Uniti Group Inc.

Good morning and welcome to today's conference call to discuss Unity's second quarter 2024 earnings results. My name is Lateef and I will be your operator for today. Today's call is being recorded and a webcast will be available on the company's investor relations website, investor.unity.com, beginning today and will remain available for 365 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. It is now my pleasure to introduce Bill DiTullio, Unity's Vice President of Investor Relations and Treasury. Please begin.

Good morning, everyone, and thank you for joining today's conference call to discuss Unity's second quarter 2024 results. Speaking on the call today will be Kenny Gunderman, our CEO, and Paul Bullington, Unity's CFO. Before we get started, I would like to quickly cover our safe harbor statement. Please note that today's remarks may contain forward-looking statements. These statements include, but are not limited to, statements about the benefits of the proposed transaction between Unity and Windstream, including future financial and operating results of either company or the combined company, statements related to the expected timing of the completion of the transaction and combined company plans, and other statements that are not historical facts. Any forward-looking statements contained in today's discussion and materials speak only as of the particular date or dates indicated in the materials. Please also note that Unity and Windstream, through the entity that will be the combined parent company following the merger, recently filed a preliminary form S4 registration statement with the SDC that includes a proxy statement and prospectus regarding the transaction that has not yet become effective. Investors are urged to read that proxy statement and prospectus as it contains important information about the transaction. In addition, Unity and Windstream and their directors and officers may be deemed to be participating in the solicitation of proxies in favor of the transaction. You may find information about Unity's directors and executive officers in the company's most recent proxy statement. You may also obtain a copy of the preliminary proxy statement and prospectus through the SEC website, Unity's and Windstream's websites, or by requesting a copy from either company's investor relations website. More information on how to request these documents is available in the presentation that accompanies this call. Unity does not undertake any obligation to update or revise any of this information in today's remarks, whether as a result of new information, future events, or otherwise. Numerous factors could cause actual results to differ materially from those described in the forward-looking statements. And for more information on those factors, please see the section titled forward-looking statements in the presentation and the risk factors section of the recently filed preliminary form S4. With that, I would now like to turn the call over to Kenny.

Thanks, Bill. Good morning, everyone. Thank you for joining. Starting on slide four, Unity delivered another solid quarter of performance led by the continued strong demand for our mission critical fiber infrastructure. As a result, we're reiterating our consolidated full-year 2024 revenue and adjusted EBITDA outlook. Our core recurring strategic fiber business grew 3% in the second quarter, fueled by exceptional growth in enterprise, wholesale, and dark fiber revenue of 12%, 15%, and 18%, respectively. When paired with our industry-leading 0.3% churn, we remain on track to deliver 4% to 6% MRR growth for the full year. We continue to execute well in our unique strategy of being a pure play fiber provider in tier two and three metro markets and on inner city routes. We believe that if you build fiber first in less competitive markets, you secure a right to win for many years into the future. Turning to slide five, we had a strong quarter of new bookings. As we have discussed previously, the demand from hyperscalers driven by generative AI is real and represented approximately 40% of this quarter's bookings. We're increasingly confident that this demand will be sustained as a meaningful percentage of our entire wholesale sales funnel is from hyperscalers. While wireless bookings for the quarter were muted, we continue to expect a pickup in wireless in the second half of this year. We're not only seeing a meaningful pickup in wireless RFPs, but we're also starting to have conversations about 25 gig upgrades at tower sites. Growth in mobile broadband, fixed wireless, and fiber-to-the-home connectivity are all driving substantial data traffic growth, and we do not see any of those trends dissipating. Finally, fiber-to-the-home carriers are driving an increasing amount of demand, procuring middle-mile and inner-city backhaul to connect our neighborhoods. The amount of bookings Unity saw relating to fiber-to-the-home carriers increased threefold in 2023 versus 2022, and we expect a similar level in 2024. On a consolidated basis, our net capital intensity during the quarter was 31%, down from 44% in the same prior year period. And we believe it will continue to decline. There are a number of encouraging trends and bookings driving that capital efficiency, including our continued focus on lease up and a higher mix of hyperscaler deals that generally come with higher NRCs and therefore better than our typical anchor yields. We also continue to see price stability, especially in dark fiber sales. Turning to slide six, our growth capital investment program continues to provide positive results for Unity, and given our pending merger with Windstream, we wanted to highlight a few key points which we believe the market is underappreciating. First, Kinetic and Unity have invested a substantial amount of capital in its network, with over $2 billion invested since 2015. These historical investments include backhaul fiber and ultimately fiber to the node. In fact, prior to starting the fiber to the home program in 2019, close to 100% of all broadband customers at Kinetic were already served by fiber-backed D-SLAMs. Each of these D-SLAMs has a minimum one gig backhaul link to the market level central office and a minimum 10 gig link from that CO to the network core. This historical investment helps enable Kinetics approximately $650 per home passing cost, as we estimate that backhaul equates to roughly 20% of the total cost of building fiber to the home for others. I'll speak more on our pending merger shortly, but to complete our earnings discussion, I'll now turn the call to Paul. Thank you, Kenny.