Welcome to Uniti Group’s First Quarter 2021 Conference Call. My name is Cynthia, and I’ll be your operator for today’s call. A webcast of this call will be available on the company’s website, www.uniti.com, beginning May 6, 2021, and will remain available for 14 days. At this time, all participants are in a listen-only mode. Participants on the call will have 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 website, 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 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.

Thanks, Cynthia. Good afternoon, everyone. Joining me on the call today is our Chief Revenue Officer, Ron Mudry; and [indiscernible] Mark. Given our strong momentum at Uniti Leasing, we thought it would be appropriate to make Ron available for this call. Before our review, Uniti’s operational performance for the first quarter, I'd first like to highlight some trends we're seeing in the communications infrastructure space. A Slide 4 of our presentation illustrates fiber is the mission-critical connective tissue for virtually all current and future broadband delivery. We're seeing an acceleration of the virtualization of our culture with 5G mobile broadband, fiber-to-the-home, fixed wireless, over-the-top video and other technologies enabling greater usage of video conferencing, e-learning, telemedicine, remote work environments and an overall continued surge in broadband traffic. Uniti is one of the largest independent wholesale fiber providers in the country and provides fiber to a full range of communication service providers. As such, we're agnostic to competing edge technologies that we eventually benefit from virtually all of these broadband trends that beat traffic per fiber network. In the past four years, for example, our Southeast fiber network has seen a roughly 10 times increase in feed daily traffic from 16 gigs, 160 gigs, and we expect that trajectory to continue. Our wireless carrier customers are particularly active in an effort to keep their underlying infrastructure ahead of the explosive growth in mobile broadband. These carriers are increasingly looking for 10-gig upgrades on our macro tower backhaul circuits, while simultaneously continuing to push CRAN small cell deployments in our metro markets and accelerating their 5G network densification. As a result, our dark fiber and small cell revenue grew 30% from the prior year during the quarter. We expect those trends to continue especially with Dish now becoming a more active customer.…

Thanks, Kenny. Good afternoon, everyone. Turning to slide nine. At Uniti Leasing, we continue to actively market over 3 million strand miles of fiber that is available to lease to third parties, making us one of the largest players in the wholesale fiber market. Our sales pipeline today stands at approximately 1 billion of total contract value, which translates to approximately 60 million of potential annual recurring revenue. This reflects the continued significant interest from our wholesale customers as well as the strategic value of these fiber strands. Approximately 75% of the deals utilize fiber we acquired as part of the settlement with Windstream and our success is the result of less than one year of actively marketing this new fiber. We continue to be successful in monetizing our portfolio of assets and to date has executed on opportunities that represent total remaining revenues under contract of 765 million, with an average contract term remaining of 14.5 years, incremental cash flow yields of approximately 12%. As slide 10 illustrates, we have executed and continue to pursue several different types of opportunities within our Uniti Leasing segment. Traditional dark fiber IRUs and dark fiber leases have driven $60 million of upfront proceeds and $345 million of remaining revenues under contract, primarily on the fiber we acquired from Lumen and Windstream. These opportunities generate margins of 90% plus with minimal to no CapEx required. Sale leasebacks are structures where we acquire new fiber to expand our network reach and then immediately enter a long-term lease with a tenant to provide anchor return economics. Our transactions with TPx, CableSouth and others over the years are examples of these. OpCo/PropCo our transactions where we sell our existing actively managed lit services revenue at double-digit transaction multiples to an operating partner and then immediately lease…

Thanks, Ron. Our guidance remains largely in line with our prior outlook. We still expect to close our transaction with Everstream in the second quarter of this year. Upon closing of the transaction, we expect to record a pretax book gain of $25 million relating to the partial sale of our Northeast operations and sell certain dark fiber IRU contracts. The gain is excluded from both adjusted EBITDA and AFFO. Turning to slide 12, we reported consolidated revenues of 273 million, consolidated adjusted EBITDA of $214 million, AFFO attributed to common shares of $103 million and AFFO for the diluted common share of $0.41. Net loss attributable to common shares for the quarter was $5 million or $0.02 per diluted share, and excludes $4 million of transaction related and other costs. At Uniti Leasing were reported segment revenues of $195 million and adjusted EBITDA of $192 million, up approximately 6% and 5% respectively from the prior year, while achieving adjusted EBIT margin of 98%. At Uniti Fiber, we turned over 160 lit backhaul, dark fiber and small cell sites for our wireless carriers across our southeast footprint during the first quarter. We currently have approximately 1,100 lit backhaul, dark fiber and small cell sites remaining in our backlog that we expect to deploy within the next two years. Uniti Fiber revenues is $78 million and adjusted EBITDA of $30 million during the first quarter were in line with our expectations. With adjusted EBIT of 8% from the prior year, primarily due to the wind down of our non-core construction business and lower operational and maintenance costs. Adjusted EBITDA margin for the quarter was 38%, representing a 270 basis point improvement from the prior year. Turning to slide 13, we're revising our prior guidance for the impact from the recent issuance…

Thank you. We will now begin the question- and-answer session. [Operator Instructions] And our first question comes from Frank Louthan with Raymond James. You may go ahead with your question.

Great, Thank you. Maybe walk us through the Dish situation and how you see yourself benefiting from that. And then, you know, and how broadly across your network. Thanks.

Sure, Frank. Thanks. Yeah, we don't like to talk specifically about customers. But Dish did name isn't a press release at the end of last year, as you know, so happy to – happy to provide a little more color. And I think we've been foreshadowing this, but we really think the second half of this year could be very, very active with Dish. There's, especially in the southeast, we've got a number of markets that are on the on the on the list for them for deployment. And we're going to be active, we think in those markets. So, and I think that's just the beginning based on everything we're seeing and hearing. And we look forward to the activity ramping.

All right, great. Thank you.

And our next question comes from Phil Cusick with JPMorgan. You may begin with your question.

Hey, guys, thanks. Hi, thanks. You mentioned growth in small cell deployments in metro markets and increasing 5G network densification. Can you just expand on that, and what kind of spectrum you're seeing deployed? Thanks

Yes. Phil, this is Kenny. I'm going to start with that, and then ask Ron to add some comments, because Ron engages a lot with our big carrier customers. But you know, we've always said that small cells were not a central part of our strategy, they were more of an addition to our core strategy. And, and we've also said that in our Tier 2, and Tier 3 markets, small cells would be behind in terms of deployments, behind meaning, come later in terms of timing relative to the larger NFL cities. And we've also said, but eventually, those deployments would start to ramp. And when they did, us having fiber in those markets would give us a leg up on competition from a speed to deployment. And just an economics point of view. And we're starting to see that. We're in the early innings of that, and eventually, I think the spigot is going to be really opened. And right now, we're starting to see good deployments across the spectrum of large wireless carriers. And so pretty excited about it. Again, it's not the core central part of our strategy, but it's really great, provide great economics, either as leased up on existing networks, or they can be good anchor economic networks for us when we were able to deploy and exists our current markets or adjacent markets. So Ron, feel free to add to that if you'd like.

Sure. Thanks, Kenny. Thanks, Phil. Well, I would say that the recent C-band spectrum option is going to be driving some significant demand, you know, that spectrum will be put out on towers that have other spectrums carrying on them as well. So it's actually driving a very significant ramp up in bandwidth requirements that lift sites, actually all the way up to 10 gig, as Kenny had mentioned, we have multiple carriers looking for that now. And also increasing our demand for Dark Fiber. So I think that that's going to be a continuing trend over the next two to three years, as the carriers look to activate that new spectrum as it's clearing. Ken?

Thanks. Ron for the small cell, are you seeing one carrier mostly driving this, or is it this is really more than one or all the major carriers? Thank you.

We have activity with all the major carriers, I would say in the small cell space and continue to see that.

Great. Thanks, guys.

And our next question comes from Michael Rollins with Citi.

Hi. Good afternoon. Just a few questions. On slide 8, it looks like the incremental lease up in the blue cumulative MRR in the left is up about 0.2 million off of last quarter. And just curious on that how to think about the pacing of this growth and how you would evaluate that outcome in the range of expectations you have? And then on slide 9, just a little bit more context about the growth of opportunities you're seeing in terms of the quantity of numbers going from 140 to 186 and the contract value staying around a billion is, is a mix or the type of business that you're now seeing in the pipeline today versus what you maybe saw a couple of months ago shifting a little bit? Thanks.

Sure. Mike, it Kenny. I'll start with your first question that asked Ron to comment on your second. I think on the lease-up, whether it be a unity leasing or at unity fiber, and we're really trying to show both. There's a lots of different ways to look at it. But ultimately, we're extremely pleased with both. And the lease-up, again, lease-up is wireless or non-wireless. It could be the second tenant -- second wireless tenant or the third wireless tenant or it could be a enterprise or school or government entity. We're relatively agnostic to that. And so in terms of the pacing and the trajectory, I think, it's been steady from the time we've deployed many of these networks. And it's been steadily building as you would expect. So you get into these markets, you're building more and more network, you've got -- you're establishing more and more of a presence with customers and more and more of a brand. And it just builds on itself. And that's exactly what we've been saying. So very pleased with it expected to continue. And I think importantly, we've said this in the past, I can't remember if it was in our prepared remarks are there or not. But most of these networks, including our national network is highly underutilized, meaning there's a tremendous amount of capacity in the network already, that we can deploy without a substantial amount of additional capital. So very pleased with the progress there. Ron, you want to comment on the second question about the leasing funnel?

Sure. Thank you. So I would say, if you call, we've only been actively marketing this new fiber that we got through the Windstream settlement for a short period of time. You know, relative to the sales cycle, dark fiber has a much longer sales cycle than let's services does. And as we've been developing the sales funnel, I would say that opportunities are becoming better qualified. You know, we've, of course some drop out of the funnel because we've closed them. Others drop-off because they don't qualify for some reason. But overall, we've seen a steady growth in interest and the transactions are moving their way through the qualification design and so forth phases of the sales cycle to get to an actual sale. As I look at the sales funnel, obviously, we're very well-diversified in terms of the different segments that were that we're serving. The regional carriers, I would say, have been an increase in interest recently. And that's because the nature of the Windstream settlement fiber, is a lot of regional markets in Tier 2, Tier 3 reach and so forth, as compared to our national long-haul network that could connect larger markets together. So overall, we've seen a lot of strong demand. And, actually just say we had our best month in bookings in April since 2019. So things are definitely trending up.

Thank you.

And our next question comes from David Barden with Bank of America.

Hey, guys, thanks so much for taking the question. So I guess, Kenny, I got to ask this question. You know, there's a slide 9, there's 186 opportunities out there. The Windstream bankruptcy was reemerged months ago. Once upon a time this was never about being an organic execution story. It was about being an OpCo-PropCo unique read with a unique, private letter ruling from the IRS and improve cost capital. You could help people do things they couldn't do on their own. Is that not the story anymore? Because I guess during the Windstream bankruptcy, I was – okay, I get it, they can't do deals because the Windstream bankruptcy is going on. But now that it's been over for nine months, nothing's really happening. And I'm wondering, if the whole story is different. And then the focus on the execution in the – in the fiber deployments in the customer base is really about trying to get some kind of fiber multiple, which other companies are trying to get as well? I'm just trying to understand, what the story is today? And I guess the second question is, with respect to this, Biden, Infrastructure Bill, is this amazing news for you guys, because you're in the exact spot where this money is trying to exploit the underpenetrated broadband opportunity, or is it a terrible news? Because this money is going to go to the municipalities and cities in the markets where you operate with the express purpose of competing with you guys. Thanks.

Hey, David, all good questions. Look, first of all, to your comment about not anything happening, I completely disagree with. So let me go back and I'll eventually build up to that. Our strategy from the beginning was to build an operating platform, in addition to being acquisitive from an M&A front. So we wanted to have an operating platform where we could have day-to-day active interaction with the big wireless carriers. The data centric providers, the MSOs, the National carriers, the real big consumers of broadband, and fiber, and have – an have an outlet to deploy capital organically to build a fiber network and operate a fiber network in addition to being an M&A, an M&A roll-up play.. And if you remember, our very first transaction back in 2016 was the buy and operating business. It was our -- it was our first acquisition out of the gate. And for nine months after being spun out in 2015, we got the question, hey, what's going on? What's happening? And it took us a while to finally find the right first deal. And then after that, the floodgates were open. And the acquisitions that we did were a combination of platform companies that were combined with our operating business, as well as portfolios of assets. And some of those assets were structured to sell lease backs, and some of them were just straight acquisitions of assets. So it was really an M&A roll up, being a combination of operating platforms and lease backs. And today, when you fast forward to where we are, I think that strategy is working exactly as we designed. And we've got a really terrific operating platform, that’s putting capital to work, building new fibre adding new long term customers with locked in attractive economics.…

All right, Kenny, Thank you so much. I don't get the softball moniker very often, but I appreciate it. Thanks.

We don't -- we never consider your question softball otherwise.

And our last question comes from Simon Flannery with Morgan Stanley. You may begin.

Great. Thanks a lot. Good evening, Ron. One of the telcos yesterday was talking about delayed decision making in the enterprises and hoping that activity would pick up later in the year. I was just wondering what your conversations are like, as the economy reopens? Are you seeing people more willing to make big decisions or has really not been affected by the COVID lock downs? And then just any updates on the Windstream disclosures, how their business went in q1? And will we be getting any more disclosures during the course of this year, or more again with the 10-K? Thank you.

Sure, Thank you. I'll take the first question and then refer the second one to Kenny, I'd say on the enterprise side, when COVID first hit and the shutdowns happened, obviously, we were affected by that. But then it rebounded, quite significantly after things began to settle down a little bit. I'm sure there are companies out there that are still assessing their situation because different sectors are affected differently by what's happening with COVID and the shutdowns, right. But broadband is required by virtually everyone. And what I would say is that our enterprise business continues to grow at a very significant pace and is achieving its objectives for the year. And, and we feel very positive about that. So maybe we're less affected, I don't know, but our enterprise initiatives seems to be on track to me and, and I think it's get stronger as the economy continues to recover. Kenny.

Great.

And Simon, on your Windstream results questions. They're reporting, I think, in 10 days, so can't get ahead of those results. We will be making some disclosure at that time. So, more to come there. I will say, and this is a little bit related to David's Question. But we are very, very encouraged and pleased by the industry overall with respect to residential broadband successes, and especially among the traditional telecom space where fiber-to-the-home is being deployed. So, whether you're looking at the very large carriers down to some of the more regional ILAC, some public some private, the successes on broadband ads, especially where you're where fiber-to-the-home deployments are being made, and even in the private markets where infrastructure, capital and otherwise are spending big dollars to acquire fiber-to-the-home platforms and to put money to work behind these business plans. We're very encouraged by that, because it obviously suggests some success for Windstream and carriers like Windstream. But also, in our view, at least it validates our GCI program. We're really spending a lot of dollars to overbuild some of the corporate portions of our network and to future proof those portions of our network with fiber and a lot of it being fiber-to-the-home. So, but more to come on Windstream results.

Great, appreciate it. Thank you.

And we have no further questions at this time. I will now turn the call over to Kenny for closing remark.

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

Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.