Uniti Group Inc. · NASDAQ:UNIT
Uniti — Communications Sales & Leasing — Merger or Acquisition (August 2016)
23 slides from Uniti's merger presentation, Aug 25, 2016
Slide 1: Safe Harbor
Safe Harbor Certain statements in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended from time to time. Those forward-looking statements include all statements that are not historical statements of fact a
Slide 2: CS&L Vision and Strategy
CS&L Vision and Strategy Building Unique REIT Investment Platform Across Communication Infrastructure Assets Taking Advantage of Favorable Industry Dynamics Driving Capital Investments Exponential Network Traffic Growth Accelerating Architecture & Technology Changes Communication Infrastruct
Slide 3: CS&L Facts – Pro Forma
CS&L Facts – Pro Forma Spinoff Formation Contractual Net Lease Revenues (1) Uniti Fiber S&P 400 Mid-Cap Company April 2015 > $9B Revenues Under Contract > $500M Revenues Under Contract > $8B Enterprise Value NASDAQ: “CSAL” Annual Revenue Net Leverage (2) Net Secured Leverage (2) Near Term Debt Matur
Slide 4: CS&L Business Strategy
CS&L Business Strategy Broadband CS&L Fiber Wireless Backhaul CS&L Tower CS&L Ground Lease Carriers Continue To Divest Critical Communication Real Estate 4 Customer relationships across multiple asset classes Value appreciates over time Difficult to replicate Customers willing to lease on a long
Slide 5: CS&L Is Building a Unique REIT Investment Platform
CS&L Is Building a Unique REIT Investment Platform Broadband Attractive Return Profiles Across all Asset Classes (A) Lit fiber is generally not “REITable”; however, TRS structure and tax attributes for PEG and Tower Cloud expected to provide substantial tax benefits. Future conversions of lit fiber
Slide 6: CS&L Pro Forma Revenue Diversification
CS&L Pro Forma Revenue Diversification National Carrier B 23% Windstream Lease 82% 15% National Carrier A 44% Revenues (1) Revenues (1) National Carrier D 14% Talk America 3% Other 16% National Carrier C 3% Achieving Diversification with High Quality Tenants Note: Data based on 1Q16 results. (1)Firs
Slide 7: CS&L M&A Pipeline
(1) CS&L M&A Pipeline 53% 53% 79% DEAL SIZE ($M) ASSET TYPE PROCESS MIX 10% 16% 21% 37% 21% Fiber Towers < $250M ≥ $250M and < $500M ≥ $500M Process Negotiated Ground Leases Consumer Broadband Pipeline Well Diversified and Privately Sourced (1) This is a summary of the transactions we are actively p
Slide 8: Fiber is Critical to All Network Infrastructure
Fiber is Critical to All Network Infrastructure Macro Cell Small Cell Distributed Antenna System Baseband Processing C-RAN Fiber is the Unifying CORE Infrastructure Underpinning Carrier Networks 8
Slide 9: Pro Forma Uniti Fiber At A Glance
Pro Forma Uniti Fiber At A Glance Lit Backhaul 85% Lit Backhaul 75% National Carrier B 23% National Carrier A 44% Revenues Under Contract (1) Product Revenues (1) Customer Revenues (1) National Carrier C 3% National Carrier D 14% Other 16% Dark Fiber, Small Cells & Other 20% Wholesale & Enterprise 5
Slide 10: Tower Cloud Investment Thesis
Tower Cloud Investment Thesis Capitalizes on the Rising Demand by Carriers and Enterprises for Dark Fiber Establishes CS&L as a Proven Small Cell Systems Provider Grows Relationships with National Wireless Carriers Advances Diversification with High Quality Long Term Contractual Revenues A
Slide 11: Tower Cloud Attractive Sales Funnel
Tower Cloud Attractive Sales Funnel(1) Dark Fiber & Small Cells 75% Dark Fiber & Small Cells 92% Dark Fiber & Small Cells 86% CONTRACT VALUE CONNECTIONS MRR Lit Backhaul 12% Lit Backhaul Lit Backhaul 7% 21% Wholesale & Enterprise 1% Wholesale & Enterprise 2% Wholesale & Enterprise 4% Dark Fiber & Sm
Slide 12: Strong Sales Momentum with Attractive Returns
Strong Sales Momentum with Attractive Returns Dark Fiber Small Cells Recent North Florida and Augusta, GA Dark Fiber Awards From National Wireless Carrier Completed First Small Cell Network in 2015 for Major Wireless Carrier $175 million Total Contract Value Recent Small Cell Awards 20 Y
Slide 13: Significant Synergy Opportunities
Significant Synergy Opportunities Access to 11 States Across the Eastern and Midwestern U.S. Expand Network Reach by Nearly 30,000 Near-Net Connection Opportunities Increase Ability to Serve Multi-location Wholesale & Enterprise Customers with Larger Geographic Reach Pool Shared Relationship
Slide 14: Tower Cloud Transaction Summary
Tower Cloud Transaction Summary Initial Consideration of $230 million $180 million Cash Consideration Consideration 1.9 million Shares of CS&L Common Stock Additional Contingent Consideration upon Tower Cloud Achieving Certain Defined Operational and Financial Milestones Over the Next 4 Year
Slide 15: Current & Pro Forma Capitalization
Current & Pro Forma Capitalization $ in Millions Tower Cloud Transaction Pro Forma as Adjusted for Tower Cloud 6/30/2016 As Reported Adjustments Transaction Cash $ 49 $ --$ 49 185 (1) Revolver 42 227 Term Loan B 2,119 --2,119 Secured Notes 550 --550 Unsecured Notes 1,110 --1,110 Capital Leases (2) 4
Slide 16: Current & Pro Forma Capitalization
Current & Pro Forma Capitalization $ in Millions Tower Cloud Pro Forma as Adjusted 6/30/2016 Transaction for Tower Cloud As Reported Adjustments Transaction Cash $ 49 $ - $49 Revolver 42 185" 227 Term Loan B 2,119 - 2,119 Secured Notes 550 - 550 Unsecured Notes 1,110 - 1,110 Capital Leases 49 7 56 T
Slide 17: Appendix
Appendix 18
Slide 18: Reconciliation of Non-GAAP Historical Financials
Reconciliation of Non-GAAP Historical Financials Unaudited, $ in Millions CS&L 2Q16 Net Loss $ (1.5) Depreciation & amortization 92.4 Interest expense 68.0 Income tax expense 0.3 1.2 Stock-based compensation 11.2 Transaction related costs Note: Subtotals may not foot due to rounding. (1)Annualized A
Slide 19: Reconciliation of Non-GAAP Historical Financials
Reconciliation of Non-GAAP Historical Financials Unaudited, $ in Millions Uniti Fiber(2) PEG Bandwidth Tower Cloud 1Q16 (1) 1Q16 (1) 1Q16 Net Income $ (5.4) Net Income $ (2.3) Net Income $ (7.7) Depreciation & amortization 8.2 Depreciation & amortization 4.7 Depreciation & amortization 12.9 Interest
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures We refer to EBITDA, Adjusted EBITDA, Funds From Operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), Normalized Funds from Operations (“NFFO”) and Adjusted Funds from Operations (“AFFO”) in our analysis of our results of o
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Because the historical cost accounting convention used for real estate assets requires the recognition of depreciation expense except on land, such accounting presentation implies that the value of the real estate assets diminishes predictably over time. However, since re
Slide 22: Other Reporting Definitions
Other Reporting Definitions Adjusted EBITDA Margin: Adjusted EBITDA divided by consolidated revenue. Adjusted EBITDA margin is a supplemental measure of our operating margin that should be considered along with, but not as an alternative to our operating margins Contract Value: MRR and MAR under
Slide 23: Other Reporting Definitions
Other Reporting Definitions * Adjusted EBITDA Margin: Adjusted EBITDA divided by consolidated revenue. Adjusted EBITDA margin is a supplemental measure of our operating margin that should be considered along with, but not as an alternative to our operating margins * Contract Value: MRR and MAR under
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