Hello everybody and welcome to the 9th annual Wells Fargo TMT Summit. I am Caleb Stein. I cover comms, infra, and telco services here at Wells Fargo. We're excited to be joined today by Paul Bullington, CFO of Uniti Group. Paul, thanks for being here. Caleb, it's great to be here. Thanks for having us. It's a good, certainly a good venue. I don't, could have ordered up better weather for us, but it's good to be here. Yeah, we'll talk to the powers that be about that. Let's start high level, Paul. Yeah. You know, Uniti Group looks a little bit different than it did this time last year. You now have Windstream in the fold, so maybe just give us some sense of why you employed that strategy, what kind of structural benefits you have now with Windstream as part of the company, again. Yeah, for sure. We're very excited to have closed the merger with Windstream, and we're off to a fast start, even though we're only about 100 days in, I guess, since we closed the merger. The leadership team is coming together well. We're starting to really execute on the plan. We've brought in some new leadership, particularly at Kinetic, which is bringing some really, really good experience, expertise, and injecting really a new level of energy, I think, into that business. We're off and running. In terms of the structural advantages, I think about, there's a few things as part of the thesis to bring these businesses together. I think at one point in time, the separation of the assets, the landlord-tenant structure made some sense, had some logic. It had its time, but I think that time was over. In the more recent years, it was more of a burden on the two companies and more of a source of friction. Kinetic really wasn't incentivized to invest in the fiberization of that network, which we see as a real long-term strategic imperative for that business. Much better alignment of the capital allocation and investment strategy of the businesses together, you know, for the long-term optimization and health of the business generally, as opposed to the previous structure, which was kind of causing us to look more sort of myopically through a lens of kind of a zero-sum game between the two parties. It is certainly a much healthier, I think, position for the two businesses from that standpoint. Also, cost of capital. Our cost of capital has improved significantly since we announced the merger. Just removing that friction, removing the overhang, was, is really good. Obviously, cost of capital is very important for our business. We're a capital-intensive business, a leveraged business, and so cost of capital is, is critical for us. Also, by reuniting the assets with the operations, you, you open up some additional financing opportunities, some attractive financing opportunities. In particular, ABS is, is unlocked by bringing the assets back together. It really wasn't available to that Kinetic business prior to the merger. So that's a piece of it. Strategically, we're in full control of the assets. Instead of having this kind of strange arrangement, an MLA tenant-landlord-landlord and separation of the assets, we're in full control of our destiny from a strategic standpoint. Better optionality, we think, better ability to kind of chart the course to unlock value over the long term. You know, something I do not think investors should lose sight of is just we are a stronger business together. A bigger network, a broader network, bigger reach, that makes us more relevant for our customers. We have got a more fulsome product set. Previously, Uniti really did not have a wavelength product set. Windstream was not able to really pursue the dark fiber opportunities we are seeing materialize at really a historic level in the industry. More fulsome product set, better able to serve our customers, better situated, really capitalize on the tailwinds and the demand we see. The leadership team, I think, you know, we have got a deeper bench. We've got a leadership team with decades of experience, both in the incumbent world that, you know, we've got, you know, that Kinetic is sort of coming out of, but then also in the more insurgent sort of competitive fiber world. I think that blending of those two leadership teams is really healthy for the business as well. That's a good overview and certainly seems to make sense from a strategic perspective of bringing heart back with impatience and operating it that way, right? Yep. Let's get into the fiber-to-the-home build a little bit. Okay. Because I know that's the, if not the most important, piece of the pie right now. How should investors think about the build pacing to achieve your three and a half million passings by year end 2029? Yep. That's right. We have put a target out there of three and a half million passings by the end of 2029. That's really a product of doing a deep dive even prior to the merger closing, a comprehensive deep dive looking at that full Kinetic Market, looking at the returns across the markets in that Kinetic footprint, and putting together really a bottoms-up long-term plan to build out the Kinetic footprint. Three and a half million homes, we're ramping that build engine, which a lot of that has to do with bringing in and onboarding external crews. We've got a couple of large external construction contractors that we've signed agreements with and brought on board and are ramping those crews up. In terms of the pacing to get to the 3.5 we really haven't given guidance on that yet, and I'll kind of save that for the future. I will say that speed is important to us. I think, you know, as much as we can, we're gonna lean in and, you know, try to accelerate the pace of the build so that we get to as many of these markets with fiber as quickly as we can. As your build engine ramps up, do you anticipate being at the appropriate run rate by, like, mid 2026, later 2026, sooner? How should we? We expect to be there more quickly than mid. I would say in the first half of the year, we should be, and hopefully really, you know, by the second quarter, we'll be fully ramped up to that kind of pacing that we need to be at to deliver that 3.5 million homes at the end of 2029. Okay. Now, cost per passing is unique for the Kinetic build and for Uniti Group, lower than industry benchmarks. I think you just recently commented it's gonna inch higher to about $850-$950 per passing, but that's below, like, $1,200 and whatever the other industry benchmarks are. What unique advantages does Uniti Group and Kinetic have to keep that lower cost base? Yep. Yep. That's one of the things that we got really excited about as we looked at the opportunity with Kinetic is a really cost-effective cost to pass when you look at it versus industry benchmarks and peers, but also when you look at the return model, the returns that we're looking to achieve off of this fiber build plan, I think are generally higher than what you've seen. It's enabled in large part by a couple of things, but one of the things is certainly the comparative advantage in terms of cost to pass. A couple of things enable that. One is Kinetic made the decision a couple of years ago to ramp up an internal crew capability, and I think that's panned out to be a really good decision. That internal crew is showing force of internal crews is showing that it can deliver at a lower cost generally than external contracted crews can deliver. That is great. That gives us a foundation. It does not scale easily, though. We want to kind of have the best of both worlds. We are going to keep that internal crew going, gives us a cost advantage there, and then we are going to marry that with some large contracts with external contractors that can commit a large volume of crews to enable us to scale and flex like we need to in order to get to our homes pass target, you know, that we talked about prior. That is one piece of it. The other piece of it is the investments that Kinetic made a few years ago in getting fiber to the node. They've got fiber to the DSLAM, that covers 95% of their market. That investment and sort of the backhaul piece of the fiberization of these networks has largely already been made, and that gives a cost advantage as well. I mean, there's some things in the Kinetic footprint. It's more rural, so it's not as dense as some other peer footprints. That can increase cost a little bit, but because of those advantages I just talked about, it gives us the ability to come in at what we think is a really great cost to pass. That 850-950 is a blended number all in, taking into account external crews and other higher cost factors. Yes. Yeah, that's all. And that's kind of a go-forward number. Historically, Kinetic focused on the lowest hanging fruit, the lowest cost, which makes sense. If you kind of blend that over the full life of the build, you know, pre-merger, post-merger, it's more like $750-$850, so even better. Yeah. You referenced IRRs underwriting thresholds being higher than what others across the industry have been able to achieve. What have you used internally as you project your IRR models from an underwriting perspective? The inputs to that are pretty intuitive, right? You have the number of passings and your pace to get those passings in, the cost per pass, the cost for the drops to the home. That is part of the capital associated with this. Then really your penetration curves and your ARPU. Kind of looking at all of those variables, putting it together, we use some outside resources that have been involved in a lot of these sort of strategic looks at build plans across the industry. Some really good experience there and expertise coming to the table to help us put all that together. You know, I would say, you know, generally, we kind of looked at a 15% IRR threshold as, you know, sort of the last home to pass being at that 15%. When you blend all of it together, our expected IRRs are, I would call them, high teens, you know, across the fiber build. I do not have perfect knowledge as to what others have expected, but based on what I have seen, that is pretty good. Yeah. Yeah. Yeah. Can you talk a little bit about the subsidy mix within your fiber-to-the-home build plan? I think recently there is a strategic pivot away from some subsidy funding that Windstream had used prior. Now you're doing more, strategic builds, or I forget what the actual wording was, but seemed to go away from subsidy funding. Yeah. Kinetic has, has historically, or at least in recent years, including this year, focused a little bit more on the subsidized builds. And those subsidized builds are good. They're part of the plan. You know, bringing in those government subsidies allows you to make passings that maybe aren't economical on their own, make them economical. And those tend to be in markets where we're gonna be the only one gig provider. Those markets are attractive, but, you know, they're less dense. It's slower to get passings, get points on the board. And there's only so much of those subsidies. The bigger opportunity for us going forward is the strategic part. That's the part where you can, there's more density. You can get more homes passed. The cost to pass is lower. you know, it builds a moat around those types of markets. And so we're, we're pivoting our build to where it has been more focused on the subsidized builds to more strategic builds. We did announce some BEAD wins. Those BEAD wins really weren't in our calculus to get to 3.5 million homes by 2029. So that's kind of incremental. Okay. To the plan. And, you know, like the other RDOF and PPP build, the public-private partnership builds that Kinetic has been working on, those BEAD markets that we've won, we're very pleased with. But the greatest volume of what we're gonna be doing going forward is much more focused on strategic. You'll see the subsidized builds maybe be, maybe 10% of the overall plan once we're done with it. Okay. That includes BEAD. 10% of the overall build. Yeah. 10%-15%. Is over and above the $3.5 million. A lot of that is baked into the three and a half million because RDOF and PPP are already part of the base, right, of what we've won and what we're working on. BEAD is incremental. Okay. Yeah. Understood. Yeah. Can you talk about the cohort penetration rates as you build? What have you seen today? What are your expectations moving forward? Yep. Our target penetration, terminal penetration, is a blended 40%. That's what we've kind of baked into our models and what we're talking about as the target that we're looking to get to. That's a mix of a couple of things. It's not a 40% necessarily everywhere. It's a blended 40%. In markets where we're the only competitor, our target penetration looks a lot more like 60%. In one competitor markets, which kind of is characterized, our footprint is characterized mostly with those kind of one competitor markets, it's around 40%. In markets where there's two plus competitors, which is not much of the planned fiberized footprint of Kinetic, you'd have more of like a maybe a 25% penetration. That all kind of blends to 40%. Our milestones, 25% penetration in year one, 30% penetration in year two. And we've been hitting those targets and exceeding those targets in our recent years. Early on with Kinetic, they were a little bit below that. If you look at more recent cohorts where they've been able to kind of roll in learnings over the years and really understand how to prep a market for fiber from a go-to-market standpoint, we're hitting those targets. I am very pleased with that so far, but we've got to continue to work our way up that ramp. That is a lot of what, when, if you hear John Hrabak, our President of Kinetic, talk about his plan, I think he brings a really strong base of knowledge as to how to do that. He's kind of seen it before, both at Fios and at Frontier, and now that playbook he's bringing to Kinetic. Kinetic was already doing a good job there, but there's a deeper playbook now, in terms of go-to-market strategy, and in terms of our pricing and, you know, marketing efforts and those sorts of things that give us confidence that we can get to those penetration levels. I think, I mean, really, if you look at it academically in a one competitor market, which again dominates most of the footprint where we're building fiber, if, you know, where you've got a fiber player or the cable player and then maybe, you know, fixed wireless or satellite alternatives, I like fiber's chances there to get a piece of the, you know, to get the majority of the pie there to win. I think fiber is a differentiated product. Longer term, I don't think it's unreasonable for us to, you know, be closer to 50% in those types of markets. We're seeing Frontier get into that range. Right now our target penetration is that 40%. That's where we're headed. You know, we'll think about beyond that and the longer term beyond that. I like, fiber's positioning in those types of markets for the long-term success. Maybe you can expound a little bit on John Hrabak's new marketing engine that he's ramping up. I think he shared some more detail about, you know, taking a more micro approach to customers and, you know, in markets, that's a little bit different than what they had been doing prior. Maybe talk about that and then also pricing, how you, you think about pricing both in initial penetrations, but then also over time where you think it can realistically grow. Yeah. Yeah. I'll take kind of the second part of that question first. From a pricing standpoint, John's bringing a much more surgical approach to that. The previous approach was really kind of more of a one-size-fits-all. They had a rate card and price increases that were just ubiquitously kind of applied across the entire Kinetic footprint. The new strategy is we feel like that leaves ARPU on the table in some markets and probably leaves us more susceptible to a higher churn in other more competitive markets. A much more surgical approach where we can look at individual markets and determine the, you know, kind of the P times Q maximizing equation in that market as opposed to just having a one-size-fits-all. We think that's gonna help us there. In terms of ARPU and the trajectory for ARPU, we had really reported really nice results on ARPU this last quarter, 10% year-over-year growth. I do not think that's the sustainable rate of growth in ARPU over the longer term. As John kind of puts in some of these tactics around pricing, you're gonna have some markets where maybe ARPU's a little bit less, where we're trying to drive penetration, and maybe there's some competition there. Other markets it might be a little higher. There are other levers for ARPU sort of longer term, right? You've got the bandwidth ladder. Only 35% of the Kinetic base today is taking speeds of 1 Gb or above. There's a lot of room to really drive consumers up the bandwidth ladder. Recently we announced the rollout of 2 Gb+ in 85% of the market. We now have more products up that ladder to drive consumers to add-ons. Historically, Kinetic has really only had a couple of add-ons, security, voice. John's got ideas for additional add-ons to bring to the table there that can help us drive ARPU. John's also focused on sort of the credit and retention strategy. Just having a thoughtful credit strategy, maybe not going straight to the bottom, you know, as a first response to a customer retention, being more kind of more thoughtful about that and trying to use different approaches, maybe, you know, taking someone down the speed ladder, you know, as opposed to a large credit on the higher speeds or something like that, can help us to manage ARPU. We are confident in the ability to have sustainable ARPU growth, but probably going forward it is more in that sort of 2%-3% range, I would say, on the longer term as opposed to maybe the 10% we just reported. You know, given the competitive nature of the Kinetic markets, there is some pricing power there. You know, only 60% of the Kinetic footprint has a big cable competitor, and there's a large portion of the footprint, 20% or so of the footprint that really has no competitor. That gives us some pricing power to, I think, have maybe a little bit above market ARPUs generally. We gotta make sure we manage that well going forward. In terms of other strategies, it's just really bringing that fulsome playbook. It's making sure your digital marketing strategy is optimized. The door-to-door ground game that we talked about in the second quarter when we kind of took down guidance, just the delay in ramping the door-to-door, feet on the street, ground game from a marketing standpoint. John's got real experience there scaling that kind of a program and is already making a difference there. bring some other things to the picture. John talks about, at Frontier they use some big box retailers as a good source of driving sales growth. You know, that's not something Kinetic has ever done. Tactics like that, I think, bringing into the mix, you know, and again, having a more surgical approach. You may be surging different marketing tactics here, there, in certain markets now and other markets later just to kind of continue to measure, continue to optimize. Taking that all together and maybe taking a step back from your seat as CFO, when you consider build pacing, pricing power, low single digits, maintaining costs that are lower than industry benchmarks, at what point do you envision the fiber-to-the-home build inflecting EBITDA positive? Yeah, that's a really good question. Obviously, you know, we've got to hit these milestones, right? We've got to fiberize our markets. We've got to get on pace with regard to that. We've got to continue to go up the penetration curve. Again, increasing confidence in our ability to do those things well. We've got a couple of big milestones that we're tracking on that are going to get us to that point. We put some of these in our latest earnings material. By the end of this year, fiber subscribers will outnumber DSL subscribers on the Kinetic footprint. That's a big milestone for us that we're celebrating or will celebrate when we cross it. In the first half of next year, fiber revenue at Kinetic surpasses copper DSL revenue there. We also talked about in our earnings release, full consolidated corporate revenue and EBITDA inflecting in 2027. The Kinetic peak is certainly a huge driver of that, with Kinetic revenue also inflecting in 2027. I think 2027 is going to be a big year for us in terms of inflecting not only the Kinetic business, but inflecting the consolidated business as well from a growth standpoint. Okay. Maybe if we can jump to the funding mechanism of the build. Yep. I know you've done a lot of work on the balance sheet recently, reduced your cost of capital. You've done two asset-backed securitization financings for $840 million. I think you and CEO Kenny Gunderman have talked about there being headroom upwards of $3 billion-$4 billion. How much of your overall funding mix do you anticipate being ABS? What are some of the hurdles to not leaning into that sooner? Yeah. We're excited about ABS. I mean, if you saw the deal that we did, which obviously you did, this, you know, in the third quarter, on ABS, or I guess it was early fourth quarter, we achieved the tightest spreads of any fiber deal since, you know, 2021. So a blended, a blended coupon in, you know, I think 5.67%. Coupon, blended coupon on that deal. Super excited about the comparative cost of capital for ABS. There is a lot of capacity, we think, at Kinetic for ABS. That will be a big part of our funding strategy and our capital structure strategy going forward, just given the comparative cost advantage of ABS. It's not a full solution for our capital structure. We're not planning to go fully into an ABS-backed capital structure anytime soon, but we think it's gonna play a growing part and will be a big part of funding the build at Kinetic. Again, it's not a full solution, I don't think. We need to maintain healthy access to other debt markets. We need to maintain a healthy mix of assets and cash flows in the high yield box as well because we like having access to multiple debt markets. I think we're gonna have to continue to have access to multiple debt markets, but ABS is gonna grow. There are other mechanisms that we can draw on to fund the build at Kinetic and the investment in the business as well. I think we haven't talked about AI and hyperscaler opportunities yet, but those can be cash accretive. Those are generally upfront deals, where most of the cash is paid upfront in an IRU kind of dark fiber structure. They can be cash accretive. Not all of them will be. It depends on the capital intensity of the particular deal, but they can be highly cash accretive. Kenny and I have both talked about opportunities for asset divestitures. We think that there are some larger opportunities for asset sales or divestitures within the current business. Kenny talked on our earnings call about assets that we have in markets, particularly fiber or real estate assets, that we do not have a short-term plan to really go monetize. Where others might have an ability to monetize those more quickly or more effectively, they might be candidates for asset sales. There's a lot of JV Capital sort of chasing these types of opportunities, looking to come in to help companies like us accelerate fiber build in the consumer space. That could be an opportunity there as well. Multiple opportunities and levers that we think we can pull in from a funding standpoint. ABS, I think, will play a big, big role. Do you have an internal target on the mix of ABS in aggregate? In aggregate? No. I mean, if you think about sort of that $3 billion-$4 billion capacity, which we do not necessarily need to take all of that down, not necessarily saying that we will. You can kind of get a feel for maybe where it could go. I think Frontier talked a bit about maybe a 50/50 mix. You know, I think that is probably the higher end of what we might do, at least in the near term. I want to maintain a healthy, healthy mix. That is going to be dictated a little bit by, you know, I think being opportunistic in the market. If we can jump back, you mentioned you provided some longer-term guidance with the third quarter call. I think we're looking at 2027 as being the pivotal inflection year for revenue and EBITDA growth in total on a consolidated basis. How much of that EBITDA growth is dependent on cost takeout and cost synergies versus just organic higher margin growth? Yeah. The deal between Windstream and Uniti, the merger, is not highly dependent on cost savings. You know, a lot of those businesses, and synergies is really what I'm talking about there. A lot of those businesses was sort of the landlord-tenant model. Not a lot of operations in those pieces of the business to synergize. There are some synergies that we're expecting to achieve in the fiber infrastructure business. A lot of that is bringing offnet expense Onnet, where we are paying third-party carriers to carry traffic for us. Bringing that Onnet on the broader network is a big cost-saving effort for us. We've talked about a target of about $100 million in annual run rate synergies. That's kind of what we're expecting from synergies. Other cost-saving initiatives, obviously we're gonna continue to work to become more efficient as you fiberize the network. We are expecting some, especially over the long term after you get through sort of the penetration ramp and the customer acquisition phase of the business. You do get a more efficient business from a margin standpoint. Just fiber's a more cost-effective type of network to run. You do not have near the number of troubles and callouts and those sorts of things. We are expecting some margin improvement from that. Most of the inflection will be driven by the growth associated with fiberizing the network, and increasing our overall penetration from a business that's dominated by copper DSL. You know, prior to this year, there will be dominated by fiber in the future. That gives us the ability to really drive penetration and growth higher on in that consumer business. You know, that's where we think the most, the biggest driver of that inflection will come from. Yeah. You referenced the hyperscale deals earlier, talking about being front-end cash loaded. You know, what are the general margin profiles of those sales? We've seen bookings increase, but we haven't seen them really flow through the P&L in a meaningful way through the vanity metrics. At what point should we expect to see some of that? The market opportunity in the hyperscaler space, it just continues to grow, really historic levels. I think it's a generational opportunity for not only for Uniti, but the fiber business in general. We've talked about our funnel is 5x what it was a year ago, because of all the growth in the hyperscaler demand. And we're seeing that demand and the investment being made in both the compute infrastructure and the network to support it increase. I think you're, you know, you're seeing that in a lot of the overall conversation in the market about where that is going. It's a historic opportunity for us. I think you'll start to see us talk about it more and more as it starts to come to fruition. We announced a $100 million total contract value deal that, with our second quarter earnings, that happened early in the third quarter. Kenny alluded to us having increasing confidence in line of sight to some of the biggest deals we have ever signed in the near future. More deals are coming. We think more opportunities are coming. The opportunities just seem to continue to grow for us there. Super excited about it. These are long sales cycles and, in many cases, long delivery cycles too. When you have to augment networks, build new networks, construct new networks, construct colocation facilities, it can take a year, two years, sometimes more to deliver these fiber networks. It is going to take a little while to work itself into our numbers. I think you're gonna start to see it impact our P&L in 2026. 2025 was really not dependent on any of that at all. There was a little bit of one-time revenue from the hyperscaler opportunity set baked into the back half of this year, but really not much of a factor at all in 2025. I think 2026 it starts to become a factor. And then beyond, you know, we think it's gonna be an even larger factor. These deals, these IRU deals, oftentimes the normal structure for those is that revenue that cash you receive upfront is deferred, and so you recognize it over a long 20-year period of the contract. You know, that mutes the impact a little bit. We think some of these deals may start to come in as one-time revenue just given the nature of lease accounting and how large some of these deals can be. More information on that as we get some more clarity on that. As we roll into 2026, we would expect to give a lot more information about how you'll see some of that start to fold into our numbers. In terms of the margin profile for these deals, it can vary a lot, and it can vary a lot largely depending on the mix of existing assets that you're able to bring to bear versus new construction, and the capital and operating expense you take on with new network versus existing network that you can sell. If you think about it in the context of Uniti's sort of classic anchor tenant and lease-up model, you know, we talked about historic anchor deals being sort of mid to high single-digit yields on the anchor deal, and then the lease-up drives additional return on top of that. We're seeing initial returns from these hyperscaler deals pretty far in excess of that. Pretty attractive model, especially when you start to think about the lease-up that you can add to these deals over the long term. We're almost at time, Paul, but I did wanna give you an opportunity with one last question in that. What do you think the equity market is missing about the Uniti story? I think prior to the Windstream deal closing, there were comments about maybe some asymmetry of information being out in the market. We've seen the stock kind of slide a little bit. What do you think the equity market's missing about the opportunity? Look, I think, you know, we threw a lot at the equity markets with this deal. You know, I think there's been certainly some technical washout associated with the transition of some of our shareholder base away from income and REIT base. We even saw some of that in the third quarter, as we actually de-REITed, and moved out of some of those indices. You've seen some technical washout continue into the third quarter. I think that's a piece of it. I think the bigger piece of it is getting up to speed on that, on the Windstream business, particularly Kinetic. It was public, you know, at one point in time, but it's been private for the last several years. I think people wanted to, investors really wanted to see information there and understand that. I think we're really in a bit of a show-me story, right? I think we need to show that we can do the things we need to do to grow this business so that we can ramp the build, that we can tap the ABS market on the Kinetic side, that we've got a plan. I think, you know, with this last quarter with John Hrabak and some of his comments in the market kind of showing that, you know, we've got a playbook and where we're going, I think that's starting to gain some traction. I think we just gotta execute. I don't know that investors are missing anything other than seeing us and getting increasing confidence that we can deliver on the plan. Excellent. With that, we are at time. Thank you, Paul, for being here. Yep. Appreciate it. Thank you, Caleb. Appreciate it.