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The call emphasized multiple clear operational and financial positives: robust fiber revenue growth (total fiber +15% YoY), strong Kinetic build and subscriber acceleration (88k homes passed in the quarter, +30k net fiber subs, consumer fiber revenue +26% YoY), improved churn and operational metrics, meaningful hyperscaler engagement (largest lit order, ~30% IRRs, ~$70M sales-type lease revenue in Q1) and notable capital structure progress (debt yields down ~600 bps, ABS access). Lowlights were mostly execution- and timing-related rather than structural: continued declines in legacy copper/TDM/Uniti Solutions (midteens expected), lumpiness and timing risk of hyperscaler one-time revenue (guidance left unchanged despite Q1 beat), some competitive pressure in copper from LEO/FWA, and modest equipment/conduit cost pressure. Overall, the positives—especially across the core fiber businesses, hyperscaler momentum, and improved capital structure—outweigh the manageable challenges and timing risks.
Management reconfirmed detailed 2026 targets and provided crisp cadence guidance: consolidated 2026 revenue and adjusted EBITDA of about $3.63B and $1.45B with consolidated net CapEx ≈ $1.4B; Kinetic guidance of ~$2.15B revenue and $905M contribution margin with ~ $1.2B net CapEx, targeting 2.30–2.35M homes passed (bringing >50% footprint coverage), 675k–700k fiber subs and $635M–$655M of consumer fiber revenue (≈25%–30% YoY); Fiber Infrastructure midpoint targets of ~$975M revenue, $560M contribution margin and ~$140M net CapEx (~14% capital intensity), plus a ~6,000-route-mile build plan aimed at nearly $1B cumulative nonrecurring cash by 2028 and up to $500M of recurring annual cash thereafter, with blended anchor lease-up yields ~35% and combined IRRs on hyperscaler deals ≈30%; Q1 metrics supporting the outlook included total fiber revenue +15% YoY, Fiber Infrastructure fiber +13%, Kinetic consumer fiber revenue +26% YoY, Kinetic added 30k net fiber subs to 564k and ended the quarter with ~1.94M homes passed (88k new passings in the quarter), fiber penetration 29.1% (+20 bps seq, +120 bps YoY), fiber ARPU +5% YoY and roughly $70M of sales‑type lease dark fiber revenue in Q1; capital structure progress noted blended debt yields down ~600 bps to ~6.5% (recent ABS coupon ~5.7%) and $500M–$1B of monetizable noncore assets identified.
Total fiber revenue grew 15% year-over-year; Fiber Infrastructure fiber revenue grew 13% year-over-year. Consolidated pro forma revenue and adjusted EBITDA increased 1% and 10% year-over-year, respectively, marking the first quarter as a combined company to achieve both top-line and EBITDA growth.
Kinetic expanded fiber passings by ~88,000 homes in the quarter (ending the quarter with ~1.94 million homes passed). Kinetic added 30,000 net new fiber subscribers (ending with 564,000 fiber subs), a 22% year-over-year increase in total fiber subscribers. Kinetic consumer fiber revenue grew 26% year-over-year. Company reiterated 2026 targets for Kinetic: 2.3M–2.35M homes passed, 675k–700k fiber subs, and $635M–$655M consumer fiber revenue (implying ~25%–30% YoY growth).
Kinetic reported the strongest quarter ever of fiber gross adds and highest homes constructed in nearly four years. Consumer fiber churn at Kinetic reached its best level ever, with churn down ~14% year-over-year and early-life customer churn down ~20% year-over-year. Fiber penetration reached 29.1% (up 20 basis points sequentially and 120 basis points YoY). Fiber ARPU increased ~5% YoY. Operational metrics improved (fewer trouble tickets/truck rolls, highest installed completion rates, lowest repeat and transfer rates).
Fiber Infrastructure recorded the third-highest quarter of bookings and consolidated bookings MRR of approximately $1.6M. The business reported ~$70M of sales-type lease dark fiber revenue in Q1. Management highlighted a 20-terabit wave package (largest lit bandwidth order in company history) and stated combined IRRs on hyperscaler deals sold to date are approximately 30%. Management expects to build ~6,000 new route miles and approach $1B cumulative nonrecurring cash revenue by 2028, with potential up to $500M of recurring annual cash revenue from lease-up.
Company reiterated long-term goals: 3.5M homes passed and 1.25M fiber subs by end of 2029, and being closer to 90% of revenue from core fiber business. Management highlighted opportunity to take share in the waves market (company currently <5% share) and product launch (FastWaves) to accelerate turn-ups.
Blended yields on debt improved ~600 basis points over three years, from ~12.5% (Feb 2023) to ~6.5% today. Recent ABS issuance printed at a blended coupon of ~5.7%. Company expects continued ABS activity and believes ABS can be a competitive, growing part of the capital mix. Management identified $500M–$1B of noncore assets that could be monetized over 12–36 months to further optimize capital.
Good morning and welcome to today's conference call to discuss the First Quarter 2026 Uniti Group's Earnings Conference Call. My name is Michelle 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.uniti.com beginning today and will remain available for 365 days. [Operator Instructions] It is now my pleasure to introduce Bill DiTullio, Uniti's Senior Vice President of Investor Relations and Treasury. Please begin.
Thanks, Michelle. Good morning, everyone, and thank you for joining today's conference call to discuss Uniti's first quarter 2026 results. Speaking on the call today will be Kenny Gunderman, our CEO; and Paul Bullington, Uniti's CFO. John Harrobin, President of Kinetic, will also be joining us this morning during Q&A. 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 regarding Uniti's fiber build strategy, the business' growth potential, our 2026 outlook and other statements that are not historical facts. Numerous factors could cause actual results to differ materially from those described in the forward-looking statements.
For more information on those factors, please see the section titled safe harbor statement in the accompanying presentation and the Risk Factors sections in our filings with the United States Securities and Exchange Commission. With that, I would now like to turn the call over to Ken...