Uniti Group NASDAQ: UNIT raised its full-year revenue expectations after strong demand for its fiber infrastructure services, even as third-quarter earnings declined and competitive pressures weighed on its Kinetic broadband business.
The company expects 2026 consolidated revenue of approximately $3.68 billion and adjusted EBITDA of $1.475 billion at the midpoints of its outlook, with net capital expenditures of about $1.525 billion. CEO Kenny Gunderman said the company was reiterating its prior guidance apart from slightly higher revenue expectations, largely driven by Fiber Infrastructure.
On a pro forma basis, third-quarter revenue fell 10% and adjusted EBITDA declined 22% from a year earlier. CFO Paul Bullington attributed the declines primarily to continued losses in legacy copper and time-division multiplexing, or TDM, services, as well as higher-than-expected churn among consumer DSL subscribers.
Gunderman said quarterly adjusted EBITDA was also affected by a wholesale customer agreement that replaced near-term TDM revenue with longer-term strategic revenue, the movement of a large hyperscaler deal into the fourth quarter, and additional customer-retention measures at Kinetic.
Fiber Demand Lifts Infrastructure Outlook
Fiber Infrastructure recorded approximately $1.9 million in monthly recurring revenue from new bookings, its second-highest level on record. Bullington said demand for both dark and lit fiber solutions remained strong among hyperscalers, superscalers and neocloud customers.
Uniti raised its full-year Fiber Infrastructure outlook to midpoint revenue of $1.045 billion and contribution margin of $600 million, reflecting increased hyperscale AI activity expected in the fourth quarter. Net capital expenditure guidance for the segment remained $140 million at the midpoint.
Gunderman said Uniti had increased its estimates for the generative AI opportunity while keeping expected gross capital spending during the build phase roughly unchanged. Compared with the company’s prior estimates, upfront customer payments are expected to be 36% higher, one-time cash revenue 33% higher and recurring annual cash revenue 90% higher.
The CEO said all expected revenue in the current plan for the rest of 2026 and for 2027 is booked and being activated. Close to all planned 2028 revenue is either booked or tied to identified opportunities being pursued, he said.
Gunderman also said the company had increased its estimate for recurring revenue in the subsequent lease-up phase to $450 million to $550 million, from $400 million to $500 million, partly reflecting demand for large-capacity wave services.
Kinetic Growth Meets Pricing Pressure
Kinetic added a record 46,000 net fiber subscribers in the quarter, ending the period with 648,000. It also added a record 162,000 fiber home passings, bringing the total to approximately 2.2 million. Consumer fiber revenue grew 22% year over year, while fiber penetration was 28.9%.
Uniti maintained its target of adding 475,000 to 525,000 fiber home passings in 2026 and expects to finish the year with 675,000 to 700,000 fiber subscribers. It projects $610 million to $630 million in consumer fiber revenue for the year.
Still, Uniti lowered its Kinetic outlook to midpoint revenue of $2.11 billion and contribution margin of $855 million, citing higher DSL churn, lower-than-expected consumer fiber average revenue per user, and increased marketing and customer acquisition costs.
Kinetic President John Harrobin said the company has been repricing fiber customers to retain them amid lower cable promotional pricing. By year-end, more than 120,000 customers, or about 20% of the fiber base, will have been repriced, he said. Bullington said the company expects fiber ARPU to stabilize in the fourth quarter and grow at a low-single-digit rate over the long term.
Gunderman said fixed wireless competition has been stronger than originally modeled, but wired competition, particularly from new fiber overbuilders, has been lower than expected. He said better-than-anticipated penetration and churn are supporting return projections despite lower pricing assumptions.
Financing and Strategic Options
Bullington said Uniti has no significant debt maturities before 2029 apart from convertible notes due at the end of 2027. The company also sees $500 million to $1 billion in non-core assets that it could monetize over three years with a negligible effect on adjusted EBITDA, he said. Uniti recently sold its CBRS spectrum portfolio.
The CFO said asset-backed securities, or ABS, remain an important funding source. He estimated that Kinetic has about $2 billion in additional ABS capacity from existing cash flows and built markets, alongside approximately $2 billion already outstanding. He said Uniti would balance new ABS financing with reductions in corporate debt, as it did with a $500 million secured debt paydown in the third quarter.
Gunderman said Uniti continues to hold strategic discussions and has seen growing interest in Fiber Infrastructure. However, he said the company is not working toward a fixed transaction timeline or under pressure to sell. “We are not forced sellers,” he told analysts.
About Uniti Group (NASDAQ:UNIT)
Uniti Group is a communications infrastructure company that owns, builds and operates fiber-optic networks and related broadband assets. Its network infrastructure supports broadband, wireless, enterprise and government communications, including fiber connectivity for businesses and other network operators.
Founded in 2015 as a spin-off from Windstream, Uniti initially focused on owning and leasing communications infrastructure, including fiber networks. In 2025, Uniti combined with Windstream, bringing together infrastructure operations with Windstream's Kinetic broadband and enterprise services.
The company serves customers across the United States through its fiber network and broadband operations.
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