Uniti Group Q1 2025 Earnings Report

Uniti Group EPS Results

• Actual EPS: $0.35
• Consensus EPS: $0.35
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.32

Uniti Group Revenue Results

• Actual Revenue: $293.91 million
• Expected Revenue: $295.39 million
• Beat/Miss: Missed by -$1.48 million
• YoY Revenue Growth: +2.60%

Uniti Group Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 8:30AM ET

Uniti Group (NASDAQ:UNIT), Inc. is a real estate investment trust company, which engages in the acquisition, construction, and leasing of properties. It operates through the following business segments: Uniti Leasing, Uniti Fiber, and Corporate. The Uniti Leasing segment involves mission-critical communications assets on exclusive or shared-tenant basis, and dark fiber network. The Uniti Fiber segment includes the operation of infrastructure solutions, cell site backhauls, and dark fiber. The Corporate segment consists of office and shared service functions. The company was founded in February 2014 and is headquartered in Little Rock, AR.

Uniti Group Q1 2025 Earnings Call Transcript

Key Takeaways

• Uniti reiterated its full-year 2025 guidance for mid-single-digit revenue growth, high-single-digit adjusted EBITDA growth, and AFFO of $1.40–$1.47 per share, with its business plan fully funded.
• The company is accelerating its fiber build through the Kinetic footprint, expecting to double targeted homes passed in 2025 versus 2024 and reach 2,000,000 fiber homes by year-end—two years ahead of schedule.
• Uniti’s pending merger with Windstream has secured ~97% shareholder approval and PUC approvals in 16 of 18 jurisdictions, and remains on track to close in H2 2025 (potentially July/August).
• In Q1, Uniti delivered consolidated revenue of $294 million, adjusted EBITDA of $238 million, and AFFO of $92 million, with core recurring strategic revenue up ~4% year-over-year and fiber capital intensity down >50%.
• The ABS market remains resilient and Uniti’s blended cost of capital has improved by ~500 bps over two years to ~7.5%, enabling pursuit of a $1 billion-plus near-term ABS financing opportunity for its fiber assets.

Presentation

[Operator]

Good morning. Thank I'm to discuss Unity's First Quarter twenty twenty and I'll be your operator for today. Today's call is being recorded and a webcast will be available on the company's Investor Relations website, investor.unity.com, beginning today and will remain available for three sixty five days. It is now my pleasure to introduce Bill DeTullio, Unity's Senior Vice President of Investor Relations and Treasury.

[Operator]

Please begin.

[Bill DiTullio, Vice President of Finance & Investor Relations at Uniti Group]

Good morning, everyone, and thank you for joining today's conference call to discuss Unity's first quarter twenty twenty five results. Speaking on the call today will be Kenny Gunderman, our CEO and Paul Bowington, Unity's CFO. Before we get started, I would like to quickly cover our Safe Harbor statement. Please note that today's remarks may contain forward looking statements. These statements include, but are not limited to statements about our 2025 outlook expectations regarding lease up of our network demand trends, business strategies, growth prospects, the benefits of the proposed transaction between unity and Windstream, including future financial and operating results of either company or the combined company statements related to the expected timing of the completion of the transaction and combined company plans and other statements that are not historical facts.

[Bill DiTullio, Vice President of Finance & Investor Relations at Uniti Group]

Numerous factors could cause actual results to differ materially from those described in the forward looking statements. For more information on those factors, please see the section titled forward looking statements in the accompanying presentation and the Risk Factors section in our filings with the United States Securities and Exchange Commission. With that, I would now like to turn the call over to Kenny.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Thanks, Bill. Good morning, everyone, and thank you for joining. Uniti had another strong quarter performance, and we're executing well on the goals we set for 2025. We remain focused on best in class execution and disciplined top line growth of mid single digits and high single digit adjusted EBITDA growth. And as a result, we're reiterating our full year revenue, adjusted EBITDA and AFFO guidance.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Our current business plan is fully funded, and we've made great progress towards our plan to fully fund new Unity. Despite recent broad capital markets volatility, the ABS market has remained resilient and will be a key tool for us going forward. Lastly, we continue to focus on building new fiber, especially within the Kinetic footprint. We announced last quarter that Kinetic expects to roughly double the number of targeted homes passed with fiber for 2025 over 2024. By the end of this year, Kinetic should have reached 2,000,000 homes, a full two years earlier than expected when we announced our merger.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

As I'll talk about later, we expect our cadence will only accelerate from there. Before turning to the quarter results, I'd like to briefly address some topical macroeconomic immunity specific topics. First, while we continue to evaluate the impact of proposed tariff changes, we currently anticipate little to no effect on our business today, including pro form a for our merger with Windstream. We are not meaningful direct importers of materials, and therefore, we expect any impact of higher tariffs to represent no more than 1% of our total combined CapEx. The risk of higher tariffs over a sustained period has created greater volatility in the capital markets and increased the risk of a recession.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

While we acknowledge these risks, we remain confident in the highly defensible mission critical nature of our fiber infrastructure. During recent protracted economic downturns, including the COVID pandemic, we witnessed little to no impact to our business performance. Further, while our cost of capital has recently been volatile, it continues to be substantially better than when compared to the levels prior to the announcement of our merger with Windstream. The ABS market has proven particularly resilient given the investment grade structure of the securities and the underlying mission critical infrastructure. As a result, our plan to continue investing heavily in new fiber has not changed.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Next, we're very pleased with recent changes we're seeing at the FCC and the NTIA and the potential impact on our business. Specifically, we're encouraged by the increased leniency towards retirement of aging copper networks and associated regulatory obligations. We also believe the dialogue regarding use of government subsidies such as bead and others to economically deploy fiber and alternative technologies is generally in line with our expectations. Finally, we welcome the renewed focus on streamlining permitting across the industry. Taken together, these regulatory trends and other initiatives provide an improved backdrop and incremental tailwinds for the substantial ramp of our business model.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Turning to our pending merger. We recently received shareholder approval to complete the transaction, and we're very pleased by the overwhelming support, with approximately 97% of all voting shareholders approving a transaction. We have received PUC approvals from 16 of the 18 jurisdictions requiring them, including Washington, D. C. As a result, we remain on track to close the transaction in the second half of this year and remain optimistic that it could be as early as July or August.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Finally, I'm very pleased to welcome two new members to the Unity team. John Harobin was recently appointed to president of Kinetic, and Harold Zeitz was nominated as a new board member of Unity. Both John and Harold are industry veterans who bring proven fiber to the home experience via Frontier and Ziply, respectively, further positioning us for success. John, in particular, will be a critical leader in helping accelerate our insurgent fiber mentality at Kinetic, and we look forward to introducing him to analysts and investors in the near future. Moving to slides four through seven, I continue to be pleased with our growth trajectory and strategy of being an insurgent pure play fiber provider in Tier two and three markets.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

We continue to show solid bookings with the right mix of anchor and lease up customers, industry leading churn, and declining capital intensity. As a result, our cumulative cash yields are approaching 30%. Industry demand for our services also continues to be strong. As predicted, we're starting to see increased activity from wireless carriers this year with bookings in the quarter almost double those from the same quarter last year. And despite much debate about hyperscaler spend in the industry during the quarter, our confidence in the opportunity ahead has only been reinforced as we saw very strong activity.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

In short, Unity is executing well on our core strategy of providing mission critical fiber, we're well positioned for the future. With that, I'll turn the call over to Paul.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

Thank you, Kenny. I'd like to begin by reviewing our first quarter performance, followed by an overview of our current 2025 outlook. We once again delivered solid results during the quarter with our core recurring strategic revenue growing approximately 4% and the capital intensity of our fiber business, excluding the impact of GCI, declining over 50% year over year. We continue to see strong tailwinds in our recurring business and are executing well on our lease up strategy at both Uniti Leasing and Uniti Fiber. As I'll cover in more detail in just a bit, our 2025 outlook for consolidated revenue, adjusted EBITDA, and AFFO remains unchanged as we expect to end the year within the previous guidance ranges provided.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

Finally, I'll end with some commentary on our current balance sheet and capital structure. We also recently provided Windstream's first quarter financial information in an eight ks filed with the SEC on May 1. Please turn to slide eight, I'll start with comments on our first quarter. We reported consolidated revenues of $294,000,000 consolidated adjusted EBITDA of $238,000,000 AFFO attributed to common shareholders of $92,000,000 and AFFO per diluted common share of $0.35 At Uniti Leasing, we reported segment revenues of $222,000,000 and adjusted EBITDA of $215,000,000 representing an adjusted EBITDA margin of 97% for the quarter. Both revenue and adjusted EBITDA were in line with our expectations for the quarter.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

During the first quarter, Uniti Leasing net success based CapEx was approximately $170,000,000 including $175,000,000 of investment relating to the Windstream GCI program. Taking into account this funding amount during the quarter, Windstream has reached its GCI funding limit for 2025 and there will be no further GCI payments for the remainder of the year. At Uniti Fiber, we reported revenues of $72,000,000 and adjusted EBITDA of 29,000,000 during the first quarter, resulting in an adjusted EBITDA margin of 40%. Non recurring revenue during the quarter was lower than expected, primarily due to the timing of delivery on a $4,000,000 1 time sale of fiber to a government customer that was originally expected to be realized in the first quarter and is now expected later this month. The delay was requested by the customer to allow for the completion of an unrelated customer project prior to the completion of our work.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

Uniti Fiber net success based CapEx was $18,000,000 in the first quarter, which represents an approximate 25% decline from prior year's levels. We also incurred about $1,500,000 of maintenance CapEx during the quarter. As I've mentioned previously, there continue to be a number of encouraging trends in bookings that are driving this capital efficiency, including our continued focus on lease up and a higher mix of dark fiber deals, primarily from hyperscalers that generally come with higher NRCs. Please turn to slide nine, and I'll now cover our updated 2025 guidance. We are revising our 2025 outlook for business unit level revisions, the impact from the partial redemption of the 10.5% senior secured notes due 2028, and the impact of transaction related and other costs incurred to date.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

Our outlook excludes any impact from the expected merger with Windstream, future acquisitions, capital market transactions, and future transaction related and other costs not mentioned herein. Actual results could differ materially from these forward looking statements. Beginning with Uniti Leasing, we continue to expect revenues and adjusted EBITDA to be $9.00 $2,000,000 and $872,000,000 respectively at the midpoint. We still expect to deploy $185,000,000 of success based CapEx at the midpoint of our guidance, of which $175,000,000 relates to Windstream GCI investments. At Uniti Fiber, we expect revenues and adjusted EBITDA to be $3.00 $4,000,000 and $125,000,000 respectively at the midpoint for full year 2025, representing an EBITDA margin of approximately 41%.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

Our outlook for net success based CapEx at Uniti Fiber this year remains $85,000,000 at the mid point of our guidance and represents a capital intensity of 28%. As a reminder, given the strong financial performance and declining capital intensity, standalone Uniti is expected to be free cash flow positive on a consolidated basis in 2025. We continue to expect full year AFFO to range between $1.4 and $1.47 per diluted common share, with a midpoint of $1.43 per diluted share, representing a 6% increase from the prior year. As a reminder, guidance ranges for key components of our outlook are included in the appendix to our earnings presentation. At quarter end, we had $592,000,000 of combined unrestricted cash and cash equivalents and undrawn revolver capacity.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

Our leverage ratio was 6.09 times based on net debt to first quarter twenty twenty five annualized adjusted EBITDA, excluding the debt and net contributions from the ABS loan facility. Slide 10 illustrates how Unity's cost of capital has improved significantly over the past two years. If you go back to this time two years ago when we launched our 10.5% secured notes offering, our secured and unsecured debt was yielding over 12%. Fast forward to today, and our debt is currently yielding around 7.5% on a blended basis, a 500 basis point improvement in just two years. As a result, we have taken an opportunistic approach to strengthening our combined balance sheet, and we'll continue to look for opportunities across all of the debt markets to which we have access.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

In regard to ABS specifically, we continue to view that market as an attractive source of financing that complements our existing capital structure well by providing an investment grade financing tool. And we will continue to evaluate further opportunities to expand our current program. To that end, we believe that the combined potential for incremental ABS capacity on our commercial fiber assets at Uniti and fiber to the home assets at Kinetic represents a $1,000,000,000 plus near term opportunity with considerable upside to that over time. On slide 11, we have provided a twenty twenty five pro form a view of revenue and adjusted EBITDA for new Uniti by each segment we expect to report on post close. Both Kinetic and Fiber Infrastructure consist of a highly predictable core recurring revenue base that continues to grow and yield attractive margins.

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

As a reminder, our Fiber to the Home platform will continue to be branded as Kinetic. Fiber infrastructure will include our current Uniti Fiber and Uniti Leasing segments, along with the Windstream Wholesale segment,

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

all

[Paul Bullington, SVP, CFO & Treasurer at Uniti Group]

of which are highly complementary and will combine to create a premier fiber infrastructure company with both national and deep regional capabilities, as well as a fiber network that is predominantly owned and operated. Going forward, as we continue to transition away from legacy services such as Windstream TDM services, we continue to expect the Kinetic and Fiber Infrastructure segments to realize low to mid single digit top line growth with an improving margin profile. With that, I'll now turn the call back over to Kenny.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Thanks, Paul. Slide 13 showcases the reach of new Unity's insurgent fiber network, extending our successful strategy of targeting less competitive markets for wholesale and enterprise now into residential fiber to the home. Our true north is building fiber first in less competitive markets, giving us the right to win for many years into the future. Slide 14 highlights some of the benefits of bringing Uniti and Windstream together. At Uniti, we have been able to drive attractive financial results in large part because of our fully owned fiber network and associated owners' economics.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Our combination with Windstream not only extends our fiber network materially, but will bring large parts of Windstream's business on net immediately, with a four year plan to achieve virtually 100% on net. As such, with owners economics and our same disciplined growth strategy, we will eventually see similar economic trends in Windstream's business, including mid single digit revenue growth, growing EBITDA and declining capital intensity. A big part of moving Windstream on net is transitioning Kinetic off of legacy based copper systems and onto fiber. As mentioned earlier, by the end of twenty twenty five, we expect to have converted about 2,000,000 of Kinetic's four point four million homes to fiber. And by 2029, we expect to have built fiber to approximately 3,500,000 homes.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

I'm excited to share more details in the coming months when we have the plan fully locked in. Lastly, we've aggressively managed out of legacy services at Unity and plan to continue that strategy at the combined new Unity. Turning to slide 15, our ability to address the burgeoning hyperscaler opportunity is going to be enhanced as well. Windstream's wholesale network is highly complementary to ours on key routes, and Windstream's largely lit Waves product capabilities are additive to our strong dark fiber portfolio. On a combined basis, we'll be able to sell a full product suite and immediately begin selling into an expanded customer base, given that Windstream has an incremental 40 different MLAs with hyperscalers to complement Unity's current count of only four.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Finally, as we mentioned previously, we believe the real opportunity with generative AI is when the inference phase begins in earnest. With a dramatic increase of distributed endpoints coming with our Windstream combination, our ability to provide enhanced broadband connectivity with low latency increases materially. Moving to slide 16, we remain committed to making progress on numerous key initiatives between signing and closing of our transaction. First, both companies continue to execute well operationally, and we continue to provide a unified investor relations outreach to help investors understand the new company. Next, we're very excited to have completed the simplification of our new pro form a balance sheet at closing, thus paving the way to roll out our accelerated and expanded Fiber to the Home plan.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

We're also actively working with Kinetic on an integration plan to achieve our synergy goals. In the coming months, we plan to provide more details on our longer term goals for the combined company, with a primary focus on the holistic Kinetic build plan and other key strategic initiatives. Let me close by restating how excited we are for our pending merger with Windstream. The new Unity is at the epicenter of the growing convergence trend, highlighting substantial strategic value on Kinetic and its scaled fiber to the home platform. Our fiber infrastructure business is uniquely positioned to benefit from explosion in broadband demand in general, including the demand being fueled by hyperscalers.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

With that, we'd be happy to take your questions. Operator?

[Operator]

As a reminder, to ask a question, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. Please stand by while we compile the Q and A roster. Our first question comes from the line of Greg Williams of TD Cohen. Please go ahead, Greg.

[Greg Williams, Analyst at Cowen]

Great. Thanks for taking my questions. Kenny, I appreciate the color on the tariffs and recessionary insulation, but I have that sort of same concern around the M and A environment. Are we penciled down at the moment or are deals moving forward in this environment? Second question is just on the high mix of lease ups, 72%.

[Greg Williams, Analyst at Cowen]

I think that's at or near a company record. I understand it's lumpy with that mix, but are we seeing a shift away from the new builds towards training data centers and maybe eventually towards inference? Any insights there would be great. Thanks.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Good morning, Greg. Good questions. Yeah, on M and A, the short answer is no, definitely don't see any slowdown in activity there at all. In fact, I'd say probably the opposite or at the very least no speed bumps related to the conversations that we're aware of and the progress that people are making on various strategic fronts. And look, from our perspective, we're very focused on integration, putting an integration plan in place and getting our transaction closed and hitting the ground running on legal day one without any disruption of service, but also accelerating our insurgent fiber go to market strategy and really accelerating the kinetic build, but always have M and A in the back of our minds.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

That's a gene that we've had at Unity for many, many years, and that's never going to change. So we're staying very engaged with the strategic market, both strategics and financial parties. And I just think there's a lot of interest in the fiber space. I think it's fueled by both the convergence themes that we're seeing across the industry, and it's also, of course, fueled by the hyperscaler activity. And we happen to have a set of assets, certainly on a combined basis with Kinetic, that are right down the fairway on both of those.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

And so we're in the middle of a lot of interesting conversations and we look forward to continuing that on a go forward basis. Look on lease up, yeah, I think you nailed it, Greg. I think it ebbs and flows when you just have the quarterly check-in. But from the standpoint of hyperscalers, we're definitely not seeing any slowdown in the investment required for large language models. And I think that's not gonna change anytime soon.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

I think we're in a one or two or three year investment cycle here for those models. I think you're gonna see some large, probably some large Greenfield type opportunities coming down the pike for us later this year, especially on a combined basis with Windstream wholesale. We've got some opportunities in the funnel that we're very, very excited about and can't wait to talk to you about. So you're still going to see those large greenfield opportunities. But I do think the inference phase is going to be upon us a lot sooner than expected, or at least sooner than we originally expected, Greg.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

And as you've heard us talk about many times, that's the phase that we're most excited about, because that's when I think you're going to see the real ramp in recurring revenue for fiber businesses as these large language models start to fuel people's usage of AI across all the different endpoints that we have. And when you listen to what the hyperscalers say publicly, they're starting to have trouble discerning between AI work streams and cloud based work streams. They're starting to mesh into one single AI is starting to be infused in all the other work streams, cloud based work streams and others, which I think is an early indication that inference is already here. And at some point, we're not going to be able to distinguish what's AI versus not. And I think that's very exciting.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

And we certainly haven't seen any slowdown in hyperscaler activity. And really bringing that back to your question about lease up, a large portion of the lease up that we saw this quarter actually was from hyperscalers. And another theme that we've mentioned previously was that some of these really high strand count transactions that we've seen in the past twelve, eighteen months, we're now seeing hyperscalers come back to us and double down on those high strand count requests, which again is an exciting trend because it validates their infrastructure investments from a couple years ago, a year ago, and they're now seeing that capacity be consumed and needing more, even when they're initially asking for 400 strands or 1,800 strands and coming back for more. So exciting times. I think you're going to always see a good healthy mix of lease up in our model though.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

That's a conscious effort on our part And that's what helps keeps our free cash flow yields approaching, you know, between 2530% when you're really sweating the asset that way. So good call out, Greg, but good themes behind all of that.

[Greg Williams, Analyst at Cowen]

Great. Thank you.

[Operator]

Thank you. Our next question comes from the line of Frank Louthan of Raymond James and Associates. Please go ahead, Frank.

[Analyst]

Hey, guys. This is Rob on for Frank. Hey, congratulations on the strong bookings this quarter. I'm wondering if you can unpack the nature of those bookings, including roughly how much of those are AI related? And also, can you guys characterize the returns on these AI driven builds relative to some builds, you know, some of the other builds you've seen historically?

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Hey, Rob. Good morning. On the bookings, we so direct directly to your question, the percentage related to hyperscalers is probably around 20%, depending on how you measure it. So somewhere in the 15 to 20% range, which by the way has been pretty consistent over the past twelve, eight, eighteen months. It's been a growing percentage, but it's been relatively consistent in that range over the past couple of three quarters, which is great.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

And we always talk about one of the benefits of the wholesale fiber business is that we're agnostic as to the winning use cases of fiber or the use case of the day in fiber. Right now AI is front and center for everybody, but the reality is when you peel back the onion, all of the different use cases of fiber for us are accelerating. Last year and continuing into this year, our biggest customer segment is actually the fiber to the home providers across the country procuring backhaul to support the fiber to the home build out. And we're seeing that again this year. So very excited about that.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

We're excited about the AI theme. I mentioned in my prepared remarks that the wireless carriers are starting to spend again. Bookings for wireless was double quarter of last year, which again, we sort of foreshadowed that at the end of last year that wireless was picking up. So all that to say, AI bookings are growing, it's just the rest of our bookings are growing as well. And so continuing to be in that 15% to 20%, range.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

Also, to call out, Rob, on AI. And we've mentioned this before, but because we're still in this large investment period for the learning models, many of those deals don't get reflected in bookings in traditional way because these are greenfield builds that have very high high NRCs and get treated as either IRUs or strategic fiber sales. And so the activity with the hyperscalers is a little bit understated by the bookings number, when in reality I think it's a lot greater. And back to my point about inference, I think that's going to change once we really get into the inference ramp later on. With respect to the returns on these deals, look, I

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

think

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

that we treat them in the same way that we treat all other anchor lease up models that we look at. And for the most part, the hyperscaler deals are generally anchor deals for us. And so as a reminder, our strategy is to target 5% to 10% yields for the anchor with a really clear path to lease up beyond 10% after the anchor deal. And that's why we track and report each quarter to show that across the portfolio, we're nearing 30 blended yields on our initial anchor deals. When you put the hyperscaler opportunities and you look at it through that lens, we're nearing 20% yields on our hyperscaler deals.

[Kenny Gunderman, President and Chief Executive Officer at Uniti Group]

So inclusive of anchor yields plus lease up over the past couple of years, we're already approaching 20% yields. So we don't like to talk about specific customers and specific customer deals, but on a blended basis, our hyperscaler deals are tracking frankly ahead of our traditional anchor lease up model. Great, thank you.

[Operator]

Thank you. That ends the Q and A session and concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Bill DiTullio, Vice President of Finance & Investor Relations
• Kenny Gunderman, President and Chief Executive Officer
• Paul Bullington, SVP, CFO & Treasurer

Analysts

• Greg Williams, Analyst at Cowen
• Analyst