Report: Windstream and Uniti in talks to be acquired

Privately held Zayo Group is in talks to acquire Little Rock-based Windstream and Uniti, a former Windstream company, according to a report from the Wall Street Journal. The deal could impact employment in central Arkansas and broadband rollout in the state in a positive way.

According to the Wall Street Journal article, Zayo’s owners and Windstream “believe bringing the two businesses back together would accelerate the build-out of broadband to as many as a million more households by redirecting the nearly $700 million Windstream spends each year on lease payments.”

Tony Thomas, Windstream CEO, tells Talk Business & Politics he can’t comment on the Wall Street Journal article or any potential negotiations, but he did say that “any transaction that helps us accelerate broadband buildout would be a very positive outcome for our customers.”

According to the Journal report, the talks began in June with an initial price discussed of around $3.5 billion. The likely complicated deal with Boulder, Colo.-based Zayo would include acquisition of about $7 billion in combined debt held by Windstream and Uniti, and involve dealing with a Uniti business model that gains around 70% of its revenue from Windstream lease payments.

“The combination of Uniti and Windstream with Zayo would drastically expand the broadband reach of (Marc) Ganzi’s DigitalBridge business. And news of the deal comes at an interesting time because the FCC on Wednesday approved millions of dollars in government network-buildout subsidies for Windstream. The company was one of the top participants in the FCC’s recent Rural Digital Opportunity Fund (RDOF) program,” Mike Dano noted in this report from Light Reading.

Both companies have significant employment in central Arkansas.

Windstream Holdings finalized its debt restructuring out of bankruptcy in September 2020 and emerged as a privately-held company. The communications and software company said at the time it had reduced corporate debt by $4 billion and gained access to $2 billion in new capital.

Windstream initially filed for Chapter 11 bankruptcy in late 2019 after a legal ruling by U.S. District Judge Jesse Furman in New York determined the company had violated bond agreements after splitting off the former Communications Sales & Leasing (CS&L) in April 2015. CS&L was the previous name of Uniti, a real estate investment trust that was spun out of Windstream and manages its fiber optic network.

Any deal could influence ongoing work by Windstream to construct broadband in Arkansas.

It was announced in early September that the company would soon being construction on the first of seven fiber broadband expansion projects that will deliver gigabit-speed internet service to more than 15,100 rural households and small businesses in seven Arkansas counties. The $63.5 million fiber projects are being funded by $46.3 million in state grants administered by the Arkansas Rural Connect Broadband Program. The money came from the federal American Rescue Plan Act. Windstream is investing $17.2 million.

Also, Windstream announced in May that its Kinetic by Windstream division is creating a new engineering and fiber construction organization to manage its broadband expansion across 18 states. The company plans to add nearly 1,000 jobs.

Talk Business & Politics will update this story.