The Wall Street Journal reported, citing unnamed sources, that “talks with Uniti started in June, when the parties discussed a price of around $15 a share, but they recently stalled over price”. That price would value a deal at $3.5 billion.
None of the parties are commenting on the report. Windstream and Uniti used to be a single company, until they split in 2015, and Uniti still gets 70% of its revenue from Windstream: Uniti owns the infrastructure on which Windstream provides services.
Windstream emerged from Chapter 11 bankruptcy protection in September 2020, and is now owned by Elliott Management and other former creditors. Uniti is a real estate investment trust (REIT). Their combined debt is put at US$7 billion.
According to the report, Zayo would re-unite the two businesses, but observers accept that a deal would be complicated.
Its main benefit would be to redirect the $700 million Windstream pays Uniti every year for lease payments. A combined operation would also benefit from US government payments to expand broadband rollout.
Windstream CEO Tony Thomas told a US business publication: “Any transaction that helps us accelerate broadband buildout would be a very positive outcome for our customers.”
In March Windstream submitted its application to receive $523 million over 10 years in the Rural Digital Opportunity Fund (RDOF) Phase I auction run by US regulator, the Federal Communications Commission (FCC). It said it will use the funds to deliver fibre-to-the-home (FTTH) services to almost 200,000 locations across 18 states.
Zayo is jointly owned by DigitalBridge, a US investment company, and EQT, an investor based in Sweden. They paid $14.3 billion in March 2020 in a deal that was conceived at a Capacity Metro Connect conference in Florida.
Zayo’s US and European network is 126,000 miles (202,000km) and Uniti’s US fibre network (pictured) is 123,000 miles (198,000km).
