Uniti Group, in November 2020, was one of four initial fiber providers to sign an agreement with DISH Network in support of DISH’s greenfield 5G network build-out. Specifically, DISH is using Uniti’s fiber network for fronthaul and backhaul support of its 5G network.
In terms of timing, Uniti Group expects orders from the DISH agreement will begin in mid-2021, with the second-half of 2021 being “very, very active with DISH”. Furthermore, orders will continue all throughout 2022.
Fiber and Small Cells – Uniti Group, DISH Network
Fiber-to-the-Tower (FTTT) / Backhaul for DISH Network
Uniti Group will leverage its Southeast fiber footprint to connect and backhaul DISH Network’s tower base stations to central sites. Specifically, the company will build fiber “laterals” or “spurs” that connect these tower sites to Uniti’s wider fiber network.
Overall, Uniti Group’s agreement with DISH represents primarily on-net and near-net fiber build-outs. Therefore, the company does not expect any material increase in its capital expenditures for 2021, as a result of DISH.
Uniti also emphasizes that its fiber network targets the less-competitive Tier-2 and Tier-3 markets of the United States. Indeed, these markets tend to be where the wireless carriers do not self-perform their own fiber builds. In the Southeast, Uniti notes that, near-term, it has “a number of markets that are on the list” for DISH’s fiber deployment plans.
Shared Digital Infrastructure
Notably, DISH is relying on third-party tower infrastructure providers including American Tower, Crown Castle, SBA Communications, and Vertical Bridge to deploy its 5G network. Therefore, Uniti Group’s shared fiber infrastructure will connect to the shared tower infrastructure of these independent tower companies.
In turn, Uniti Group’s capital expenditures to extend its fiber network to these tower sites will also benefit additional lease-up, beyond DISH Network, from other wireless carriers that desire backhaul support from these towers.
Uniti Group has 2.3k small cells in service or in backlog and also provides the fiber to connect small cells. While Uniti’s agreement with DISH does not currently contemplate small cells, it could be possible as DISH’s 5G network evolves.
Overall, one key point of differentiation that Uniti highlights is its rapid time-to-deployment for small cells, particularly in the Southeast. Given its fiber network in the Southeast, Uniti can deploy small cells for wireless carriers much faster than a new entrant, performing a greenfield build. Uniti points out that wireless carriers such as DISH cannot wait 18 months for their small cells to be turned-up.
Lease Terms and Economics – Uniti Group
Uniti Group highlights the long-term, 10- to 20-year, lease terms of dark fiber-to-the-tower (FTTT) backhaul and small cell projects. However, in exchange for longer lease terms, the wireless carrier customers demand tighter pricing, translating into lower margins for Uniti.
As a result, Uniti Group notes that initial cash flow yields on these deals typically range between 5% to 8%. Importantly, the company is able to add additional tenants to the dark fiber or small cell nodes, with lease-up generating incremental margins of 70% to 90%.