Inquired about the types of projects and product preferences (dark fiber vs. waves) for different customer segments like neoclouds, superscalers, and hyperscalers.

Kenny Gunderman explained that hyperscalers are more focused on building new fiber (greenfield, over-pulls) and dark fiber for learning models, representing the build cycle. Neoclouds and superscalers are driving demand for lit wave packages for inference, often on existing or newly built infrastructure, and this demand is accelerating faster than expected, with multi-terabit wave packages becoming the norm. “I'd say the majority of the funnel that we talked about there is really coming from the neocloud group and these multi-terabit wave packages are more of the norm than the exception.”

Asked if the 15% IRR for hyperscaler lease-up is due to timing, volume, or pricing.

Kenny Gunderman clarified that many hyperscaler deals come with large non-recurring charges (NRCs) upfront, which largely offset initial capital, making traditional cash flow yield measurement difficult. He stated that returns are very attractive and expected to become more so as recurring revenue from lease-ups grows. “many of these hyperscaler deals come with very large NRCs. And so we used to measure our anchor deals on a cash flow yield basis, but we can't do that with the hyperscalers because it's not measurable.”

Inquired about restrictions on charging new tenants for lease-ups, most favored nation clauses, and the scope of WAVES offerings (any endpoint vs. specific POPs/data centers).

Kenny Gunderman stated there are very few limitations or restrictions on lease-ups due to conscious design, as fiber is a shared infrastructure asset. For WAVES, they selectively light routes with a competitive advantage (network quality, uniqueness) rather than competing on price in Tier 1 markets. The hyperscaler build is accelerating WAVES opportunities in Tier 2/3 markets connecting to Tier 1. “We have very few limitations, restrictions, and sort of unique terms with respect to what we can or can't do with the fiber that we're building. And that's by conscious design.”

UNIT

Uniti Group (UNIT) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Jul 30, 2026

Source: earnings call transcript

Executive summary

Uniti Group Inc. Q2 FY26 — Record Fiber Bookings and Accelerated Build

Uniti Group delivered a strong quarter, driven by record fiber infrastructure bookings fueled by AI demand and accelerated fiber-to-the-home builds at Kinetic. The company is strategically expanding its network and optimizing its capital structure, while navigating industry-wide ARPU pressures and managing the timing of large infrastructure deals. Management is focused on operational excellence and customer obsession to drive future growth.

Highlights

Fiber Infrastructure recorded record new bookings, exceeding the previous record by almost 30%.
Kinetic achieved its strongest quarter ever of net adds, with 38,000 net new fiber subscribers.
Kinetic's fiber churn this quarter was the best second quarter churn ever seen.
Fiber Infrastructure consolidated bookings MRR reached approximately $2.2 million, its highest level on record.
The full-year target for new fiber homes constructed was raised to 475,000-525,000.

Concerns

Consumer fiber ARPU decreased 2.6% year-over-year and is expected to decrease low single digits in Q3 FY26.
Consolidated pro forma revenue and adjusted EBITDA were down 5% and 10% year-over-year, respectively.
Kinetic CapEx guidance increased by $100 million to $1.27 billion at the midpoint, partly due to pull-forward for 2027 builds.
There is a possibility that some large Fiber Infrastructure deals could slip from Q4 FY26 into early 2027.

Guidance & targets

Category	Target	Timeline	Confidence
New fiber homes constructed	475,000-525,000 high materiality	FY26	High
Homes passed with fiber (Kinetic)	2.33 million to 2.38 million high materiality	End of FY26	High
Fiber subscribers (Kinetic)	675,000 and 700,000 medium materiality	End of FY26	High
Consumer fiber revenue (Kinetic)	$635 million to $655 million medium materiality	FY26	High
Revenue (Kinetic)	$2.145 billion high materiality	FY26	High
Contribution margin (Kinetic)	$905 million medium materiality	FY26	High
Net CapEx (Kinetic)	$1.27 billion high materiality	FY26	High
Revenue (Fiber Infrastructure)	$1 billion high materiality	FY26	High
Contribution margin (Fiber Infrastructure)	$575 million medium materiality	FY26	High
Net CapEx (Fiber Infrastructure)	$140 million medium materiality	FY26	High
Revenue (Unity Solutions)	$700 million medium materiality	FY26	High
Contribution margin (Unity Solutions)	$320 million medium materiality	FY26	High
Consolidated revenue	$3.655 billion high materiality	FY26	High
Consolidated Adjusted EBITDA	$1.475 billion high materiality	FY26	High
Consolidated Net CapEx	$1.525 billion high materiality	FY26	High
Consumer fiber ARPU	decrease low single digits medium materiality	Q3 · FY26	Medium
Consumer fiber ARPU	stabilize with expected increase of low single digits medium materiality	Q4 · FY26	Medium
Fiber as majority of revenue	overtake legacy services high materiality	End of FY26	High
Homes passed with fiber (Kinetic)	3.5 million high materiality	End of 2029 · FY29	High
Fiber subscribers (Kinetic)	1.25 million high materiality	Future	High
Revenue from core business	closer to 90% medium materiality	Future	High
Terminal fiber penetration (Kinetic)	40% medium materiality	Long-term	High
Revenue from new builds (Fiber Infrastructure)	$1.5 billion high materiality	Next few years	High
Recurring revenue from new builds (Fiber Infrastructure)	$500 million high materiality	Future	High
Non-core assets monetization	$500 million to $1 billion high materiality	Next 12-36 months	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Kinetic Kinetic's fiber-based revenue, including consumer, business, and wholesale services, grew 12% year-over-year. The segment achieved its highest level of new passings on record and strongest quarter ever of net fiber adds. Consumer fiber ARPU was impacted by various factors but is expected to stabilize. Homes passed with fiber: 2.1 millionNet new fiber subscribers: 38,000Total fiber subscribers: 603,000Fiber subscribers growth YoY: 25%Consumer fiber revenue growth YoY: 19%Fiber penetration: 29% (up 90 bps YoY)Fiber coverage within footprint: 46%	$2.145 billion	12%	—	$905 million
Fiber Infrastructure Fiber Infrastructure revenue grew 10% year-over-year, driven by robust demand from hyperscaler and neocloud customers. The segment recorded its highest-ever consolidated bookings MRR and strong anchor lease-up cash yields. Consolidated bookings MRR: $2.2 millionAnchor lease up cash yields: 37%	$1 billion	10%	—	$575 million
Unity Solutions Unity Solutions revenue and contribution margin are expected to decline at a mid-teens pace year-over-year over the next few years. The increase in contribution margin guidance is due to higher margin strategic services sold during the quarter. The company aims to retain profitable portions while winding down low-value legacy services.	$700 million	mid-teens decline	—	$320 million

Deals & partnerships

Windstream Agreement to merge

Since announcing our agreement to merge with Windstream, we have successfully executed on a series of planned actions.

Kinetic Second ABS transaction

Recently completed our second ABS transaction at Kinetic to fund fiber build and potentially pay down secured debt through asset sale offers.

Risks & headwinds

Consumer fiber ARPU pressure Q3 FY26

Decreased 2.6% YoY in Q2 FY26; expected to decrease low single digits YoY in Q3 FY26.

Mitigation:Targeted marketing, customer experience, and customer retention initiatives; adjusting pricing based on market strength and competitor pricing; expecting stabilization and low single-digit increase by Q4 FY26.

Timing of large Fiber Infrastructure deals Q4 FY26 / Early 2027

Possibility that some large sales type lease dark fiber deals could slip from Q4 FY26 into early 2027.

Mitigation:Acknowledged as a reality of building large amounts of fiber (hundreds of miles, multiple permitting authorities, contractors); not a reflection of deal quality, typically a matter of weeks or a month.

Increased cost per home pass Mid-2027 and beyond

Expected to come in at the upper end of the guided range for cost per passing.

Mitigation:Long-term contracts and volume for CPE memory; ability to balance different SKUs; CapEx increase for 2026 is largely a pull-forward for 2027 builds, not necessarily higher 2026 costs.

Competitive promotions Near-term

Impact on ARPU across the industry from convergence offerings and new initiatives from Big Cable.

Mitigation:Implementing targeted pricing tiers and cohorts; fortunate to compete with cable in less than 60% of fiber territory; not chasing unprofitable growth but not ceding market share.

What to watch in Q3 FY26

Consumer Fiber ARPU trajectory

Q4 FY26

Current Down 2.6% YoY in Q2 FY26, expected to decrease low single digits YoY in Q3 FY26

Target Stabilize and increase low single digits YoY in Q4 FY26

Why it matters

ARPU stabilization is key for Kinetic's profitability and growth amidst competitive pressures.

For the remainder of the year, we expect consumer fiber ARPU to decrease low single digits year-over-year in the third quarter, but should stabilize in the fourth quarter with an expected increase of low single digits year-over-year.

Find out whether UNIT delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked for more color on ARPU trends given industry pressures and whether the CapEx increase implies higher cost per home pass or front-loading of costs.

Management acknowledged ARPU pressure due to competitive promotions but expects stabilization and return to positive growth by Q4 FY26, driven by targeted strategies. They clarified that the CapEx increase is largely a pull-forward for 2027 builds, not necessarily higher cost per passing for 2026, though 2026 costs might be at the higher end of the range due to fiber material costs in outer years.

“You can't really take the increase in capital that we're guiding to and apply it directly to just those 25,000 additional homes we're guiding to. As mentioned in my comments, a lot of that CapEx is a pull forward of CapEx to accelerate 2027 growth.”

asked by Gregory Williams · answered by Unknown Speaker

2 min read 6 chapters

Detailed narrative

AI-Driven Demand for Fiber Infrastructure

Uniti is experiencing accelerating demand for fiber infrastructure, particularly from hyperscalers and neoclouds, driven by the rapid adoption of agentic AI. This demand is evolving from dark fiber networks to lit wave packages, with significant multiplier effects expected on broadband usage as AI inference moves to the edge, requiring low latency and high bandwidth connectivity.

The company is building the necessary infrastructure to enable this growth, positioning itself to benefit from the expanding AI market.

Accelerated Fiber Build and Market Positioning

As a premier insurgent fiber provider, Uniti is strategically positioned in Tier 2 and 3 markets, leveraging its robust existing network. The company significantly accelerated its fiber build at Kinetic, achieving a record 141,000 new passings in Q2 FY26, bringing total homes passed with fiber to 2.1 million.

The full-year target for new fiber homes constructed was raised to 475,000-525,000, with a long-term goal of 3.5 million homes passed by the end of 2029, capitalizing on unique market opportunities.

Record Bookings and Product Mix Shift

Fiber Infrastructure recorded its highest-ever new bookings, with consolidated bookings MRR of approximately $2.2 million, an almost 30% increase from the previous record. Over 50% of these new bookings were WAVES or LIT capacity, reinforcing a pivot from the initial build cycle to lease-up and inference.

This shift is primarily driven by neoclouds and superscalers demanding multi-terabit wave packages, leveraging Uniti's unique routes and network quality, with a current waves funnel representing approximately 1.3 petabytes of traffic.

Kinetic Performance and ARPU Dynamics

Kinetic achieved record net fiber subscriber adds of 38,000 in Q2 FY26, ending the quarter with 603,000 total fiber subscribers, a 25% YoY increase. Fiber penetration reached 29%, up 90 basis points YoY, with 46% of the Kinetic consumer footprint now fiber-passed.

While consumer fiber ARPU decreased 2.6% YoY due to competitive pressures, it is expected to stabilize and return to low single-digit growth by Q4 FY26, supported by targeted marketing and retention initiatives.

Capital Structure Optimization and Asset Monetization

Uniti has successfully optimized its capital structure, extending debt maturities, lowering costs, and improving blended debt yields by 600 basis points over three years to 6.5%. The company completed its second ABS transaction at Kinetic to fund fiber builds and potentially pay down up to $500 million of secured debt.

Additionally, Uniti is actively pursuing the monetization of $500 million to $1 billion in non-core assets over the next 12-36 months, which are currently underutilized and produce minimal cash flow, to generate material proceeds.

Cross-Selling and Strategic Services Growth

Uniti Solutions is demonstrating growing success in cross-selling managed services into its on-net fiber base, with approximately 16% of new bookings including a managed services product. While Unity Solutions is not core to the long-term fiber infrastructure strategy, it generates meaningful and predictable cash flow.

The company aims to retain the most profitable portions of this business while winding down low-value legacy and TDM services, contributing to enhanced margins and customer loyalty.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.