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Windstream’s Revenue Falls, Fights to ‘Re-Characterize’ Uniti Agreement

Money Bag

Windstream is reporting lower second quarter revenue as it fights to minimize a costly network agreement.

The carrier added 1,900 broadband customers last quarter and grew its SD-WAN, UCaaS and OfficeSuite UC sales 43% from last year. President and CEO Tony Thomas said his company has avoided “material business interruption” during the chapter 11 bankruptcy process it began in February.

Windstream's Tony Thomas

Windstream’s Tony Thomas

“We continue to expand broadband service across our largely rural footprint and grow our consumer broadband customer base. We also continue to see strong growth in strategic sales in our enterprise business unit. We appreciate the continued strong support we have received from our employees, customers, vendors and financial stakeholders as we work through this process,” Thomas said.

Windstream raised $1.29 billion in total revenue and sales in the second quarter. It brought in $1.4 billion in the second quarter of 2018. Adjusted capital expenditures ticked up, hitting $215 million compared to $181 million a year prior.

The company reported a $2.3 billion loss in the first quarter of 2019.

A lienholder committee this week asked to join Windstream to “re-characterize” its network leasing deal with Uniti Group into a financing agreement. Uniti is a publicly traded real estate investment trust (REIT) consisting of network assets that Windstream divested in 2015. Windstream pays Uniti about $650 million annually to use Uniti’s network.

We wrote last month about the tense negotiations among Uniti, Windstream and Windstream’s creditors. Two banks requested that the bankruptcy court appoint a mediator to “negotiate” the $54 million monthly network rental agreement between Windstream and Uniti. Uniti executives scoffed at the notion and said they may ultimately “evict” Windstream from its network if it fails to make its payments.

“This latest effort by out-of-the money junior creditors of Windstream to extract value from Uniti does nothing to change that essential fact. Consistent with the views of Windstream’s counsel and advisers when the lease was established, we believe that the lease is a true lease and will be respected and enforced as such, and we will vigorously contest any argument to the contrary,” Uniti’s president and CEO said earlier this year.

A judge nevertheless approved a mediator for the leasing agreement.

“Whether through litigation or mediation, Windstream’s overarching focus is and has been securing the greatest value for its stakeholders. Hopefully we will reach a mutual agreement with Uniti through mediation, but we will pursue all of our options with respect to our arrangement with Uniti,” Thomas said in Windstream’s quarterly update.

In happier news for the vendor, Gartner named Windstream to its latest UCaaS Magic Quadrant.


2 comments

  1. Avatar Tony August 8, 2019 @ 11:13 pm

    So we are to believe ken gunderman and bob gunderman are actually arguing? Its a show so people believe Uniti isnt just a shell company/tax haven

  2. Avatar Todd Singleton October 4, 2019 @ 1:00 pm

    This whole thing is such a scam. Uniti was never anything more than a tax haven, set up illegally without notification to bond holders and to make sure their was never any genuine infighting they put Ken in place at REIT. Now the judge puts them in mediation with each other? What about the creditors? They should be able to stop Windstream’s shill payments to Uniti even if it means Windstream goes down in a ball of flames. They built this disaster, now simmer in it. And why in the hell did the board decide to put Tony Thomas back as CEO of Windstream after this nightmare he created? He violated the first rule of bondholder agreements when he failed to notify them of his mastermind shill company spin off. Windstream needs to die. The company’s been the worst ranked telco for a long time among consumers. Very few business customers want anything to do with them. They damn sure shouldn’t be allowed to take on new customers right now when they can’t even pay their debts. LET THEM DIE. NO BAILOUT. Sell off their assets to local telcos and make sure they are not “too big to fail” before tax payers get to pay the creditors for their ongoing failures.

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