Uniti Group Inc. (UNIT) | The Buildout — AI Infrastructure

The Verdict

Uniti Group is a U.S. fiber operator. Its Fiber Infrastructure segment sells wholesale capacity — dark fiber on high-count routes, lit Waves and leased routes — to the hyperscalers, neo-clouds and superscalers building AI data centers in Tier 2 and Tier 3 markets, which need those sites connected back into the long-haul network. Kinetic, the fiber-to-the-home engine, is framed by management as longer-dated edge-inference optionality rather than a current AI revenue line. Uniti supplies capacity that hyperscalers could source elsewhere without material delay; it is a participant in the buildout, not a chokepoint.

Earnings

Q2 2026 revenue was $909.7M at a 24.2% gross margin, with a net loss of $155.9M. Revenue fell from Q1 2026's $987.5M as high-margin sales-type-lease revenue did not land in the quarter. The standout was demand: a record ~$2.2M of Fiber Infrastructure bookings MRR, up almost 30% from the prior record, with over 50% of new bookings in Waves or lit capacity for the first time.

Management tone: Across the two calls, management's tone was direct and, on timing, deliberately conservative. On Q1 2026 it held guidance despite a beat, explaining it had debated a raise but chose not to because large deals can move by a month. On Q2 2026 it raised consolidated, Fiber Infrastructure and Kinetic build and capex guidance — then volunteered the slippage risk on large dark-fiber deals and conceded cost per passing would land at the top of the range. Questions on ARPU, capex and deal terms drew specific answers rather than restatements.

Management Guidance

For FY2026, management guides consolidated revenue of ~$3.655B and adjusted EBITDA of ~$1.475B, with net capex of ~$1.525B. By segment: Kinetic $2.145B revenue / $905M contribution margin and ~$1.27B net capex; Fiber Infrastructure $1.0B / $575M with $140M net capex; Uniti Solutions $700M / $320M. Consumer Fiber revenue is guided to $635M-$655M, year-end homes passed to 2.33M-2.38M, and fiber subscribers to 675,000-700,000, on 475,000-525,000 new homes constructed. Consumer Fiber ARPU is guided down low-single-digits in Q3 and up low-single-digits in Q4, returning to 2-3% growth from 2027. Management expects Q3 2026 to be down, with most large dark-fiber deals landing in Q4 and some possibly slipping into early 2027.

Trajectory

Recent reported revenue is dominated by the Windstream merger, which closed August 1, 2025. Reported revenue went $723M in Q3 FY2025 to $917M in Q4, $988M in Q1 FY2026, then $910M in Q2 FY2026. On the company's pro forma basis, consolidated revenue and adjusted EBITDA grew 1% and 10% in Q1 2026, then fell 5% and 10% in Q2 — swings driven by lumpy hyperscaler sales-type-lease revenue and continued decline at Uniti Solutions and legacy copper/TDM. Every fiber growth line decelerated quarter to quarter: total fiber +15% to +10%, Fiber Infrastructure fiber +13% to +6%, Kinetic consumer fiber +26% to +19%. Gross margin has oscillated with lease-recognition timing — 24.1% in Q4 FY2025, 31.4% in Q1 FY2026, 24.2% in Q2.

The Model

The model projects FY+1 revenue of $3,670M and EBITDA of $1,453M (39.6% margin), then FY+2 revenue of $3,850M and EBITDA of $1,548M (40.2% margin). The near-term anchor is the guided Fiber Infrastructure segment — $1.0B of revenue at roughly 14% capital intensity — as the build-and-lease-up program converts bookings into recurring revenue on plant that is largely already built. FY+2 assumes that conversion continues while the legacy drag shrinks as a share of the mix.

Projections are the median of 5 independent model runs.

For FY2026, management guides consolidated revenue of ~$3.655B and adjusted EBITDA of ~$1.475B, with net capex of ~$1.525B. By segment: Kinetic $2.145B revenue / $905M contribution margin and ~$1.27B net capex; Fiber Infrastructure $1.0B / $575M with $140M net capex; Uniti Solutions $700M / $320M. Consumer Fiber revenue is guided to $635M-$655M, year-end homes passed to 2.33M-2.38M, and fiber subscribers to 675,000-700,000, on 475,000-525,000 new homes constructed. Consumer Fiber ARPU is guided down low-single-digits in Q3 and up low-single-digits in Q4, returning to 2-3% growth from 2027. Management expects Q3 2026 to be down, with most large dark-fiber deals landing in Q4 and some possibly slipping into early 2027.

What Could Go Right — and Wrong

Looking Ahead

Over the next 12 months the test is conversion. Management expects most large dark-fiber deals to land in Q4 2026, with Q3 guided down and some risk of slipping into early 2027. Kinetic is guided to 475,000-525,000 new homes constructed and 2.33M-2.38M homes passed by year-end, and management expects Fiber to overtake legacy as the majority of revenue by end-2026. The company is also pursuing ongoing non-core asset sales that could pay down up to $500M of secured debt, plus further ABS issuance, while Consumer Fiber ARPU is guided to recover in Q4 2026 and return to 2-3% growth from 2027.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Uniti Group is a U.S. digital-infrastructure and fiber company. Per its FY2025 10-K, it operates approximately 240,000 fiber route miles across 47 states and serves more than 1.0 million customers. Its Fiber Infrastructure segment sells wholesale capacity — dark fiber on high-count routes including 864-strand and 1,728-strand fiber, lit Waves, FastWaves and sales-type leases — to hyperscalers, neo-clouds and superscalers. The company closed its merger with Windstream on August 1, 2025, which changed it from a single-tenant landlord into a diversified operating business; Windstream leasing revenues were about 68.3% of consolidated revenue before the close, and after it no single customer is above 10%.

It reports in three segments. Kinetic provides multi-gigabit fiber internet, whole-home Wi-Fi, security and voice across approximately 1,400 markets in 18 states. Uniti Solutions is a platform-led managed-services provider selling SD-WAN, SASE and managed security. Fiber Infrastructure delivers fiber connectivity and enterprise networking for businesses including banks, hospitals, schools and government organizations, and houses the AI-linked wholesale business. Management describes the company as 'the premier insurgent fiber provider,' with twin engines: the fiber-to-the-home build at Kinetic and the hyperscaler AI build at Fiber Infrastructure. Roughly 5 million 'future-proof connected endpoints' sit across the footprint.

Business Segments

Competitive Landscape

The 10-K describes the consumer competitive set. Cable providers are 'our largest source of competition for residential and small business broadband customers'; fiber overbuilders have expanded networks 'within our footprint'; fixed wireless has 'emerged as an alternate source for Broadband connectivity'; and satellite offerings 'have improved in recent years, particularly in our more rural and lower-speed copper areas.' Management's differentiation claim is a structural statistic — competing with big cable in less than 60% of its fiber territory, versus 'mid-80s to low 90s' for peers. On the wholesale side, management says it avoids Tier 1 routes where multiple competitors are 'competing largely on price,' and puts its Waves market share at 'probably less than 5%' of a market growing roughly 10% a year.

Supply Chain

Uniti buys fiber and network equipment from a small, unnamed supplier base and sells wholesale capacity to hyperscalers, neo-clouds, superscalers and other carriers. Its FY2025 10-K discloses the concentrated supplier base but names no suppliers, and the filings also name no customers.