Uniti Group Inc. · NASDAQ:UNIT
Uniti — Communications Sales & Leasing — Merger or Acquisition (June 2016)
23 slides from Uniti's merger presentation, Jun 20, 2016
Slide 1: CS&L The Communications REIT: Acquisition of Tower Cloud
CS&L The Communications REIT Acquisition of June 20, 2016
Slide 2: Safe Harbor
Safe Harbor Certain statements in this presentation may constitute forward - looking statements within the meaning of the Private Securities L itigation Reform Act of 1995, as amended from time to time. Those forward - looking statements include all statements that are not historical statements of f
Slide 3: Agenda and Speakers
Agenda and Speakers 2 Strategic Vision & Investment Thesis Transaction and Financial Structure Mark A. Wallace Executive Vice President, Chief Financial Officer and Treasurer Kenny Gunderman President and Chief Executive Officer
Slide 4: CS&L Vision and Strategy
3 ▪ Building Unique REIT Investment Platform Across Communication Infrastructure Assets ▪ Taking Advantage of Favorable Industry Dynamics Driving Capital Investments ▪ Exponential Network T raffic Growth Accelerating Architecture & Technology Changes ▪ Communication Infrastructure Converging Around
Slide 5: Tower Cloud Investment Thesis Drives Scale and Growth within CS&L Fiber Infrastructure Group
Tower Cloud Investment Thesis 4 Drives Scale and Growth within CS&L Fiber Infrastructure Group ▪ 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 Div
Slide 6: Fiber is Mission Critical to Serving Carriers and Enterprises
5 Fiber is Mission Critical to Serving C arriers and Enterprises Macro Cell Small Cell Distributed Antenna System C - RAN Baseband Processing Fiber is Critical to All Network Infrastructure
Slide 7: Significantly Extends CS&L Fiber Network
6 Significantly Extends CS&L Fiber Network Enhanced Combined Network Footprint PRODUCT REVENUES (1) E - Rate 3% Other 2% Wholesale & Enterprise 9% Lit Backhaul 85% CUSTOMER REVENUES (1 ) Dark Fiber & Small Cells 1% E - Rate 1% REVENUES UNDER CONTRACT Wholesale & Enterprise 5% Dark Fiber & Small Cell
Slide 8: CS&L Pro Forma Revenue Diversification
7 CS&L Pro Forma Revenue Diversification Achieving Diversification with High Quality Tenants 15% Talk America 3 % National Carrier A 44% National Carrier B 23% National Carrier D 14% National Carrier C 3% Other 16% Revenues (1) PEG / Tower Cloud 19% Talk America 3% Windstream Lease 82% Revenues (1)
Slide 9: Tower Cloud At A Glance
Tower Cloud At A Glance 8 Financial Data (1) Lit Backhaul Connections (4) 1,889 Revenue Under Contract (5) > $225M Average Remaining Contract Term (6) 56 months Employees ~70 $ in Millions 1Q16 LQA LQA Revenue $41 LQA Adjusted EBITDA (2) $14 Maintenance Capex to Revenues ~6% Monthly Revenue (3) – MR
Slide 10: Strong Growth Track Record With Attractive Sales Funnel
$8 $15 $27 $33 $41 2011 2012 2013 2014 2015 Strong Growth Track Record With Attractive Sales Funnel 9 Dark Fiber & Small Cells Driving Sales Momentum Tower Cloud Sales Funnel (1) - $1 $2 $5 $9 $13 2011 2012 2013 2014 2015 Revenue ($ in Millions) Adjusted EBITDA ($ in Millions) (2) MRR CONTRACT VALUE
Slide 11: Strong Sales Momentum with Attractive Returns
Strong Sales Momentum with Attractive Returns 10 ▪ Recent North Florida and Augusta, GA Dark Fiber Awards From National Wireless Carrier ▪ $175 million Total Contract Value ▪ 20 Year Term ▪ Carrier Contributing Upfront NRC ▪ Contracts Signed Late 2015 ▪ North Florida Build Expected to Be Completed i
Slide 12: Significant Synergy Opportunities
Significant S ynergy O pportunities 11 ▪ Integrate Sales Organizations and Marketing Coverage ▪ Automation of Manual Processes and Consolidation of Duplicative Administrative Processes ▪ Best Practice Approach to OSS/BSS Systems ▪ Implement Best Practices in Service Delivery, Service Assurance, and
Slide 13: Transaction Summary
Transaction Summary 12 Consideration ▪ Initial Consideration of $230 million ▪ $180 million Cash 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 Years Synergi
Slide 14: Current & Pro Forma Capitalization
Current & Pro Forma Capitalization 13 $ in Millions 3/31/2016 As Reported PEG Transaction Adjustments Recent Senior Secured Notes Adjustments Pro Forma as Adjusted before Tower Cloud Transc . Tower Cloud Transaction Adjustments Pro Forma as Adjusted for Tower Cloud Transaction Cash $ 1 65 $ 12 $ (2)
Slide 15: Key Customers / Attractive Return Profiles Across all Asset Classes
Key Customers REITable ? x x x x (A) x Initial Yields 6% – 8% 5% – 10 %+ 5% – 7% 5% – 7% 10% – 2 0% 8% - 12% Multi Tenant Leased Up “Shared Economics” x x x x x Initial Term (Years) 50 – 99 5 – 10 10 – 20 10 – 20 5 – 10 15 – 20 Escalators 1% – 4% 1% – 3% 0% – 3% 0% – 3% N/A 1% – 3% Characteristics C
Slide 16: CS&L Facts – Pro Forma
CS&L Facts – Pro Forma Spinoff Formation April 2015 NASDA Q: “CSAL” Contractual Net Lease Revenues (1) $ 10B Revenues Under Contract Fiber Infrastructure Group > $500M Revenues Under Contract S&P 400 Mid - Cap Company > $7B Enterprise Value Annual Revenue ≈ $ 800M Net Leverage (2) 5.6x Net Secured L
Slide 17: Q&A
Q&A sad” 6
Slide 18: Appendix
Appendix 17
Slide 19: Reconciliation of Non-GAAP Historical Financials
Reconciliation of Non - GAAP Historical Financials Unaudited , $ in Millions CS&L PEG Bandwidth 1Q16 Net Income $ 8.0 Depreciation & amortization 86.3 Interest expense 66.0 Income tax expense 0.4 EBITDA $ 160.8 Stock - based compensation 0.9 Transaction related costs 3.9 Adjusted EBITDA 165.7 Annual
Slide 20: Reconciliation of Tower Cloud Historical Financials
Reconciliation of Tower Cloud Historical Financials 19 $ in Millions 2013 (1) 2014 (1) 2015 (1) Net loss $ (8.9) $ (10.8) $ (10.1) Depreciation and amortization 11.6 15.9 18.6 Interest expense 1.6 3.4 4.4 Income tax expense - - - EBITDA $ 4.3 $ 8.5 $ 13.0 Stock - based compensation 0.4 0.4 0.3 Adjus
Slide 21: Non-GAAP measure definitions: EBITDA, Adjusted EBITDA, FFO
We refer to EBITDA, Adjusted EBITDA, Funds From Operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), NFFO and AFFO in our analysis of our results of operations, which are not required by, or prese nte d in accordance with, accounting principles gener
Slide 22: FFO, NFFO and AFFO definitions
Because the historical cost accounting convention used for real estate assets requires the recognition of depreciation expens e e xcept on land, such accounting presentation implies that the value of the real estate assets diminishes predictably over time. Howe ver , since real estate values have hi
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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