Uniti Group Inc., the only fiber-focused real estate investment trust, plans to remain "very aggressive" in acquiring operating companies as it seeks to build out a fiber operating platform under its umbrella, President and CEO Kenneth Gunderman said during a conference appearance.
In addition to its network leasing business, the operating business permits Uniti to play a role in the development of the billions of dollars of fiber telecommunications assets that will be needed in the coming years, Gunderman said in webcast remarks from NAREIT's REITWeek conference.
Uniti is building networks worth tens of millions of dollars — even as much as $100 million — for some of the largest U.S. telecommunications carriers. Those carriers are anchors in the networks, helping defray the costs of development and providing Uniti with "a nice starting steady yield." Those networks will then give the company "tremendous" lease-up potential with other carriers and other customers, he said.
Pro forma for its pending acquisitions of Southern Light LLC and Hunt Telecommunications LLC, the company is on track to create a fiber operating platform generating more than $200 million of revenue, Gunderman said.
The company is also aiming to diversify away from Windstream Holdings Inc., from which it was spun off in 2015. Uniti owns a large portion of Windstream's network and leases it back to Windstream on an exclusive basis.
Uniti initially projected reducing its exposure to Windstream to below 75% through diversification, but it now expects to cut that down to 70% once the Southern Light and Hunt acquisitions close, and it is targeting a reduction to below 50% possibly within the next 24 months, Gunderman noted, adding that eventually the company could bring its Windstream exposure to less than 20%.