Uniti continues to see opportunities to address small cell backhaul needs, signing agreements with some of the largest wireless operators while lending a voice to realign regulations to make it easier to install facilities.
Kenny Gunderman, CEO of Uniti, told investors during the company’s third-quarter earnings call that small cells have been a key element of its growth.
“We have now signed master services agreements for small cells with 3 of the 4 national carriers and have over 2,000 small cell nodes either billing or in our contracted backlog,” said Gunderman during the earnings call, according to a Seeking Alpha transcript.
Ongoing small cell deployments are boosting the company’s Uniti Fiber division. Gunderman noted that Uniti Fiber's sales bookings and bandwidth upgrades continue to trend at a similar pace as the second quarter.
“Bandwidth upgrades are being driven by the unlimited data plans of the wireless carriers,” Gunderman said. “Forty-five percent of our sales bookings during the third quarter came from the 4 national wireless carriers, 25% from other carriers and 30% from local enterprise and K through 12 schools.”
As it works with more wireless operators on small cell deals, Uniti has been working with stakeholders to address small cell permitting issues. The company recently met with all five of the FCC commissioners' offices as well as with FCC staff in the Wireline Competition Bureau and Wireless Telecommunications Bureau.
“We're working on several proceedings aimed at reducing regulatory barriers to the deployment of broadband, which may include the use of the FCC's branching authority, best practices and potentially other measures,” Gunderman said.
One state where Uniti has seen the most progress with small cell regulations is in Florida, one of its largest wireless backhaul markets. In July, the state of Florida passed a bill that the company says could streamline the permitting process for small cells.
“The state of Florida passed such a bill on July that we believe may eventually help alleviate many of the local permitting delays we're facing in that state,” Gunderman said. “However, many jurisdictions within Florida have implemented moratoria or abatements on the processing of new small cell applications pending the development of local ordinances consistent with the state law. We have worked collaboratively with many of these localities in Florida on the development of these ordinances to try to limit the financial and technical impediments that they might seek to impose on companies like ours and to reduce the amount of time that such moratoria are in place.”
Here’s a breakdown of Uniti’s key metrics:
Uniti Fiber: Uniti Fiber reported revenues of $66.4 million and adjusted EBITDA margins of 42.7% or $28.3 million. On a sequential basis, adjusted EBITDA margins improved from 36.1% in the prior quarter, principally due to its Hunt and Southern Light acquisitions with a richer mix of enterprise, wholesale and E-Rate customers.
Uniti Leasing: Uniti Leasing segment revenues were $171.7 million with adjusted EBITDA of $171.2 million for the third quarter. Uniti said the Leasing segment benefited this quarter from nearly $53 million of improvements to its network made by Windstream with its capital. On a cumulative basis since the spinoff, Uniti noted it has benefited from $392 million of tenant capital improvements completed by Windstream.
Financials: Uniti Fiber reported consolidated revenues of $245.2 million with consolidated adjusted EBITDA of $194.9 million.