Uniti swings to Q3 profit, cuts deal with Everstream

Real estate investment trust Uniti Corp. posted a $7.26 million third quarter profit Monday (Nov. 9) on revenue of $258.76 million. The quarter was a reversal from a year ago when Little Rock-based Uniti recorded a $19.42 million loss on revenue of $263.63 million.

Year-to-date, Uniti has produced revenue of $791.75 million, but shows a $660.19 million loss primarily attributable to a one-time $650 million settlement with Windstream Corp., its former parent company.

Uniti and Windstream settled a major contract over its lease agreement during a contentious bankruptcy chapter for Windstream.

Uniti also announced Monday a strategic transaction with Everstream Solutions LLC, which is majority owned by AMP Capital, a global investment manager headquartered in Sydney, Australia.

As part of the transaction, Uniti will enter into two 20-year lease agreements with Everstream on Uniti owned fiber that spans eight states and covers over 10,000 route miles and 220,000 fiber strand miles.

Concurrently, Uniti has agreed to sell to Everstream a portion of Uniti Fiber’s Northeast operations and certain dark fiber contracts acquired as part of the Windstream settlement, that on a combined basis, currently generate approximately $24 million of annual revenue.

Total cash consideration to Uniti, including upfront payments, is approximately $135 million. In addition to the upfront proceeds, Uniti will receive fees of approximately $3 million annually from Everstream over the initial 20-year term of the lease agreements

“Our fiber and leasing businesses continue to perform exceedingly well,” said Uniti CEO Kenny Gunderman. “Install activity during the quarter at Uniti Fiber remained robust reflecting the strong demand we continue to see for our wireless and non-wireless service offerings. At Uniti Leasing, we continue to drive additional lease up on our national fiber network. This was reflected in the Everstream transaction we are announcing today, reinforcing the substantial value of our national network, including the fiber Uniti acquired the rights to in its settlement with Windstream.”

Other notes from the quarter include:

• On July 1, 2020, Uniti completed the sale of a controlling ownership stake in the entity that holds certain former Uniti Midwest fiber network assets to MIP for total cash consideration of approximately $168 million.
• On September 21, 2020, Uniti announced the effectiveness of the previously announced settlement with Windstream Holdings Inc. and certain of its subsidiaries. The settlement occurred in connection with Windstream’s emergence from bankruptcy.

“The demand for our fiber networks has never been higher as we continue to drive high margin, low churn, recurring revenue to provide mission critical services,” Gunderman said.

Shares of Uniti (NASDAQ: UNIT) closed trading Monday at $9.46 per share. The company’s shares have traded as low as $4.86 and as high as $11.08 during the past year.