Uniti Group Inc.

Good morning, and welcome to today's conference call to discuss Unity's third quarter 2024 earnings results. My name is Gigi, and I'll 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.

Thanks, Gigi. Good morning, everyone, and thank you for joining today's conference call to discuss Unity's third 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 our 2024 outlook, expectations regarding lease-up of our network, demand trends, business strategies, growth prospects, 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, has filed a Form S-4 registration statement with the SEC. 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 directors and executive officers in the company's most recent proxy statement. You may also obtain a copy of the proxy statement and prospectus through the SEC website, Unity's and Winstream'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 Risk Factors section of the filed Form S-4. With that, I would now like to turn the call over to Kenny.

Thanks, Bill. Good morning, everyone, and thank you for joining. I'm excited to talk about another solid quarter of performance at Unity in our pending combination with Windstream. But before doing that, I want to first acknowledge the terrible impact of Hurricanes Helene and Milton. Our thoughts are with the many people who've suffered loss and damage in the affected areas. I also want to thank emphatically the loyal Unity first responders and support employees who yet again provided terrific, virtually immediate support to our customers and communities. While our response to such natural disasters is a core competency and regularly complemented by our customers, Unity leadership never takes your service for granted. Now, turning to the quarter and starting on slide four. Unity once again delivered a solid quarter performance led by the continued strong demand for our mission-critical fiber infrastructure by various customers, including hyperscalers. Paul will provide more details on our updated guidance later on, but we're slightly increasing our full-year 2024 revenue outlook as a result of this strong demand. Our core recurring strategic fiber business grew 3% in the third quarter, fueled by exceptional growth in enterprise, wholesale, and dark fiber revenue of 10%, 14%, and 18% respectively. When paired with our industry-leading 0.2% churn, we remain on track to deliver 4% to 6% MRR growth for the full year. Turning to slide five, we had another strong quarter of new bookings. While wireless bookings have remained muted so far, we're encouraged that we'll see a pickup in activity towards the end of this year and into 2025. This downturn is more than offset by demand from other customers, including fiber-to-the-home carriers, which are driving substantial demand, procuring middle-mile and intercity backhaul to connect their 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 this year. As we mentioned previously, the demand from hyperscalers continues to represent a meaningful part of our consolidated bookings with 20% of our year-to-date bookings coming from hyperscalers. We're confident that this demand will be sustained going forward as a meaningful amount of our entire sales funnel is from hyperscalers. Moving to slide six, I wanted to talk a bit more granularly about the hyperscaler deals we're seeing. There should be no debate in the industry about the size of the demand for digital infrastructure, the hyperscaler opportunity for digital infrastructure providers, including data centers and fiber. Hyperscalers are spending over $200 billion annually, and a meaningful percentage of that is being spent on digital infrastructure for cloud-based products, now generative AI, and other future use cases. We believe this spend is going to persist and likely grow. The types of transactions we're pursuing with hyperscalers thus far are attractive financial deals and highly strategic. As you can see from the map, we're either selling existing infrastructure with little to no capital required or building new infrastructure in highly strategic parts of our network, providing future lease-up potential. In some cases, we're building new long-haul routes that we previously coveted but could not justify from a cost perspective. Further, the economics of these transactions are entirely in line with our previously stated anchor plus lease-up model, and we're very excited to pursue future transactions during this investment phase. As you can see, the types of deals vary from strategic sales to IRUs to dark fiber leases and, in some cases, selling waves. As a result, the impact of our financials, including bookings, will vary quarter to quarter. For example, in the fourth quarter, we're likely to see a spike in revenue from strategic sales that were made to hyperscalers earlier in the year and are being delivered during the quarter. We're even more excited for the inference phase of generative AI and the many other ultra-high broadband use cases that are coming. The edge of our network will become even more valuable as data centers, wireless towers, small cells, and connected buildings will need to be built or upgraded, providing a lift to MRR. Importantly, fiber to the home will also become even more valuable. In short, Unity is executing well on our core strategy of providing mission-critical fiber, and we're well positioned for the future. With that, I will turn the call over to Paul.