Uniti Group Inc. (NASDAQ:UNIT) Q2 2020 Earnings Conference Call - Final Transcript

Aug 10, 2020 • 04:15 pm ET

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Uniti Group Inc. (NASDAQ:UNIT) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to Uniti Group's Second Quarter 2020 Conference Call. My name is Delim and I'll be your operator for today. A webcast of this call will be available on the Company's website, www.uniti.com, beginning August 10, 2020 and will remain available for 14 days.

[Operator Instructions] The company would like to remind you that today's remarks include forward-looking statements and actual results could differ materially from those projected in these statements. The factors that could cause actual results to differ are discussed in the Company's filings with the SEC. The Company's remarks this afternoon will reference slides posted on its website and you are encouraged to refer to those materials during this call.

Discussions during the call will also include certain financial measures that were not prepared in accordance with the generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Company's current report on Form 8-K dated today.

I would now like to turn the call over to Uniti Group's Chief Executive Officer, Kenny Gunderman. Please go ahead, Mr. Gunderman.

Executive
Kenny Gunderman

Thanks, Delim. Good afternoon, everyone, and thank you for joining. Please turn to Slide 4 in our presentation. The Second quarter showed continued positive momentum for Uniti. Our largest customer received approval for its plan of reorganization, putting it on a path to emerge from bankruptcy later this year as a substantially healthier tenant. Our settlement will also become effective, providing Uniti with a 90% increase in leasable fiber, approximately $30 million of new third-party revenue and a hardened master lease.

We're also responding well to the COVID-19 crisis. The majority of our employees are working from home, while our remaining employee base is actively working in the field with first-responder designation.

Our installation activity in the second quarter was one of our strongest ever with a 40% increase in activity from the prior quarter. Our network continues to perform well with no degradation and has normalized after we saw an uptick in traffic last quarter. To date, we have not seen any order nor service cancellations from customers as a result of COVID-19 and we continue to see only marginal delays relating to new sales and install activity.

For example, only about 13,000 of MRR to be installed continues to be delayed, compared to 50,000 of MRR last quarter. Depending on how long businesses in our market continue to be impacted, there could be a potential for another 50,000 to 75,000 of MRR delayed in the second half of this year. Less than 5% of our revenue is from enterprise customers and 75% of those enterprises provide essential services. Thus, we expect any future impact from COVID to continue to be minimal.

On the flip side, we continue to see increased demand from these critical industries, including healthcare customers for communications infrastructure upgrades and builds as more providers turn to telemedicine and other high-bandwidth usage technologies to serve their patients. Demand in installation activity from our