Little Rock-based Windstream posted declines in annual revenue and an adjusted net income variant related to an ongoing legal fight with Uniti. A new trial that will determine the future of both companies is set to begin in early March.
In mid-December, talks between Windstream Holdings Inc. and its former real estate spin-off broke down over a multimillion-dollar landlord-tenant agreement that could threaten the solvency of both Little Rock concerns.
Windstream and Uniti first entered into mediation on July 31 on a master lease agreement after the latter filed voluntary petitions for reorganization in late February under federal Chapter 11 bankruptcy rules. The controversial lease agreement provides for annual rent of $659 million to Uniti paid in equal monthly installments in advance, with an annual base rent escalator of 0.5%, according to securities filings. U.S. Bank and other unsecured creditors have also tried to change the terms of the lease agreement.
In the original court decision that pushed Windstream into bankruptcy, U.S. District Judge Jesse Furman’s ruling first arose from challenges by Aurelius Capital Management and U.S. Bank that the spinoff of Uniti in April 2015 was invalid under previous financial arrangements with Windstream.
In a Thursday (Feb. 20) earnings report, Windstream said adjusted total revenues and sales were $1.24 billion in the fourth quarter, compared to $1.35 billion in the same period a year ago, and $5.1 billion for 2019, compared to $5.5 billion in 2018.
Adjusted OIBDAR was $423 million in the fourth quarter, compared to $456 million in the same period a year ago, and $1.74 billion for 2019, compared to $1.85 billion in 2018. Adjusted OIBDAR is Adjusted OIBDA before the annual cash payment due under the arrangement with Uniti. Adjusted OIBDA is operating income (loss) before depreciation and amortization. The company also noted that financial results under Generally Accepted Accounting Principles (GAAP) were not disclosed while the company evaluates the accounting treatment for the Uniti arrangement.
In non-financial news, the earnings report noted that Windstream grew its Kinetic broadband customer base for the seventh consecutive quarter, adding 9,300 new subscribers in the fourth quarter. The company added approximately 28,000 new broadband subscribers for the year, achieving its second consecutive year of consumer broadband growth.
“Windstream achieved impressive year-over-year growth in consumer broadband subscribers as a result of our strategic network investments to deliver faster internet speeds across our rural footprint. And we still have a tremendous opportunity in front of us to up-sell our faster speed capabilities to larger portions of our Kinetic customer base,” said Tony Thomas, president and chief executive officer of Windstream.