Welcome to Uniti Group's First Quarter 2019 Earnings Conference Call. My name is Ditamara, and I will be your operator for today. A webcast of this call will be available on the company's Web site, www.uniti.com, beginning May 9, 2019, and will remain available for 14 days. At this time, all participants are in a listen-only mode. Participants on the call will have the opportunity to ask questions following the company's prepared comments. The company would like to remind you that today's remarks include forward-looking statements, and actual results could differ materially from those projected in these statements. The factors that could cause actual results to differ are discussed in the company's filings with the SEC. The company's remarks this afternoon will reference slides posted on its Web site, and you are encouraged to refer to those materials during this call. Discussions during the call will also include certain financial measures that were not prepared in accordance with the Generally Accepted Accounting Principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's current report on Form 8-K dated today. I would now like to turn the call over to Uniti Group's Chief Executive Officer, Kenny Gunderman. Please go ahead, Mr. Gunderman.

Thank you. Good afternoon everyone, and thank you for joining. We continue to strong demand for fiber infrastructure both for macro backhaul towers and small cells, as well as demand for new tower builds as wireless carriers continue their progress towards a broader rollout of 5G wireless services. Again, we believe that both Uniti Fiber and Uniti Leasing are uniquely positioned to capture this demand with over 5 million strand miles of valuable owned fiber. We continue to expect to complete the build out of several dark fiber and small cells projects, primarily in the Southeast by the end of this year. We've deployed over a 1,100 small cells today and currently have over 1,700 small cells in our backlog with over 1,500 of those expected to be deployed in 2019. An important part of our strategy is to replace shorter-term lit wireless backhaul with longer term contractual dark fiber and small cell revenue. Dark fiber and small cell revenue contracts generally have 10 year to 20 year terms with virtually no associated churn. In 2018, dark fiber and small cell revenue grew by almost a 100% from the prior year and represented approximately 70% of total wireless bookings. We expect these trends to continue in 2019. Another important part of our strategy is for the lease up of anchor wireless networks to grow including lease up from non-wireless customers such as enterprise, schools and government. In 2018, non-wireless revenue grew as a percentage of total Uniti Fiber revenue year-over-year and non-wireless bookings grew from 55% in the prior year to 63% of total Uniti Fiber bookings in 2018. Again, we expect both trends to continue in 2019. These lease up opportunities drive attractive incremental cash flow yields at substantially less CapEx than our anchor wireless builds. On May 1,…

Thanks, Kenny, and good afternoon everyone. We reported strong first quarter results with all of our business units performing well to start the year except for a few discrete items that I will cover in a moment. We're maintaining our previous guidance while we are certainly keenly focused on the Windstream bankruptcy process and positioning Uniti for long-term success, one of our priorities this year is solid operating performance by all of our business segments. We were pleased that each of our businesses delivered on that priority this quarter. So let's review the numbers. Turning to slide 5, we reported consolidated revenues of $261 million, consolidated adjusted EBITDA of $200 million AFFO attributable to common shares of $107 million and AFFO per diluted common share of $0.59, net income attributable to common share for the quarter after transaction and integration related costs was $1 million or $0.01 per diluted share, net income for the quarter was impacted by a few items that did not effect AFFO. Those items include $6.7 million of transaction and integration related cost, $4.6 million of cash taxes associated with tax basis cancellation of debt income partially offset by approximately $3.3 million of income from changes in the fair value of contingent consideration arrangements, the cancellation of debt income is related to the fourth amendment and waiver to our credit agreement we executed in March and impacted our tax book only as there is no associated income recognized under GAAP for financial reporting purposes. For the first quarter of this year our leasing segment revenues were $176 million with adjusted EBITDA of $135 million. Non-Windstream revenues and adjusted EBITDA were $5.2 million and $4.2 million respectively and should continue to represent a growing share of Uniti Leasing revenues over the next several years. The new lease…

Thanks, Mark. As I mentioned last quarter Uniti is uniquely positioned to participate as both the buyer and seller of valuable communications infrastructure assets as we demonstrated this quarter we have the ability to transact on smaller value accretive M&A despite the overhang from the Windstream bankruptcy proceedings. We also continue to remain active with our diversification efforts during the duration of these proceedings. I'd like to provide a short update on Windstream. So far we've been pleased with how the Windstream bankruptcy proceedings have progressed. We were also delighted to see that Windstream received court approval and was able to finalize its $1 billion in debtor-in-possession financing, Windstream continues to remain current on its monthly lease payments which have been paid in full and on time through May, we continue to be open to pursuing mutually beneficial outcomes with Windstream that could potentially be credit enhancing to Windstream and its stakeholders and value accretive to Uniti. We still believe we have the ability to navigate the Windstream bankruptcy proceedings without having to raise external capital and still be able to invest in all of our valuable business units in -- including potentially pursuing smaller M&A transactions. We remain confident that Windstream will successfully emerge from the restructuring process and continue to remain focus on operating its business on normal course resulting in a potentially stronger tenant and a commercial relationship that could be enhanced. Operator, we are now ready to take questions.

[Operator Instructions] Your first response is from Brett Feldman with Goldman Sachs. Please go ahead.

Thanks for taking the question. And two about Uniti Fiber, if you don't mind, it looks like revenue declined sequentially in the quarter, so I was hoping I can get a little more insight into what's behind that and what supports your guidance that you reiterative that segment for the full-year on an operating basis, so beyond just the M&A implications? And then also maybe at a higher level, I'm curious for your thoughts on how you think about the Uniti Fiber business fitting into your business mix over the long term, particularly as you move past the resolution of the Windstream bankruptcy, it certainly seems like you're getting more and more visibility into your opportunity funnel and leasing and is there a merit to maybe pivoting away, maybe selling off the fiber -- the Uniti Fiber business and exclusively focusing on leasing in OpCo/PropCo relationships? Thank you.

Yes, great. On your first question regarding the revenues, they were down a little bit in the first quarter from our expectations on revenue, not really on EBITDA because we have some cost savings there. They were down slightly from what we expected on revenues for Uniti Fiber, but it was mostly construction income, which is mostly a timing item and then also some equipment sale income as well. So as we look at our forecast for the balance of the year, again those are primarily just timing issues and we remain confident that those will be made up in the balance of the year. Then I'll let…

Got it.

Then I'll let Kenny take the balance of your questions.

Hey, Brett. Yes, good question and we -- as I mentioned in my prepared remarks, we are constantly evaluating the asset portfolio where -- as we have been for the past couple of years have been fielding inbound interest in the assets given the strategic nature of them and I think that's only continued accelerated in this current environment. But as we look out we still think having a fiber operating platform is valuable for the optionality that it brings to us not only in terms of investing our capital organically but also the incremental M&A opportunities that it presents for us. So I still see that as a value play for us, but ultimately as I mentioned and as we've proven with some of the other sales that -- asset sales we've executed on including the Latin American towers and selling the Midwest fiber operations not the fiber but the operations at attractive multiples, we are open to opportunities like that particularly where they enhance our shareholder value. So we'll continue to be open-minded and look for value accretive opportunities going forward.

If you don't mind if I sets a follow-up to the very first question just about the impact of the equipment and construction revenues, during your prepared remarks, it did not sound like churn and Uniti Fiber had really ticked up. So, is it fair to assume that the recurring revenues in that segment were flat to up or much more stable during the quarter or are there any moving parts in there we need to be thinking about?

Not really, the churn was pretty much as we expected and I think we outlined kind of all the different waterfall of the MRR growth that we expect for this year on our last call. So there's a slide on our last quarter -- quarter's call deck, so I think we expect -- still expect it to be consistent for the full-year with the growth rates I already outlined on that call.

Great, thank you.

Thank you. Your next response is from Philip Cusick, JPMorgan.

Hi guys, I suppose a similar question to Brett's with towers, does it make sense to have this in the company any more or less than fiber and any restrictions on selling that asset?

Hey, Phil. Yes, look, we think there is value to having the three pronged infrastructure -- well, actually four prong infrastructure approach including Uniti fiber backhaul, small cells, towers and leasing. We think that's a very unique offering to the marketplace and we see the benefits of that values of value that with our customer relationships every day and I think it's growing as we as the scale and the portfolio under each of those businesses grow. So we see value in it and our tower business our thesis going into that initially was that there was a unique niche for a new tower provider particularly a REIT with staying power given the carrier's desire for vendor diversity and so we thought the opportunity was there that's proven to be true particularly with the FirstNet opportunity and with the activity of AT&T and others. So we've been very pleased with that and we've been pleased with the early returns on the lease up that we're seeing on those towers it's as expected. So we feel very good about that and we've been pleased with the synergy value associated with that across our customer relationships in the rest of our portfolio. So a lot of -- both what I characterize as quantifiable synergies and qualitative synergies across our customer relationships. Having said all of that, we are we remain open to optimizing shareholder value in various ways and so we're going to remain open minded around all opportunities.

Are there any restrictions on who you could sell those towers to from your anchor tenant?

No.

Okay. One other if I can your first OpCo-PropCo deal, Bluebird is supposed to close I think in the third quarter anything you can share on how that's going. And then what does the pipeline look like here for additional fields like that?

Yes, as we -- as I think Mark mentioned in his remarks we're still working towards I think late third quarter closing. So everything is on track there with the work towards integration and that sort of thing is progressing. So, no surprises. I would say on the funnel as frankly as evidenced by the SFN deal the funnel on sale leaseback opportunities and OpCo-PropCo partnerships remains robust and growing. And we I think I mentioned this on our last call Bill but we don't even though there's a lot of volatility in our securities we're very cognizant of not overextending ourselves with really sizable transactions but we do want to maintain the development of that pipeline and engagement with the M&A market particularly on sale leasebacks and OpCo-PropCo opportunities so we continue that in both over the coming months and quarters.

Thanks, Kenny.

Thank you. Your next response is from Simon Flannery of Morgan Stanley.

Great, thank you. Good evening. Thanks for the color on the Windstream lease and on the progress on the lease payments. Have you had any substantive discussions with Windstream or their advisors at this point or is that still a TBD? And do you have any sense on the timeframe, are they on track for a plan of re-org, I guess in the four month time frame or do you think it might take longer? And then Mark, just to clarify on the dividend point, you talked about the $0.32, is that the maximum that you can pay and what would you be required to pay on under REIT rules [ph] in terms of IRS net income distribution? Thank you.

Hey, Simon and I'll take the first couple.

Thanks.

I think I'd rather not comment on specific conversations but I'll say that with our both legal and financial advisors, you can rest assured we're having conversations with advisors and principals and I would, I would say that we continue to feel optimistic about the progress. You know we're -- we think all parties are looking to expedite the bankruptcy process and believe that there's no benefit to any one of dragging out the process, along getting the process and spending a lot of unnecessary legal fees and advisory fees. So that continues to be true. We think that there is a - general consensus that our network remains mission critical to Windstream's business and so we've been pleased by that. And again no surprise but that has met our expectations and we also continue to feel optimistic about the engagement around mutually beneficial opportunities to enhance the commercial relationship. So all of those things are consistent with our last quarter of messaging and I would say no changes there. With respect to the specific time line, again, I - we've talked about the dates on that are sort of in the lease and dates plus extensions in June and then September, really don't have anything new to say beyond that, Simon and so we'll just leave with that.

Okay. Thank you.

Hey, Simon, this is Mark. On your dividend question, those amounts that I gave are consistent with the same amounts I gave previously except for the dividend that we have -- that we've declared since that time. So those do represent the minimum that we are required to pay out under the 90% of taxable income that you're required to pay out. And that's the maximum that we're allowed to pay out through the -- under the credit agreement amendment.

Great, thank you.

Thank you. Your next response is from David Barton of Bank of America. Please go ahead.

Thank you for taking my questions. I guess I have kind of three questions. I guess, the first one is, Kenny, when you talk about, you're working with Windstream for a mutual beneficial outcomes and creating value for unit that offsets the potential loss of value with respect to the lease, when I think about that, you have a $650 million lease, for there to be a change in the lease relationship that means pretty much anything to the credit quality Windstream, probably a minimum of $100 million and that $100 million over a 30 year lease is discounted back, a $1 billion, $1.5 billion. I think a lot of people struggle to see where Uniti could extract $1 billion or $1.5 billion or other relationship with Windstream, so if you cannot point to where you think that value is, so you could come to this mutually beneficial outcome may be helpful? And then the second question maybe for you Mark, I guess as you look down this bankruptcy is going to be still going on in a year, your evolver matures in April. I was just interested in knowing kind of what you think the banks appetite to roll that is and if you don't think there is one, do you need to wait for the lease to be accepted in bankruptcy to do anything about it and if you do is there any way you can get Windstream to kind of accelerate that process, which you know should happen in June, but could be pushed off until September? And I'm sorry, but this last question is fundamental, which is really again back on the Tower business which is you know with respect to you know the winds that you're getting in the Tower business mostly built to suit I imagine, can you kind of profile the terms and conditions that you're offering relative to you know kind of standard industry conditions that are letting you win and talk about the returns you're generating off of those terms? Thanks.

David, this is Kenny, I'll take the first and third and I'll let Mark take the second. So on the first one, I think, first of all, we don't, we don't, you mentioned $100 million red guiding roughly $1 billion of discounted value associated with that. We don't, we don't have a bogey or rent cut bogey that we're trying to hit at all. And so I think that's the big -- the big difference in what you're saying versus how we're thinking, but our view is there are some opportunities to enhance the commercial relationship that could be beneficial to both and whether it's a billion dollars of value or something more or less, I won't comment on, but we're not - we don't have a bogey there that we're aiming towards.

The Windstream creditors probably do that right?

Well, I won't speak for them but at the end of the day we're not a creditor, we're a landlord and so with respect to what the creditors may be hoping for, or what that doesn't necessarily dictate what conversations we're prepared to have or what opportunities were prepared to pursue.

Got it.

So, Mark, you want to comment on Dave's second question?

Yes. Hey, David, the revolver, so we're certainly focused on getting the revolver refinances. We had started conversations pre-petition when trimmed with the banks previously with the bankruptcy filing those one [indiscernible] to say, about addressing the revolver. I don't want to go into too much about it right now but I do - but to answer your question specifically, I do that there is appetite for exiting at this time or you know we could wait till there's more clarity around Windstream bankruptcy process and/or you know resolution around the lease. So but I think either way, I think the banks do have appetite for helping us get that addressed and we are certainly focused on it right now.

And Mark, just a quick follow-up, it's my fine own experience with the process, but is there a reason why when Wind would or wouldn't want to accelerate or decelerate the acceptance of the lease if they said, they're already just going to keep paying it in the ordinary course?

I think it's hard to kind of say what for us to comment on what Windstream is thinking. I think you know our view is always been that trying to get -- trying to have a resolution to run the bankruptcies and the regulator is probably in everybody's interest. So but we'll just have to see how it plays out right now.

Got it.

David, with respect to your last question on towers, you're right most of our opportunities to invest new capital there in the U.S. are on build-to-suit opportunities we did acquire a tower portfolio from Windstream a few years ago when we acquired a portfolio when we acquired Hunt and I think together that represents roughly 220 or 230 of our towers that there alone where we spent a de minimis amount of money to acquire those but with respect to buying new portfolios of towers in the U.S. we really shied away from that because the valuations are at a level that we find difficult to make accretive and so we've shied away from that. But the build to suit opportunities are ones where we think we have a proprietary opportunity especially with certain customers where we're not necessarily competing against the entire tower industry and so as a result we've pursued those and I would say we have definitely seen some build-to-suit opportunities in the U.S. that are unattractive us where we just can't make the returns work for a variety of reasons and we're perfectly willing to just let those opportunities go because as I've said many times we're not a tower company, we don't want to be a tower company, we're an infrastructure company with a focus on fiber who happens to believe that having a tower business in our portfolio is additive to that fiber business but we're not in a position where we're we have to take on to our deals that are unattractive and so we've really stuck to what we said from the very beginning and continue to say in our public filings about the type of tower deals that we will take on and I think we still show that 5% to 10% range on cap rates, 1% to 3% escalators and so -- and of course there is other -- many other terms to tower deals with those tend to be the big economic once the people focus on. And I would say we have held true to that - to that - to those terms that we laid out really two years ago, one or two years ago.

Thanks so much, Kenny.

Thank you.

Thank you. Your next response is from Matthew Niknam from Deutsche Bank.

Hey, guys. Thank you for taking my questions. One on leasing, so I think in the past, you've talked about say, leaseback opportunity being more prevalent, larger and larger deals maybe being out there, but I'm just wondering, I know there's sort of a tendency right now given the current date that keep yourself to maybe smaller sell leaseback deals, but are you seeing more appetite for these types of deals from a larger operators, whether they be telcos or cable co's, that's question one. And then secondly on the fiber side, I think you had mentioned about three quarters of the bookings coming from non-wireless. Just wondering what sort of demand have you seen of late from the wireless carriers, has that evolved to decline that all. And then how we should think about the opportunity on a go forward basis? Thanks.

Yes, sure. I'll take both of those. We have definitely - so as the pipeline development work has progressed and on the leasing side and as we have began –begun to show real transactions, [indiscernible] transactions and announced transactions including larger and smaller ones. And we've devoted a team of experienced executives to that business. Ron -- as mentioned in the past, Ron Murdy, is now heading up that effort for us. We have definitely seen an increase in interest and including smaller deals and larger deals. And I would say that on the larger transactions, I don't want to imply that we would not pursue larger transactions now because in reality there is capital out there to help us finance those types of opportunities and we've got some very interesting assets that can enhance those deals with synergy value and other -- and in other ways. But I would just cautioning that the likelihood of those types of opportunities are lower during this period of volatility. But we are definitely continuing those conversations and I would say that the interest level in that type of opportunity is continues to grow including with larger opportunities. With respect to second part of your question, I would say the demand among our wireless carriers continues to be strong and especially when you consider the fact that we're selling both traditional, wholesale we're selling fiber traditional wholesale and fiber to the tower backhaul and the small cells so we're now doing all three with pretty much all of the big four carriers. So that is growing our focus on growing the other parts of our business the non-wireless parts of our business is definitely a conscious effort because we've always talked about the need to lease up those anchor wireless networks with enterprise schools and government as a way to really drive better economics off those networks and so it isn't that the demand has declined among our wireless carriers, it's really a conscious effort on our part to focus on the other parts of our business that's driving that change in mix.

That's helpful. Thanks, Kenny.

Thank you.

Thank you. Your next response is from Frank Louthan with Raymond James.

Great, thank you. Can you characterize how you're handling employee retention during the process what's the current number of quota bearing heads and what do you expect that to be throughout the course of the year and then just kind of what are you doing maintain that and keep folks motivated while you're going through the whole process for Windstream.

Yes, Frank, great question. We've got roughly 40 quota bearing reps now. We've been growing that number especially as we're beginning to move into some of these markets, where we're building fiber or fiber is now coming online. So we're backfilling with on the ground enterprise or [indiscernible] sales folks and so I would say we've been growing our base and have a conscious effort to - excuse me to continue doing that. We really haven't seen a lot of churn among our base but I will say and I would certainly wouldn't attribute any of the churn to some of the volatility that we've seen with Windstream, I will say that it's the labor market is tight. We've found that up and down the chain in our organization and so and as I talk with other folks in the industry, I don't think that's an uncommon thing. I think that's just something that's impacting a lot of us. But I don't think there's -- we've seen churn related to our volatility. Having said that, we're very focused on employee engagement, very regular employee engagement at the executive level on down, and we were even before the filings earlier this year, preparing people with talking points on how to deal with customers and talking points with respect to our position in all of this. And so I think that's the best approach is to communicate and give people the facts and lean into it and that certainly what we done and with respect to any other items we are in discussion with our board constantly about comp related matters. And so I think we're very focused on all the things that we need to be focused on their.

All right, great. Thank you very much.

I am showing no further questions at this time. I would like to turn the conference back over to Kenny Gunderman.

Okay. We appreciate your interest in Uniti Group and look forward to updating you further on future calls. Thank you all for joining today.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.