Uniti Group Inc. · NASDAQ:UNIT
Uniti — Merger or Acquisition (September 2024)
22 slides from Uniti's merger presentation, Sep 23, 2024
Slide 1: Investor Presentation September 2024
Investor Presentation September 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements that are subject to risks and uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. Forward-looking statements are typically identif
Slide 3: Business Overview
Business Overview ▪ Provides broadband internet, traditional voice, and video services to residential and small business customers ▪ Key products include high-speed Internet, CPE, wireless service bundle, Internet security, live TV and streaming video, and Voice ▪ 1.6M FTTH consumer premises passed
Slide 4: Adjusted EBITDAR of $871.1M for the six months ended June 30, 2024
Adjusted EBITDAR(1) of $871.1M for the 6 months Ended June 30, 2024, Up 4% in 1H 2024 Consumer Highlights ▪ Kinetic consumer service revenue down 2% year-over-year largely driven by impact of the ACP step-down(2) ▪ Strong fiber net additions of 17K in quarter ▪ Consumer Broadband ARPU of $89.13 up 2
Slide 5: Uniti and Windstream announced their intention to merge
▪ On May 3, 2024, Uniti and Windstream announced their intention to merge ▪ The combination will create a premier insurgent fiber provider with $4.3B in pro forma revenue for the year ended as of 12/31/23 and 230,000 fiber route miles covering 47 states within the U.S. ▪ Existing Uniti shareholders
Slide 6: Kinetic consumer overview and strategy
61.9% 61.2% Consumer Broadband HHs(3) (by technology) # HHs Penetration Fiber – Strategic Markets 1.5M 27% Fiber – PPP / RDOF Markets 0.1M 34% DSL 2.8M 25% $414 $405 1Q24 2Q24 $256 $248 1Q24 2Q24 Revenue ($M) Direct Margin ($M) (1) Overview ▪ Provides broadband internet, traditional voice, and video
Slide 7: Kinetic key operational and financial metrics
Broadband subscribers ~1.1M Next Gen penetration(2) ~27% Fiber Build program expected to bring next gen speeds to over 1.9M households by 2027, representing over 40% coverage of all broadband addressable households, including out-of-footprint RDOF and PPP expansion Next Gen Consumer passings ~1.6M A
Slide 8: Unique, diverse footprint with limited overbuilder presence
Unique, diverse footprint with limited overbuilder presence ▪ Rural and geographically diverse footprint: ~75% of footprint in markets with less than 20,000 households ▪ Insurgent fiber provider resulting in 85% of footprint with no overbuilders Already upgraded ~1.6M households to Next Gen FTTH ▪ C
Slide 9: Kinetic subscriber, penetration and ARPU trends
401 418 26.6% 26.9% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 200 250 300 350 400 450 500 1Q24 2Q24 1,508 1,553 1Q24 2Q24 Consumer $305 $299 $89.93 $89.13 $75 $77 $79 $81 $83 $85 $87 $89 $91 $290 $295 $300 $305 $310 1Q24 2Q24 Consumer Broadband Revenue Consumer Broadband ARPU Cumulative 1 Gbps Pas
Slide 10: Newest Fiber Cohorts Are Showing Strong Penetration Early
Newest Fiber Cohorts Are Showing Strong Penetration Early 40% Target Penetration over a 4 year period Year 1 and Year 2 Cohort Penetration < 1 Year Cohorts 16% 22% 15% 15% 20% 22% 25% 26% 27% 24% 29% 28% 23% 29% 22% 21% 26% 27% 29% 30% 25% 24% 20% 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q
Slide 11: Enterprise overview and strategy
57.1% 55.8% $208 $187 1Q24 2Q24 $364 $334 1Q24 2Q24 ▪ Provides cloud-enabled connectivity, communications and security solutions to enterprises with primary operations in U.S. ▪ Strategic & Advanced revenues annualized(2) ~$1,151M, representing ~90% of total Enterprise market service revenue(3) ▪ ~8
Slide 12: Leading enterprise service provider with significant scale
Leading enterprise service provider with significant scale ▪ Largest independent provider outside of major carriers and CableCos ▪ Serves more than 11K enterprise customers across more than 70K critical locations(1) Large, sticky, and diversified customer base across industries ▪ Serve customers spa
Slide 13: TDM Retirement Accelerates Cost Reduction and Improves Customer Experience
TDM Retirement Accelerates Cost Reduction and Improves Customer Experience ▪ 2Q24 annualized run-rate of $342M in interconnection and network access & facilities expenses; annualized decline of 27% ▪ $90M of Legacy TDM-related expenses(1) including Network Facility expense; annualized decline of 52%
Slide 14: Wholesale overview and ICON network
▪ Enhancements made on Windstream’s Intelligent Converted Optical Network (ICON), launched in 2020, provides open and disaggregated network architecture ▪ Benefits include ultra high capacity, lower equipment and 86.8% 88.5% operations cost and increased network reliability Products $194 $166 1Q24 2
Slide 15: Future-proof nationwide wholesale fiber network
Future-proof nationwide wholesale fiber network ▪ Scalable, pan-U.S. fiber network with key strategic routes, covering 102K(1) fiber route miles in the United States ▪ 1 of only 3 nationwide fiber-to-the-tower networks Long-term, highly recurring customer relationships ▪ Attractive mix of high-quali
Slide 16: One of the Three Players that Matter to National Customers
~34% We are One of the Three Players that Matter to National Sophisticated Customers… …And it Bears Out in Our Outsized Market Share We have ~25% of the Wave Wireline / Carrier Market We have ~34% Share of Spend Across Our Connected Data Centers ~25% Nationwide? Dedicated to Waves and Dark Fiber? Pr
Slide 17: Unaudited Adjusted Results of Operations (Non-GAAP)
Unaudited Adjusted Results of Operations (Non-GAAP) Financial Overview ($M) 2024 2024 1Q 2Q Revenue and Sales Kinetic Market $547 $529 Enterprise Market 316 287 Wholesale Market 114 100 Service Revenue $977 $916 Product & Fiber Sales 24 11 Total Revenue and Sales $1,001 $926 Expenses Direct Segment
Slide 18: Debt Maturity as of June 30, 2024
Debt Maturity as of June 30, 2024 ($M) Undrawn Super Senior Revolver Term Loan First Out Term Loan Senior First Lien Notes $250 $0 $0 $0 $0 $708 $1,400 $- $250 $500 $750 $1,000 $1,250 $1,500 2023 2024 2025 2026 2027 2028 $475 Note: The amended senior secured revolving credit facility will have $500
Slide 19: Segment revenue, direct margin and Adjusted EBITDA
61.9% 61.2% 57.1% 55.8% Enterprise Wholesale $414 $405 1Q24 2Q24 $256 $248 1Q24 2Q24 Kinetic $208 $187 1Q24 2Q24 $364 $334 1Q24 2Q24 $194 $166 1Q24 2Q24 $223 $187 1Q24 2Q24 86.8% 88.5% Revenue ($M) Direct margin ($M)(1) Revenue ($M) $1,001 $926 1Q24 2Q24 Adj. EBITDA(2) ($M) $366 $217 1Q24 2Q24 Note:
Slide 20: Total and net debt, leverage and interest coverage
6.8x 4.7x 4.5x 5.2x 2021A 2022A 2023A LTM 2Q 2024A $2,170 $2,407 $2,389 $2,380 $1,884 $2,294 $2,344 $2,284 2021A 2022A 2023A LTM 2Q 2024A Total debt Net debt $711 $510 $380 $462 2021A 2022A 2023A LTM 2Q 2024A Total and net debt Cash + Revolver availability(1) Gross and net leverage Adj. EBITDA(2) /
Slide 21: Adjusted EBITDAR reconciliation
($M) FY2023 Q1 ‘24 Q2 ‘24 LTM 06/30/2024 Net (loss) income ($209.8) $59.7 ($59.9) ($122.1) Depreciation and amortization 790.8 207.7 200.8 804.1 Interest expense 209.6 53.6 52.8 211.7 Income tax expense (benefit) (61.4) 20.5 (13.7) (28.0) EBITDA $729.2 $341.5 $180.0 $865.7 Straight-line expense unde
Slide 22: Adjusted EBITDA reconciliation
($M) FY2023 Q1 ‘24 Q2 ‘24 LTM 06/30/2024 Net (loss) income ($209.8) $59.7 ($59.9) ($122.1) Depreciation and amortization 790.8 207.7 200.8 804.1 Interest expense 209.6 53.6 52.8 211.7 Income tax expense (benefit) (61.4) 20.5 (13.7) (28.0) EBITDA $729.2 $341.5 $180.0 $865.7 Straight -line expense und