Uniti Group today announced its Q1 2022 earnings and provided updates on its fiber and small cell infrastructure portfolio, growth capital improvements (GCI) program with Windstream, leasing success with a large national residential fiber provider, and its view on dark fiber demand in North America, particularly for long-haul fiber routes.

Financial Performance in Q1 2022 – Uniti Group

In Q1 2022, Uniti Group reported total revenue of $278m, a 5.1% decrease quarter-over-quarter, and adjusted EBITDA of $225m, a 2.7% decrease quarter-over-quarter. Therefore, the company’s EBITDA margin was 80.8% in Q1 2022, a ~200 bps improvement quarter-over-quarter. Decomposing the results further:

  • Uniti Leasing: primarily Windstream, contributed revenue of $205m (74% of total) and adjusted EBITDA of $199m (97% margin)
  • Uniti Fiber: revenue of $73.4m (26% of total) and adjusted EBITDA of $31.5m (43% margin)

New Sales Bookings

Uniti Group secured consolidated new sales bookings during Q1 2022 of $0.8m in monthly recurring revenue (MRR). Of this total, wholesale bookings comprised $0.5m, while non-wholesale bookings formed the remaining $0.3m.

Uniti Group New Sales Bookings MRR Q1 2022
  • Wholesale Bookings: Uniti Leasing bookings, and wireless & wholesale bookings at Uniti Fiber
  • Non-Wholesale Bookings: enterprise, E-Rate, and government bookings at Uniti Fiber
  • Lease-Up Bookings %: represents percentage of total bookings that come from lease-up sold on Uniti’s major wireless anchor builds and lease-up sold at Uniti Leasing
Customer Win – Private Wave Channel Product

In March 2022, Uniti Group announced that it delivered 3.6 terabits of bandwidth to a large national residential fiber provider, its first customer on its wave channel system, connecting Tampa to Miami, Florida. Particularly, Uniti’s wave channel system offers 100G and 400G wavelengths and multi-terabit spectrum services to customers. For Uniti, this opportunity represents ~$1m of monthly recurring revenue (MRR), with “very high margins”.

Outlook for 2022 – Uniti Group

For full-year 2022, Uniti Group provides an outlook for revenue of $1.12bn to $1.14bn. Additionally, the company forecasts adjusted EBITDA of $884m to $902m, implying a 79% EBITDA margin.

Full-Year 2022 Outlook – as of May 2022
$ in millionsLowHighMid-PointYoY Growth
Revenue$1,119$1,137$1,1282.5%
Adjusted EBITDA$884$902$8931.7%

As shown above, the mid-point of Uniti Group’s 2022 outlook infers a year-over-year increase of 2.5% and 1.7% in revenue and adjusted EBITDA, respectively. Finally, the company expects to deploy $275m of success-based capital expenditures in 2022, of which $250m relates to Windstream growth capital improvements (GCI).

Fiber and Small Cells as of Q1 2022 – Uniti Group

As of Q1 2022, Uniti Group owns 129k fiber route miles and 7.7 million fiber strand miles. Indeed, this represents an average strand count of 59.7 strands per route mile.

Overall, Uniti serves ~300 metro markets with its owned metro fiber or enterprise services. With this metro fiber network, the company passes 270k+ on-net and near-net buildings.

Beyond fiber, Uniti also has 2.5k small cells in service or in backlog. The company currently has 1.7k lit backhaul, dark fiber, and small cell sites remaining in its backlog which will be deployed over the coming years. Further, this wireless backlog represents an incremental $15m of annualized revenue.

Growth Capital Improvements (GCI) – Q1 2022 – Uniti Leasing

During Q1 2022, Uniti Leasing deployed capital expenditures of $52.7m primarily towards its growth capital improvements (GCI) program with Windstream. Through these GCI investments, Uniti constructed ~1.5k new fiber route miles and ~49k fiber strand miles (33 strands per mile).

As of Q1 2022, Uniti Group has invested, since inception, $354m through its growth capital improvements (GCI) program with Windstream. In turn, this investment has added 9.5k fiber route miles and 354k fiber strand miles to the company’s network.

Revenue from GCI Investments

Uniti Group’s GCI investments add to the cash rent payments it receives under existing master lease agreements (MLAs) with Windstream. Specifically, the company generates an 8% initial yield, payable one-year following the corresponding investment made. Additionally, a 0.5% annual rental escalator, is applied to the yield, from the prior year.

As of Q1 2022, Uniti generates ~$29m of annualized cash rent on the investments it has made through the GCI program.

Dark Fiber Demand in North America

High-capacity, long-haul fiber routes are in demand from Uniti Group’s customers, including wireless carriers, hyperscalers, international carriers, multiple-system operators (MSOs), and large enterprises. Particularly, these customers use Uniti’s long-haul fiber to connect their disparate markets, data centers, and points-of-presence (PoPs).

As of 2021, dark fiber in North America has a total addressable market (TAM) of $1.6bn and is expected to increase by a ~10% compound annual growth rate (CAGR) through 2030, reaching a ~$4bn TAM. Within this dark fiber TAM, long-haul fiber routes will contribute to the majority of this revenue growth.

Dark Fiber – North America TAM
Dark Fiber Demand in North America 2020 to 2030

Demand for high-capacity, long-haul fiber is being driven by the needs of 5G, metro fiber deployments, small cells, fiber-to-the-tower (FTTT), fiber-to-the-home (FTTH), fixed wireless access (FWA), and satellite broadband.

More specifically, Uniti notes that it is gaining traction with private overbuilders, as well as upstarts who are receiving broadband stimulus funding, particularly in underserved Tier-2 and Tier-3 markets. These customers are building-out new last-mile fiber networks, but in order to connect those markets back to the core, these customers need access to metro and long-haul transport, supplied by companies like Uniti.

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