure I mean, that's a business that we do.
Thanks and good morning. Um, first I wanted to ask about, uh, slide 15 a little bit more. So, you know, thanks for sharing this proforma Outlook, both for revenue and EA and curious. If you could just share with us, you know, how to think about these Trends, going into 2026, in terms of the type of growth for fiber infrastructure. Um, you talked about the Tailwind in kinetic, um, you know, that that you're seeing for this year and just trying to understand maybe some of those um, headwinds and then, you know, finally on the ibida side of that chart, um, as Revenue moves, you know, for each of these big buckets, uh, you know, these uh, segment buckets. Anything about the operating leverage or the incremental margins that, you know, you can extract as, um, the revenues evolved in each of those pieces and then just, secondly,
We know well that we love and bringing the windstream wholesale business into that fold along with heritage unity fiber in unity wholesale is a terrific synergistic fit and we think the historical mid single digit growth there, we're going to get back to that and I think there is great.
Just curious if you have an update on the Strategic front, uh, you know, last uh, quarter in the slide. I think you referenced, um, you know, starting a review for the acquired assets and and just curious, if you have any updates on on how you're thinking about optimizing your portfolio of assets, thank you.
<unk> cost savings in that business, when we combine them, but also revenue synergies the waves opportunity. For example is one of them clearly the hyperscale opportunity is another that I think is additive and incremental to what to what we had before because we've now got multiple products to sell to a broader customers customer set so very.
We're excited about the opportunity in that business.
Ultimately.
When you when you think about the the legacy services within that business. There is some tdm there right. We're inheriting some tdm and the Windstream wholesale heritage Windstream wholesale business, but about 2027, 2028 that it'll be less than $100 million of <unk>.
<unk> revenue. So we're working through that that'll be a little bit of a headwind in that in that business.
But we're working through that and as Paul said in his prepared remarks that TTM revenue doesn't in any way detract from the real value of the fiber business, the underlying fiber business thats growing and prospering and putting up good predictable results, so a little bit of a headwind, but generating cash flow in the meantime, and eventually will be.
An immaterial part of the part of the business at.
When we come back together in February of next year, but on the businesses, you know, I'll start with fiber infrastructure. I mean, that that's a business that we that we know well that we love and and bringing the Windstream wholesale business into that fold, along with Heritage, uniti fiber and unity, wholesale is a terrific synergistic fit and we think that historical mid single digit growth there. We're going to get back to that and and I think there's great uh both cost Savings in that business when we combine them, but also Revenue synergies. The waves opportunity for example, is 1 of them. Clearly, the hyperscaler opportunity is another that that I think is additive and incremental to what to, what we had before, because we've now got multiple products to sell to a broader customer customer set. So, very excited about the opportunity in that business. And, and I think ultimately,
At kinetic.
Very excited about the playbook, there and with John now on the team and adding key leaders in key positions. Those inflections point inflection points for next year are very much in focus very much predictable and as we say around here, we're not we're not forecasting anything herculean with respect to <unk>.
But others have accomplished in the copper to fiber migration story I mean this is.
We are not we don't shy from the fact that John comes from frontier.
Ran a playbook and we're following a lot of that and obviously, making.
Um, when you, when you think about the, the Legacy services within that business, there is some TDM there, right? We're we're inheriting, some TDM and the Windstream wholesale Heritage, Windstream wholesale business, but by 2027 2028 that'll be less than a hundred million dollars of of TDM Revenue. So, we're we're working through that. That'll be a little bit of a headwind in that, in that business, uh, but we're working through that. And as Paul said, in his prepared remarks, that TDM Revenue doesn't in any way, detract from the real value of the fiber business, the underlying fiber business. That's
<unk> and improvements in certain areas and we've got a little bit of a unique footprint relative to frontier, but really the playbook is very very clear and we think the growth trajectory in the fiber business at kinetic is very predictable.
Growing and prospering and putting up good predictable results. So, a little bit of headwind, but generating cash flow in the meantime and, and, and eventually will become an immaterial part of the part of the business.
At kinetic.
So very excited about that and yes, we're going to work through the copper and DSL book of business, but we're going to do that in a responsible manner and we're we're migrate we're overbuilding and were.
Replacing that with with the superior product and we're migrating customers in an aggressive manner increasingly aggressive manner I would say.
And so eventually youre going to youre going to start to see that predictable growth.
At kinetics. So when you take those two businesses together, we think we're creating a lot of value in those businesses by building fiber transitioning out of legacy networks and services and I think the path is very very clear and thats.
Three quarters of our business and so then you get into the unity solutions business, which is really where a lot of.
The heritage.
The headwinds in declining top line.
Exists.
By the end of this year and early next year, we'll largely have exited the tdm part of that business and then you've got large enterprises that are taking managed services products that are generally off net.
Very excited about the Playbook there and and, you know, with John now on the team and the, and the, and the, and adding key leaders, and key positions those inflections Point inflection points. For next year, are very much in Focus. Very much predictable. And as we say around here, we're not, we're not forecasting, anything, Hercule and with respect to what others have accomplished in the copper, to fiber, migration Story. I mean, this is, you know, we we, we're not, we don't shy from the fact that John comes from Frontier, uh, which ran a Playbook. And, and we're, we're following a lot of that. And, and obviously making additions and improvements in, in certain areas and we've got a little bit of a unique footprint relative to the frontier, but really the The Playbook is very, very clear. And we think the the growth trajectory in the fiber business at at Connecticut is very predictable, uh, and so, very excited about that. And yes, we're going to work through the the copper and DSL book of business. But we're going to do that in a responsible Manner. And we're, we're
And as we've pivoted that strategy away from targeting new logos and focusing on the.
<unk>.
Long tenured customers.
Profitable products within that business, yes, that's going to continue to result in topline decline, but we feel like the book of business that were left with two or three years is going to be valuable.
Migrate we're, we're overbuilding and, and we're, uh, replacing that with, uh, with a superior product and we're migrating customers in an aggressive manner, increasingly aggressive manner, I would say. Uh, and and So eventually, you're going to, you're going to start to see that predictable growth at at at Kinetics. So when you take those 2 businesses together, we think we're creating a lot of value in those businesses, by building fiber transitioning out of Legacy networks and services. And and I think the path is very, very clear and that's
Long tenured customers large enterprises, some of which we think we can bring on our onto our own fiber network. Some of which we think are going to be bandwidth hogs win win win win win.
3/4 of our business. And so then you get into the unity Solutions business which is really where a lot of the, you know, the Heritage uh headwinds and and and declining Topline exists.
When the learnings are sorry, the training.
The.
Inference phase of AI starts to kick in and we also think there's cross selling opportunities with that business into our base at kinetic and unify ever so all that to say those headwinds are going to persist for the next several years and are in some ways going to cloud the growth at the core fiber business, but in the meantime.
Were generating nice cash flow off that business, and where we're transitioning that really large key customers either on that and we're certainly.
Using the really high quality products in those in that business to to help us in other parts and other parts of the business. So.
We've by the end of this year and and early next year will largely have exited the the TDM part of that business. And then you've got large Enterprises that are taking managed Services products that are generally off-net. Uh, and as we've pivoted that strategy away from targeting new logos and focusing on the um, uh, long tenured customers and the, and the profitable products within that business. Yes. That's going to continue to result in Topline decline, but we feel like the book of business that we're left with in 2 or 3 years is going to be valuable um long tenured customers, large Enterprises some of which we think we can
On your strategic question Michael.
Lot of activity there, we look at M&A the same way as we looked at it for years, there's four buckets right. There is asset sale opportunities. There there is joint venture opportunities there's opportunities too.
To add bolt on deals that are strategic and then of course, there is the real big bucket of just selling selling the business or parts of the business I'd say.
And the asset sale category, we're actually looking at a number of opportunities to generate some nice cash flow I mean, we've got a lot of fiber.
The footprint that.
We're not planning to light anytime soon within the fiber infrastructure business.
For example, we think those could be monetization opportunities Theres also some fellow real estate within the footprint that we're looking at.
And we're certainly, uh, we're certainly using the the the really high quality products in those in that business to, uh, to help us in other parts in the other parts of the business.
So, um,
On the joint venture side.
There's a lot of third party capital looking to help companies like ours accelerate the build there is also a lot of capital looking to invest in fiber AI infrastructure.
So we're looking at some of those opportunities.
There could be some opportunities there that's really a cost of capital conversation more than anything, but and right now we don't necessarily need the capital, but we're certainly looking at those opportunities to create options for ourselves.
And I would say on the bolt on.
Point, we're we're certainly getting lots of opportunities to look at but I think on balance the marginal dollar is probably better spent investing internally.
And then being acquisitive, so we're not spending a lot of time in that category.
On your strategic question Michael. Um a lot of activity there. We look at m&a the same way as we looked at it for years, we there's 4 buckets, right? There's asset sale opportunities there. There's joint venture opportunities, there's opportunities to, um, to to add bold on, uh, deals that are strategic. And then, of course, there's the, the the real big bucket of just selling selling the business or parts of the business. I'd say, with on, in the asset sale category, we're actually looking at a number of opportunities, to, to generate some nice cash flow. I mean, we've got a lot of fiber around the footprint that, uh, you know, we're not planning to light anytime soon within the fiber infrastructure business for, for, for example, we think those could be monetization opportunities. There's also some fallow real estate within the footprint that we're looking at.
And really on the last bucket.
The the big tectonic plates continue to move in the industry and.
We with our two scaled fiber businesses fiber infrastructure and certainly kinetic we feel like we have two very strategic and very valuable assets and I would say that our confidence level in that statement grows every day rather than dissipates. So.
On the joint venture side. Um, there's a lot of third-party Capital looking to help companies like ours, accelerate, the build. There's also a lot of capital looking to invest in fiber, AI infrastructure. Uh, and so we're looking at some of those opportunities. And, and I think there, there could be some opportunities there. That's really a cost of capital conversation more than anything, uh, but and right now we don't necessarily need the capital but, but we're certainly looking
Paul anything you want to add on the trends are.
Outlook no I think that's good.
Thanks very much.
Thanks, Michael.
And the next question comes from Richard Choe with Jpmorgan Your line's open.
Hi, I wanted to follow up on the Hyperscale opportunity. It seems like that pipeline is just going to continue to grow but can we get a sense on timing maybe on when you should start signing these deals and coming through and how that should pace over the next few years, because it seems like such a big opportunity.
Yes, good morning, Richard.
So we've already.
We signed a lot in the <unk>.
Couple of years.
Looking to get those opportunities to create options for ourselves. Um, and I would say, on the bolt-on, uh, point, we're, we're certainly getting lots of opportunities to look at, but but I think on balance, the marginal dollar is probably better spent investing internally, uh, than than, than being a quisitive. So, we're not spending a lot of time in that category and really on on the last bucket. Uh, you know, the, the, the, the big tectonic plates continue to move in the industry. And, uh, we with our 2, scaled fiber, businesses, fiber, infrastructure, and certainly kinetic. We we feel like we have 2 very strategic and very valuable assets. And I would say that our confidence level in that statement grows every day rather than dissipates. So, um,
And I'd say the past couple of years more like the past year, maybe 18 months.
Paul anything you want to add on the trends, or
And look this Tam came out of nowhere very in a very short period of time.
Outlook, know? I think that's good. Yep.
Thanks very much.
Thanks Michael.
I remember two years ago, maybe maybe 30 months ago, we were getting questions about whether or not this was real.
And the next question comes from Richard Cho with JP Morgan your lines open.
And opportunity there and we were we were struggling to answer that question because the numbers and the outlook looks extremely exciting and bullish but we were trying to be measured in our in our response.
And now we fast forward two years, and we can't keep up with the numbers and you can't put numbers on the page that are that seem current or that arent overly conservative.
Hi. Uh, I wanted to follow up on the hyperscale opportunity. It seems like that pipeline is just going to continue to grow, but can we get a sense on timing? Maybe on when you should start signing these deals and coming through and how should that should Pace over the next few years? Because it seems like such a big opportunity.
We've definitely been signing deals and we have more to come I do think as I said in my prepared remarks. The next couple several quarters youre, probably going to see the bigger deals are the biggest deals that we've had to date and those are probably going to start showing up in revenue and EBITDA.
Yeah, good morning Richard. Uh so we've we've already we've we've signed a lot uh in the past couple years uh and I'd say the past couple years more like the past year, maybe 18 months.
And I think that's we've said for the past 12 months that many of these deals don't show up in the Vanity metrics like bookings or revenue and EBITDA because the nature of the deals or if you're building something with a very high NRC. It just doesn't show up in our bookings number it doesn't show up.
And our revenue our EBITDA number and so we've consistently heard from investors that they want more visibility into those deals and how the economics work and we have a we have a plan to start showing that in the coming quarters. As these bigger deals start to come online. So all that to say Richard we have been signing the deals they haven't been showing up in the vanity metrics, but on a go.
Forward basis, I think we're going to we're going to be signing more deals probably bigger deals and we're going to be able to show you a little bit more visibility into all of that.
Got it and then one on the kinetic side in terms of the churn for the fiber there.
And look, this Tam came out of nowhere, very in a very short period of time, you know, I I remember 2 years ago, maybe maybe 30 months ago, we were getting questions about whether or not this was real, you know, is is there really an opportunity there? And we were, we were struggling to answer that question because the numbers and the Outlook looked extremely, exciting and bullish, but we were trying to be measured in our in our response and now you know, we fast forward 2 years and and and we can't keep up with the numbers and we can't put numbers on the page. That that that are that seem current or that aren't overly conservative. So we we've definitely been signing deals and we have more to come. I do think as I said in my prepared remarks, the next couple several quarters, you're probably going to see the bigger deals uh or the biggest deals that we've had today. And those are probably going to start showing up in revenue and ibida. Um, and I think that's, you know, we've said for the past 12 months that many of these deals don't,
Residential customers, where are you losing customers too.
What's the plan to maybe reduce that churn if he can.
Yes.
So.
This is John thanks.
Thanks, Richard on the fiber churn side were high.
The churn rate versus benchmark.
Thats not dissimilar than frontier in 2021, when it first started this transformation.
And we're losing to the logical players.
In our fiber footprint, it's not <unk>.
It's cable, it's largely cable and.
Our approach.
Is too.
Apply the same five tactics that I know work.
And.
Got it. And then 1 on the kinetic side, in terms of the churn for the fiber there, um,
And we're starting to execute those right now the first tactic really is to clear the decks of any noise right and we're making to hygiene changes to do that first in July.
The residential customers, where are you losing customers, too? And, um, what's the plan to maybe reduce that turn if you can.
Yeah. Uh, so um
We saw that were dragging on nonpaying customers for a little bit and incurring bad debt.
So now we have a policy to write them off earlier, so thats going to inflate churn a little bit on the fiber side will wash through that by the end of the year and the second is.
To really get out of the ACP credit business when the ACP program going away, we extended credit to those customers and on September 1st we notify them that that's no longer going to be the case and effective 10, one we are no longer subsidizing the ACP program. After it went away.
It's going to put about 16 basis point pressure on fiber churn in the fourth quarter.
Again, that's just clearing the decks for the future. The second is being more surgical about price ups.
Over the last 18 months.
The legacy company was pretty aggressive across the board price ups, so versus across the board price ups were going to be more surgical and very customized by each customer based on their competitive profile and their speed tier.
Uh, this is John, uh, uh, thanks Richard, on the fiber, turn side. Uh, we're High, uh, on on the turn rate versus Benchmark and that's not dissimilar. That Frontier in 2021. When it first started as transformation, and we're losing to The Logical players. Uh, uh, in our fiber footprint, it's not, you know, fwa or Leo. It's it's cable, right? It's largely cable. And, uh, our approach, um, is to, um, apply the same 5 tactics that I know work, uh, and, uh, and, and we're starting to, uh, execute those right now, uh, the first tactic really is to clear the decks of any noise, right? And we're making 2 hygiene changes, uh, to do that first in July. Uh, we saw that we were dragging on non-pay customers for a little bit and incurring bad debt. Uh, so now we have a policy to write them off earlier. So that's going to inflate churn a little bit on the fiber side. Well,
Assign them.
Price up.
That's fair and inflationary and many cases, if we can give them more speed for more money more for more value.
That's the strategy that will take cables used at frontier has used it we're going to use it. So yes, we might be increasing your rate a few dollars, but we're also going to.
W are speed in some cases, so it's that more for more strategy and aligning value with price.
Wash through that by the end of the year and the second is, uh, to really get out of the ACP credit business. When the ACP program went away, we extended credits to those customers and, uh, on September 1st, we notified them that, uh, that's no longer going to be the case and effective 101. Uh, we are no longer, uh, subsidizing the ACP program after it went away. Uh, that's going to, you know, put about 16 basis. Point pressure on fiber turned in the fourth quarter, uh, but that again, that's just clearing the decks for the future. The second is being more surgical about price UPS, uh,
The third is really redesigning our value proposition.
We just went from.
National pricing to regional pricing to not leave money on the table and take more share.
We've eliminated the concept of rack rate pricing.
And.
<unk>.
Adopted a pulse strategy. So we'll go in and out of markets with <unk>.
Promotions.
So that is.
That's a tactic that works and we're deploying that and we've recently revamped many call center practices Thats, the kind of fourth prong routing customers to the right cues simplifying the ibrd get to people quicker aligning incentives with reps.
So that it's not only save rate, but also net retained revenue for the retention queues and really using <unk>.
Over the last, uh, 18 months, uh, uh, the Legacy company was pretty aggressive about across the board price UPS, so versus across the board price UPS. Uh, we're going to be more Surgical and very customized by each customer, based on their competitive profile and their speed tier, uh, you know, assign them, uh, a price up. Uh, uh, that's, that's fair and inflationary. And in many cases, if we can give them more speed for More Money, More for more value. Um, that's the strategy that will take cables use. It Frontier, is used it. We're going to use it. So yeah, we might be uh, increasing your rate a few dollars, but we're also going to, you know, double your speed in some cases. So it's that more for more strategy and aligning value with price. Um, the third is really redesigning our value.
<unk> AI to identify root causes of churn and performance management identifying those reps that do it well and those that don't and sharing and pushing out those best practices to the entire.
The entire team and finally and very fundamentally it's fixing broken customer experiences every week my leadership team gathered around the table.
Proposition. We we just went from um uh National pricing to Regional pricing to not leave money on the table and take more share. Uh, We've eliminated, uh, the concept of rack rate pricing, um, and uh, We've um, uh,
To find proactively find and fix problems and this is a discipline and muscle that $1 billion to act fast and to do this everything from <unk>.
Transferring customers too many times.
And we've made some progress there too.
Simplifying the AVR to small business customers up until a month ago at wanted single location small business customers up until a month ago.
Wanted to place a fiber.
Order could not schedule and install hate.
We fixed that pretty quickly.
Adopted, a pulse strategy. So we'll go in and out of markets, uh, with uh promotions. Uh, so that is um, that's a tactic that works. And, and we're deploying that. And we've recently revamped many call center practices. That's the kind of the fourth prong, uh, routing customers to the right queue, simplifying the ibr to get the people quicker, aligning incentives with reps. Uh, so that it's not only save rate, but also net retained revenue for the retention cues and really using, uh, gen AI to identify root cause of
Yes.
Went up fairly significantly. So these are the things that we're finding and fixing them and this is the way to go after at churn and loyalty I expect will make.
Strong progress this isn't rocket science.
It sounds like a good playbook and nice to clear the decks for next year. Thank you.
Thanks Richard.
And the next question comes from David Barden with New Street Research. Your line is same thing.
Hey, guys. How are you guys doing.
David Welcome back.
Churn and Performance Management. Identifying those reps that do it well and those that don't and sharing them pushing out those best practices to the entire uh, to the entire uh, team. And finally, and very fundamentally, it's fixing broken customer experiences every week, the, my leadership team gathers around a table, uh, to find proactively find and fix problems. And this is a discipline and muscle that we're building to act fast and to do this, you know, everything from, you know, transferring customers to many times, uh, and we've made some progress there to, uh, you know, simplifying the ibr.
Thank you so much Tony.
So I guess I had a couple of questions for John.
Prior to, you know, small business customers up until a month ago at Wanted single location. Small business customers up until a month ago.
John There is a philosophical divide in the in the fiber.
Market right now, which is building in house versus outsource building.
And how that contributes to your cost to pass in your efficiency and your ability to scale I was wondering if you could kind of elaborate a little bit on kind of where.
Where you are landing on that in the.
They that wanted a place of fiber. Uh, order could not schedule an install date. Uh, we fixed that pretty quickly and, you know, sales um, you know, more went up fairly significantly. So these are the things that we're finding and fixing and, and this is the way to go after, uh, turning loyalty. I expect we'll make, uh, strong progress, this isn't rocket science.
The new kinetic.
And then the second is the chart, where you guys show the penetration rates for fiber I mean, 25% to 30% penetration year, one is pretty incredible, but then it tails off really quickly only giving us a few more percentage points over the next couple of years could you kind of talk a little bit about that or how do you get that really high penetration.
Last year. Thank you.
Thanks Richard.
And the next question comes from David Barden with New Street Research. Your line is open.
Hey guys, how are you guys doing?
Great, David. Welcome back.
<unk> you want and then how are we going to scale that further in years two three plus thanks.
Yes.
Excellent. Thanks, Thanks, David and.
Thank you so much, Kenny. Um, so I guess I got a couple questions for John. Um, John, there's a philosophical divide in in the in the fiber.
On your first question.
We buy it.
Made three major fundamental changes to our <unk>.
Build plan over the last several months first is.
From having no plan to actually having one.
Right.
Specific.
Sequencing of where we're going to build and what order. We know every household as specifically for the next three years and sequence. The second is moving from subsidized builds largely to strategic builds.
And 2025 will be the last year that kinetic builds more subsidized households than strategic households.
And the third is.
Going from predominantly internal.
Market right now which is building in-house versus Outsource building um and how that contributes to your, you know, cost to pass and your efficiency and your ability to scale. I was wondering if you could kind of elaborate a little bit on kind of where you uh are landing on that, you know, in the kind of the new kinetic. Um and then the second is the chart where you guys show the penetration rates for fiber. I mean 25 to 30% penetration year, 1 is pretty incredible but then it tails off really quickly. Uh, you know, only getting us a few more percentage points over the next couple years. Could you kind of talk a little bit about that Ark? How do you get that really high penetration, you know, year 1 and then how are we going to scale that further? In in years 2 3, plus thanks?
Construction teams to predominantly external.
Yeah, uh, excellent. Uh, thanks. Thanks, David. And, um, on your first question, uh,
We took a page out of the frontier playbook here put multiyear volume on the table and secured agreements.
That can scale cost efficiently.
And because we have an internal team we know that we could hire up there we could deploy it just takes time and effort.
But that gives us a little bit of leverage when negotiating with.
Third parties as well and it's not one or the other is absolutely evolve.
Our internal teams not only have a cost advantage.
Combine that with our 95%.
Either fiber and our fiber to the node allows us for quick and cost effective deployment of fiber but.
We've, uh, made 3, major, fundamental changes to our, uh, build plan, uh, over the last several months. Uh, first is, uh, from having no plan to actually having 1 with, uh, very specific, uh, sequencing of where we're going to build in, what order, we know, every household, uh, specifically for the next 3 years in sequence, uh, the second is moving from subsidized bills, largely to strategic builds, um, and 2025 will be the last year that kinetic builds more subsidized households than strategic households.
The internal teams have a lot of flexibility to travel to go to places, where we can pivot quickly as appropriate and send teams in to do specific builds and so we have a plan to use both internal external effectively.
We don't buy into one or the other I think if we can get the right cost and we believe we have them on external that's the fastest way to scale and that's where we're moving the majority of our work to but we'll never give up our internal.
Construction team.
On the other question on the fast penetration and then the curve for the outer years yeah.
And the third is, uh, going from predominantly internal, uh, uh, uh construction uh, teams to predominantly external. Uh, we took a page out of the frontier Playbook here, put multi-year volume on the table and secured agreements. Uh, that can scale cost efficiently and, uh, because we have an internal team, we know that we could hire up there, we could deploy, it just takes time and effort. Uh, but that gives us a little bit of Leverage when negotiating with, uh, you know, uh, third parties as well, and it's not 1 of the other, it's absolutely bowled. You know, the our internal teams, uh, not only have a cost advantage.
As you see this also with.
Over builders et cetera, you hit a wall and I remember in 2021 at frontier people people.
We're skeptical of us.
Growing the legacy what you call the base markets in the legacy markets and it was like 45.
<unk> penetration in 2021, and we said we wanted to get to.
45% in four years, we achieved that one year ahead of schedule and I think last quarter frontier might have announced 48% penetration in those base market. So I think the kinetics team has done a really strong job penetrating.
<unk>.
Holmes.
New fiber territories quickly they have a whole effort called fiber fast, it's very disciplined and its very effective.
Where they haven't paid as much attention to is those legacy markets and recently, we have and I can tell you that we're seeing improvements there in the older cohorts and a lot of it is just how you go after those discretely do you.
Pulse in and out of those markets with promo do you add distribution in those markets either door to door or.
Do bolster media performance based media in those markets. So a combination of Ah.
Promo distribution.
Uh, on the other question on the fast penetration. And then the the, the curve for the outer years? Yeah, uh this is, you see this also with, you know, over Builders Etc. You know, you hit a wall and I, I remember in 2021 at Frontier people. People, uh, were skeptical of us, uh, growing the Legacy. We call the base markets or the Legacy markets and it was like 40 and a half percent penetration and, and 2021. And, you know, we said we wanted to get to what uh, 45% in 4 years we achieved that 1 year ahead of schedule. And I think last quarter Frontier might have announced 48% penetration in those base markets. So I think the
<unk> media is how we go after that and that's how he did it at at frontier and it seemed to work. So I'm confident that we'll make inroads. There there is a really good markets with good <unk>.
For our files, we should be winning our fair share.
In those markets.
Super helpful. John Thank you so much guys.
David just to build on John's comments on the build and philosophy. There. We've said for several quarters now leading up to this pivot to more external that our build costs.
Kris.
So going from that historically low 600 to 650, all internal that we were going to make the sacrifice to let that cost per passing increase some.
But the but the benefit of that would be that we'd bring all of the things John just said about the benefits and able to build more faster, we think that trade off is well worth it so to your philosophical point, that's that's where we land.
Bringing a good mix as opposed to doing it 100% internal yes, you spend a little bit more per passing but all the benefits that John just mentioned accrue accrue eventually to the bottom line.
Uh, do you bolster media performance based media in those markets? Uh, so a combination of uh, promo distribution and uh, media is how we go after that. And that's how we did it at at Frontier and it seemed to work. So I'm I'm confident that we'll make inroads there. There's a, there's a really good markets with good market profiles. We should be winning our fair share uh, in those markets.
Super helpful. John. Thank you so much guys.
And our next question will come from Brendan.
Matt <unk> with Barclays. Your line is open.
Great. Thanks for taking my question.
On Connecticut home, passing that Youre, a little below the pace that you originally anticipated, but expect to kind of recapture that.
Original trajectory in 2026 can you just walk us through what you expect to change next year to help you get back on track.
David just to build on John's comments on the bill and and philosophy. There we've said for several quarters now leading up to this pivot to more external that our build costs would increase. Uh, so going from that historically low, 600 to 650, all internal that we were going to make the sacrifice to let that cost per passing increase. Some
Yeah, I mean, we're we're below as Kenny mentioned.
Site.
But we expect to catch up in the first quarter.
Uh, but the but the benefit of that would be that we bring all the things. John just said about the benefits and able to build more faster. We think that trade-off is well worth it. So from to to your philosophical Point, that's how that's where we land, you know, let's let's bring in a good mix.
Simply a timing issue after the merger close we realize that not all projects that we are designed and ready to go we secured.
As opposed to doing it 100% internal, yes. You spend a little bit more for passing but, but all the benefits that John just mentioned a crew, a crew eventually to the bottom line.
The crews at external to go build them not all of the projects for permitted and we ran into delays on permits and locates, particularly in the subsidized markets, where we're new to the area and we don't have any existing experience or facilities. This is not a kinetic problem as you know permitting is.
And our next question will come from Brendan?
Lynch with Barclays, your line is open.
Industry wide problem and Theres, a lot of support and efforts to streamline the permitting process we support you.
U S.
Great, thanks for taking my question. Um, just on kinetic home passings, you're a little below, the taste that you were originally anticipated. Um, but expect to kind of recapture that, um, original trajectory in 2026, can you just walk us through what? You expect to change next year to help you get back on track?
<unk> telecom and other institutions that are going after that I know there is potential.
Potential is on the table as well, which were supported by the FCC has been a good advocated for reform here.
That said.
Relative to permitting and facilities, we have visibility to every project, where we are in that pipeline how to get ahead of it the timing now.
And this is easy to resolve and we're already knocking down some obstacles. We we took our team that really did a good job on a subsidized build planning and win a lot of winning a lot of great subsidized building.
Pivoted them to solely focus on managing our permitting and locate.
The motion and the velocity there has increased in September and October consecutively, we've set an internal record on number of permits clear neither that means anything.
When it comes to build plans, but we know that we're clearing the decks for the teams to roll. So that's why we're really confident of that.
First quarter will catch up.
Yeah, I mean uh we're we're below as as Kenny mentioned, uh, a slight, uh, bit but we expect to catch up in the first quarter. That's that's simply a timing issue. After the merger closed, we realized that not all projects that were designed and ready to go. We secured, you know, the the cruise, uh, external to, to go build them. Not all the projects were permitted, and we ran into delays on permits, uh, and locates, particularly in those subsidized markets, where we're new to the area and we don't have any existing experience or facilities. Uh, this is not a Connecticut problem. As you know, permitting is, uh, ah, ah, industry-wide problem. There's a lot of support and efforts to streamline the permitting process. We, we support, uh, us, uh, uh, Telecom and other institutions that are going, uh, after that, I know there's uh, potential, uh, EOS on the table as well, which we're, we're supportive of. And the FCC has been a good
Great. Thanks, that's helpful. And then can you kind of.
Multiple dwelling units as a growth opportunity.
Maybe just help us understand why that wasn't part of the plan in the past and what's changing to make it part of that plan now.
Yes, great question I'm going to start and then turn it to John to Paul on run and so look I think the short answer is it just wasn't a priority because there were so many other priorities that were being focused on.
Number one but number two I think that.
We've talked many times about bringing in fresh leadership, a fresh set of eyes.
Our proven playbook. This is one of those great examples of how.
With John coming in.
Taking a look at where we were focusing where our resources were targeted.
Advocate for reform here, uh, that said, uh, relative to the permitting and Facilities we have visibility to every project where we are in that pipeline. How to get ahead of it. The timing now, um, and uh, this is easy to resolve and we're already knocking down some obstacles. We, we, we took our team that really did a good job on our subsidized, build planning, and win a lot of winning. A lot of great subsidized, build and uh, uh, pivoted them to solely focus on managing our permitting and locate, uh, motion and the velocity there has increased in September and October consecutively. We've Set, uh, an internal record on number of permits cleared, not that. That means anything in the, uh, when it comes to build plans, but we know that, uh, we're clearing the decks for the teams to roll. So that's why we're really confident that, uh, in first quarter, we'll catch up.
And just and just servicing.
But hey, this is a big this was a big opportunity at Pryor.
Prior companies and here it is a big opportunity as well and we don't have the resources next to it that we should and on a go forward basis, we're going to so it's just really a question of leadership and priorities, but no I think thats well said.
Great. Thanks, that's helpful. And then can you you kind of teased, multiple dwelling units, as a growth opportunity. Uh, we've just helped us understand why that wasn't part of the plan in the past and what's changing to make it part of that plan. Now,
At Verizon I manage the MD business and you kind of have to when they're in horizon with New York City, Boston and other large cities you kind of have to have to know that.
Yeah, great question. I'm going to start and then turn it to John to, to, to Paul on running. So look, I think the short answer is it just wasn't a priority because there were so many other priorities that were being focused on uh, number 1. But number 2, I think that
Then add kinetic there really wasn't investment there. So we kind of built it from the ground up and to this day.
Tier and at Frontier I think it's delivering double digit nets every single quarter right now in terms of customer growth. So once you get it rolling it's really strong and the IRR is a really even higher than single family.
Sure.
Business, so I'm very bullish on it.
It'll take a little bit to build but we'll get it done you've got to have the right.
Motion if you will and leadership you also have the right product we have the right product in fact.
Our arrow deal that we just announced.
You know, we've talked many times about bringing in fresh leadership, a fresh set of eyes, uh, uh, you know, a proven Playbook. This is 1 of those great examples of how with, with John coming in uh, and, and taking a look at where we were focusing, where our resources were were targeted uh and and just and just servicing the, the concept that hey, this is a big. This was a big opportunity, a prior, uh, prior companies and here, uh, it it's a big opportunity as well and, and we don't have the resources next to it that we should. And, and, and, and on a go forward basis. We're going to. So it's just a, really a question of leadership and priorities, but no, I I I think that's well, said I, I
Has certain MDU and community capabilities that we can use.
To deliver effectively on that segment. So we're.
Get after this and it might take.
A few quarters or a year to really show the results, but once we once we get.
Involved there I know that we will succeed.
Great. Thank you.
And the next question will come from Matthew Griffiths with Bank of America. Your line is open.
Yes.
Hi, good morning, and thanks for taking the question I wanted to ask on fiber consumer fiber art you mentioned in the comments.
Explaining the kind of sequential down.
We've caused by price adjustments and net adds so I was wondering to what extent.
Kind of your comments on churn.
Kind of impacted.
Moving RP.
And then on the net add side are you finding that the kind of incremental net add is coming in at an increasingly lower ARPA.
And I, I manage the MD business and you kind of have to win there in Verizon, I mean, with New York City, Boston and other large cities. You kind of have to have to nail that. Uh, and then at kinetic, there really wasn't investment there. So, we we kind of built it from the ground up. And to this day, I, I mean, at at Frontier and at Frontier, I think it's delivering double digit Nets every single quarter right now, in terms of, uh, customer growth. So once you get it rolling, it's really strong and the IRS are really, um, even higher than single, uh, family uh, uh, business. So, uh, I'm very bullish on it. Uh, it it'll take a little bit to build, but we'll, we'll get it done. You've got to have the right, uh, motion. If you will, and Leadership, you also have the right, right product. We have the right product, in fact, uh, our Euro deal that we just announced, uh, uh, has certain MDU, uh, and Community capabilities that we can use, uh, to deliver effectively on that segment. So, uh, we're going to get after this and it, it might take
You know, a, a few quarters or a year to really show the results. But once we, once we get
Or was this just something within the quarter.
Uh, involved there. I know that we will succeed.
We may not see repeat.
Great. Thank you.
Color there would be great.
Yes, Matthew astute question.
I'll answer the first part and then on the second part with new customers.
And the next question will come from Matthew Griffith with Bank of America. Your line is open.
It may sound like I'm circling the airport, but I promise all of that in the plan and as to your question.
And yes, there is a correlation between.
Between churn and <unk> I mean, we have very high churn in.
And.
Among the best highest <unk> in the category I mean, 10% year over year on top of an already high.
<unk> in the category.
That's something that.
We need to really understand and I've spent a lot of time initially understanding that.
The higher <unk> that we have is in part due to our market profile, which I believe is very attractive and distinct.
Hi, good morning, and thanks for taking the question. I want to ask on the the fiber, a consumer fiber aru. Um, you mentioned in the comments, um, explaining the kind of sequential down move, um, was caused by price, adjustments and net ads. So I was wondering, you know, to what extent, um, kind of your comments on churn, uh, kind of impacted, uh, the move in arpu. Um, and then on the net, add side, you know, are you finding that the kind of incremental metadata is coming in at an increasingly lower arpu? Um, or was this just something within the quarter that, uh, you know, we may not see, repeat not of color. That would be great.
But the 10% year over year is really a result of multiple across the board price ups over the past 18 months and just like with copper customers.
Yeah, yeah. Yeah. I'm Matthew, uh, astute question. Uh, and I'll I'll I'll I'll I'll answer the the first part. And then on the the second part with new customers,
We're going to get.
More surgical here, we're going to drive more for more.
<unk>.
And really use the speed ladder to move customers up the speed ladder to drive <unk> higher and we have a massive opportunity there 65%.
Our fiber base is on plans that are less than one gig.
This is again similar to the frontier playbook.
Just about a month ago, we launched two gig to 85% of our footprint and already new customer take rates there are in the double digits.
It may sound like I'm Circle in the airport, but I promise I'll land the plane and and answer your question, uh, on on. Yeah, there's a correlation between, um, between turn and our arpu. I mean, we have very high churn and uh, and and uh, and among the best, you know, highest RP who's uh, in the category, I mean, 10% year-over-year on top of an already high, uh, rpu in the category. I mean, that that's something that, you know, we need to really understand
We're going to introduce more value added services to sell more services to customers not only to drive more <unk>, but also we know the more services customers purchase from us.
Understand. And I've spent a lot of time initially understanding that, uh, the higher proof that we have is in part due to our Market profile, which, which is is, I believe is very attractive and and distinct.
But the 10% year-over-year is really a result of multiple.
<unk> lowered the churn is for those customers.
And.
And also a contributor ARPA is using credits more effectively we put more controls on the use of credits over the last 60 days and we've now aligned rep retention rep compensation with net retained revenue. So you want to qualify the customer right size.
Drop all the way to the bottom in terms of.
Saving the customer.
You asked about new customers and <unk>.
I'm always I'm always reminded us.
Moffitt.
Characterization, a couple of years ago, we really captured the essence of our categories, new customer promo strategy that you'd characterize it.
This is almost exact words like it's really valued deferred not forgotten.
And for years and this works the industry brings in new customers at a lower rate.
Because it reflects a natural ability to move customers up the speed ladder sell more services and deploy inflationary price increases.
Across the board price UPS over the past 18 months and just like, with copper customers, uh, we're going to get, you know, uh, more surgical here. Uh, we're going to drive, you know, more from more, you know, uh, uh, and and really use the speed ladder to move customers up the speed ladder to drive, uh, our poop higher, uh, and we have a massive opportunity there. 65%. Uh, of our fiber base is on plans that are less than 1 gig. Uh, this is again similar to the frontier Playbook. Uh, just about a month ago, we launched 2 gigs to 85% of our footprint and already new customer. Take rates there are in the double digits. Um uh we're going to introduce more value added services to sell more services to customers. Not only to drive more arpu but also we know the more services customers purchase from us. The lower the churn is for those customers. Uh and uh and also a contributor RP who's using credits
We embrace that notion we've changed our go to market recently like I mentioned before.
To take advantage of that and so we have specific plans to.
Grow ARPA using the four levers that we always use speed ladder value added services inflationary price increases and use of credits and while it might not be it won't be 10% on a sustainable basis. We do believe there's a path to durable ARPA growth.
More effectively. We put more controls on the use of credits, over the last 60 days. And we now aligned rep, retention rep, compensation with net retained Revenue, so you want to qualify the customer right size Amendment. You don't have to drop all the way to the bottom in terms of, uh, saving the customer. Um, you asked about, you know, new customers and, uh, I'm always, I'm always reminded of, uh, moffit's, uh,
Okay, great. Thanks, that's super helpful.
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Really like I mentioned before uh, to to take advantage of that. And so we have specific plans to uh grow our poo using, you know, the 4 Le that we always use speed ladder value, added Services, inflationary price increases and uh, use of credits. And while it might not be, it won't be 10% on a sustainable basis. We do believe there's a path to adorable, uh, our food growth,
Great great. Thanks. I'm super helpful.
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