Uniti Group Inc. of Little Rock reported Thursday first-quarter net income of $2.5 million, or 1 cent per share, up from $1.2 million, or a loss of 1 cent per share, in the same quarter last year.
The real estate investment trust (Nasdaq: UNIT), a spinoff of Windstream Holdings Inc. of Little Rock, reported first-quarter revenue of $261 million, up from $247 million.
The company also made an accounting change regarding its master lease with Windstream.
“Going forward, until there is more certainty regarding the master lease, the company will recognize revenue from the master lease on a cash basis,” the company said in a news release.
Uniti said its 2019 outlook “assumes the Windstream lease continues in full force and effect, and that Windstream continues to make all lease payments on time.”
On its quarterly earnings conference call Wednesday, Windstream President and CEO Tony Thomas indicated that the company might renegotiate its lease agreements with Uniti. Windstream filed Chapter 11 bankruptcy reorganization in February.
“Windstream believes that the current rent under the Uniti master lease is significantly above market,” Thomas said. “In the context of its Chapter 11 cases, Windstream is evaluating all options regarding the Uniti lease, including renegotiation, recharacterization, unwinding the lease, as well as an outright rejection of the lease. More details will emerge as the Chapter 11 process evolves.”
Uniti acquires and builds communications infrastructure for lease to communications companies like Windstream. As of March 31, Uniti owns 5.6 million fiber strand miles, 500 wireless towers and other communications real estate throughout the country.
In the report about Uniti’s quarterly results, President and CEO Kenny Gunderman said the company is seeing “strong demand” for dark fiber and small cell deployments, as well as new tower demand in the U.S.
“Uniti Fiber continues to be on track to complete the build out of several major network expansion projects by the end of this year, and recently wrapped up a successful E-Rate season,” Gunderman said. “We continue to see positive momentum in our leasing business and are focused on the lease-up of our existing fiber networks, as well as pursuing additional value accretive sale-leaseback and OpCo/PropCo transactions.”
Gunderman said “solid organic revenue growth” across its businesses and industry trends prompted the company to leave its full-year 2019 outlook unchanged.