Windstream and Uniti Talking Merger?

That’s what Bloomberg says is going on, according to the ever aware ‘people with knowledge of the matter’. Windstream and Uniti Group are said to be talking some sort of stock deal that would consolidate the businesses but leave Uniti as independently traded. Such a deal wouldn’t be surprising, and in fact would in some ways wrap up what would be a 10 year story arc.

Back in 2014 (yes it was that long ago), Windstream announced plans to spin off its fiber assets as CS&L while retaining their use via a triple net lease. CS&L was structured as a REIT, looking to take advantage of the corporate structure favored by data center assets but with network assets instead.  CS&L then did some consolidation of its own, acquiring PEG Bandwidth, Tower Cloud, and a bunch of other tower assets, among other things, before rebranding itself as Uniti Group.

But the original transaction angered Windstream creditors, who didn’t like the fact that the assets backing their debt were now under other ownership, and the whole thing wound up in court. The creditors won, Windstream was forced to restructure, and Uniti agreed to a settlement of its own that reshaped their relationship with Windstream.

The drama is long over now, and both companies have long since moved on. Windstream’s own wholesale division has been busy rolling out new network routes and infrastructure, while Uniti has been steadily leasing assets and investing in more.  Yet, the two remain intertwined as Windstream still operates on the assets it leases exclusively from Uniti. That means that Windstream surely would loom large in any strategic transaction that Uniti’s owners might be looking at.

That’s why the rumored combination would be less of a consolidation and more of a reunion of assets. The fact that, with the deal under discussion, Uniti might be kept as an independently traded entity suggests that the underlying structure of the original spinoff might live on, just back under the same roof.   In all, such a transaction would make a lot of strategic sense for Windstream to pursue, offering both significant simplification and new opportunities.

But there is no guarantee the talks between Windstream and Uniti Group go anywhere. It all comes down to whether prices can be agreed upon and the result can be financed. Whether this is the time for that to happen is anybody’s guess.  

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Categories: Fiber Networks · Mergers and Acquisitions · Towers