Uniti Group Inc. Q2 FY2025 Earnings Call

Good morning, and welcome to today's conference call to discuss Uniti's Second Quarter 2025 Earnings Results. My name is Gigi, 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.uniti.com, starting today and will remain accessible for 365 days. It is now my pleasure to introduce Bill DiTullio, Uniti's Senior Vice President of Investor Relations and Treasury. Please begin.

Good morning, everyone, and thank you for joining today's conference call to discuss Uniti's second quarter 2025 results. Speaking on the call today will be Kenny Gunderman, our CEO; and Paul Bullington, Uniti'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 regarding Uniti's fiber build strategy, the business' growth potential, efficiencies from the debt silos combination, Uniti's 2025 outlook and other statements that are not historical facts. 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 Safe Harbor Statement 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.

Thanks, Bill. Good morning, everyone, and thank you for joining. We're very pleased to have closed our merger with Windstream. When we announced this combination in May of 2024, we talked about how fiber is the mission-critical connective tissue for all current and future broadband delivery. Since then, we've not only seen a validation of that thesis, but an acceleration of positive themes that reinforce our views. Since our announcement, for example, four of the largest wireless carriers in North America have begun investing heavily in fiber-to-the-home, and we believe that investment will continue. With Kinetic, we own one of the most strategic independent fiber-to-the-home platforms remaining. And with a focus on Tier 2 and 3 markets, our footprint has substantial first-mover advantages with fiber. We've also seen the dramatic emergence of the hyperscalers as massive bandwidth users, and Uniti is one of the few truly national wholesale providers able to support their growth and scale. Importantly, with our close to 5 million connected fiber endpoints by 2029, we will be substantial beneficiaries of the AI inference phase, which is fast approaching. Lastly, since our deal announcement, we've seen a material improvement in the regulatory backdrop for fiber providers, including copper-to-fiber conversions. The FCC has taken a much more commercially favorable position towards copper retirement and a more business-friendly view of communications regulations in general. Many of our state PUCs are following their lead. So with that, we could not be more pleased with our transaction and how well positioned we are as a premier insurgent fiber provider. Before jumping into the quarter, we want to spend a little more time on prepared remarks than normal in order to give a refresher of new Uniti. Starting on Slide 4. First, we are going to accelerate our investment in fiber and expect to pass 3.5 million homes with fiber within the Kinetic footprint by the end of 2029, and we have no plans of stopping there. We also expect that about 75% of our total revenue will be fiber-based by 2029. That conversion to fiber will further fuel the strong core fiber revenue and EBITDA growth we saw during the second quarter. The proven success of fiber-based products, especially when you build first or early in a market like we're doing at Kinetic and Uniti Fiber, allows for predictable, steady growth with increasingly improving churn. Our aggressive management of legacy products and services will allow us to eventually achieve stable consolidated revenue and adjusted EBITDA growth. Our mentality and go-to-market strategy will be that of an insurgent share taker with industry-leading NPS scores and a focus on network quality and customer obsession. We believe long-term blended penetration of 40% is not only achievable, but looks increasingly conservative. Slide 5 shows key metrics we plan on presenting each quarter. We currently pass 1.7 million homes with fiber within our Kinetic footprint, and we expect to be at 2 million homes by the end of this year and 3.5 million homes by the end of 2029. Even before taking into account our enhanced build plan, our percentage of total revenue on fiber is already around 40%, and we expect that to increase to roughly 75%. Also, the percentage of total revenue that comes from our core business, Kinetic and Fiber Infrastructure, is 80% today and growing to 90%, providing a substantially future-proofed business. As demonstrated on Slide 6, the growth in each of our core fiber lines of business has been very strong, and we expect that to continue given the indisputably superior nature of fiber. Given this pace of growth, fiber will soon overtake legacy services as the majority of our revenue and EBITDA. It's important to highlight on this page that we will face headwinds from legacy services that will weigh on consolidated revenue and EBITDA. With that said, I'd like to highlight three points. First, these services in no way diminish the value of our core fiber business. Secondly, within a relatively short period of time, the mix shift to higher fiber revenue will make the legacy services increasingly immaterial. And thirdly, in the meantime, these services are generating predictable free cash flow. In order to grow, we have to take market share, and our insurgent mentality is reinforced by very strong NPS scores as shown on Slide 7. We're obsessed with customer satisfaction. And as a result, our industry-leading churn is our superpower. On a go-forward basis, as we transition the majority of Kinetic's footprint to fiber, we'll also start to see material improvements in churn. Finally, we believe we have the right leadership team in place to capitalize on the opportunity ahead, as highlighted on Slide 8. Our collective experience spans successful copper to fiber conversion stories like Frontier and Ziply, as well as wholesale and enterprise fiber. And of course, we have substantial strategic and M&A experience for the exciting road ahead. Going forward, we will report our results in three segments. The first is Kinetic, which is our fiber-to-the-home platform. Second is Fiber Infrastructure, which includes Uniti Fiber, Uniti Leasing, plus Windstream wholesale. And our third segment is Uniti Solutions, which is the business formerly known as Windstream Enterprise. Starting with Fiber Infrastructure on Slide 10, you can see we had a solid quarter of pro forma Uniti and Windstream consolidated bookings of $1.2 million of MRR. As we foreshadowed, wireless bookings have been a highlight, up 30% in the first half of 2025 compared to the first half of last year. Our anchor lease-up strategy within the Fiber Infrastructure segment will not change going forward. And in fact, the economics when combined with Windstream Wholesale track right in line with our expectations. Importantly, the hyperscaler deals we are pursuing on a consolidated basis are not only in line with these economics, but are tracking ahead of our expectations. As demonstrated on Slides 11 and 12, we have terrific potential in this segment. The chart on the right side of Slide 11 is frankly dated as it shows the industry growth expectations before the hyperscalers theme emerged in earnest. Our new combined wholesale fiber platform not only has an expansive high strand count network to sell with unique metro markets and intercity routes, we also now have capabilities to sell a more robust product set of lit and dark fiber. As you can see on Slide 12, we have an immediate and materially enhanced set of customer MSAs to now sell that larger product set into. In fact, on August 1, Windstream signed a 20-year IRU with a major hyperscaler that spans approximately 500 miles on existing intercity network. The total contract value is approximately $100 million. This is a deal that we've been working on together for some time and would not have been possible without Uniti's network and Windstream's relationship with the customer. This cross-selling opportunity is exactly the type of deal we've been foreshadowing, and we expect to see more in the near future. That's a great segue to our wholesale sales funnel on Slide 13. On a combined basis, our hyperscaler funnel represents about $1.5 billion of total contract value. At Uniti alone, hyperscalers have increased as a percentage of the total funnel from less than 15% a year ago to now 40%, and that's on a total funnel that's increased 80% since Q2 of 2024. The activity of both companies alone has been very strong, but the closing of this deal is an accelerant, and we expect a nice ramp in the second half of 2025 and certainly into 2026. Turning to Kinetic. This segment will now include all consumer, wholesale, and enterprise customers that are located within the ILEC footprint. As Slide 15 illustrates, consumer represents about 60% of total revenue and is expected to grow to about 75%. And although fiber-based revenue within Kinetic today represents a minority share of total revenue, by 2029, we expect that to be about 85%. As I said earlier, this shift to fiber will result in growth, lower churn, and therefore, predictable revenue and EBITDA. Slide 16 shows the cadence of our accelerated fiber build. As a reminder, Kinetic has built a substantial amount of fiber-to-the-node over the past 10 years, and building that last mile can be done both cost-efficiently and in a timely fashion relative to many of our peers. Also, it's important to point out that the 3.5 million homes that we're passing do not include BEAD nor any out-of-territory builds. We think there's a terrific opportunity to build fiber-to-the-home, utilizing our existing metro-rich Uniti Fiber footprint. And taken together, we see a clear path to up to 4 million fiber homes over time. More to come on that in the future. Turning to Slide 17. As we've now demonstrated at Uniti over the years, if you build fiber first or early to Tier 2 or 3 markets, you have the right to win for many years into the future, and that same strategy is being implemented at Kinetic. 80% of Kinetic's footprint has either one competitor or less, highlighting the competitive dynamics of Tier 2 and 3 markets. I mentioned it earlier, but Kinetic's footprint represents one of the last remaining scale platform opportunities to be first with fiber. Also, as you can see, only 60% of the footprint has a national cable provider that's offering a fixed mobile bundle. And we believe that's one of the real highlights of our footprint. Speaking of the bundle, turning to Slide 18. As we've talked about in the past, we think a wireless bundle at Kinetic today is a nice-to-have, but not a must-have. As this slide demonstrates, we're seeing terrific success thus far with our existing wireless bundle partnership with AT&T with 18 times quarter-over-quarter fiber subscriber growth and approximately 50% improvement in churn for those subscribers that bundle. So while we do not think a bundle is critical, it does demonstrate the benefits of the conversion theme we're seeing in the industry. And we think this provides tremendous upside by combining Kinetic with a more robust bundle in the future. I mentioned the favorable regulatory roadmap earlier at the FCC, but that's also true of our state PUCs. Of the 18 states comprising Kinetic's footprint, 9 have eliminated COLR obligations with deregulation and expanded access to advanced technology. In the remaining 9 states with COLR obligations, we have the flexibility to provide voice services using the technology of our choosing, such as fixed wireless or fiber-based VoIP solutions. So as Slide 19 highlights, by 2029, we believe that over 95% of our customers will be on fiber-to-the-home directly or through alternative technologies like fixed wireless that leverage our substantial fiber-to-the-node investment. We think this is one of our key competitive and strategic advantages, and we'll elaborate more on that in the future. Turning to Slide 21. Before I turn the call over to Paul, I want to talk about Uniti Solutions, which is a robust nationwide managed services provider to Fortune 100 enterprise customers across the country. As I mentioned earlier, this business is not part of our go-forward fiber infrastructure strategy, but it is still a very good business that generates a substantial amount of predictable cash flow. While both revenue and EBITDA are declining, weighing on our top line, as I mentioned earlier, a critical part of our strategy is to retain the most profitable part of this business while maximizing cash flow. We will largely exit TDM by the end of this year. And we believe many of the customers we plan to retain will be huge bandwidth users from AI-generated products when the infrastructure space begins, giving us a potential opportunity to move these customers to fiber. Also, we believe some of the managed services products within this segment can be cross-sold into our Uniti Fiber enterprise base as well as into the Kinetic enterprise base. Taken together, we believe all these things will flatten the decline of this business by 2028, resulting in an NPV of over $1 billion of enterprise value. With that, I'll now turn the call over to Paul.

Thank you, Kenny. Starting on Slide 23. 15 months ago, when we announced the planned merger with Windstream, we laid out our key pre-close priorities. Through the dedication and collaboration of our combined teams, we have completed nearly all of those objectives, including our go-forward operating plan, the collapsing of the debt silos and the full redesign of the Kinetic fiber-to-the-home build plan. And we are now set to hit the ground running at full speed as one company. Please turn to Slide 24, and I'll touch on some of the key second quarter highlights for both Kinetic and our Fiber Infrastructure segment. 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, all of which are highly complementary and will combine to create a premier fiber infrastructure company with both national and deep regional capabilities. We are also now referring to the Windstream Managed Solutions segment as Uniti Solutions. Both Uniti and Windstream made good progress this quarter on several different fronts. Starting with Kinetic, we expanded our fiber network to pass an additional 52,000 homes with fiber, ending the quarter with 1.7 million homes passed. Kinetic also added 19,000 fiber subscribers during the second quarter, ending the quarter with 483,000 total fiber subscribers, a 15% increase from the prior year period. As Kenny mentioned earlier, total fiber revenue for Uniti and Windstream increased 10% year-over-year during the second quarter, with Kinetic consumer fiber revenue alone growing 27%, which is consistent with the growth rate we've seen for multiple quarters now. This growth is being driven by the strong adoption of our fiber-to-the-home product, bolstered by the performance of our Fiber Fast Start and Fiber Forward initiatives at Kinetic that target our newer and more seasoned cohorts, respectively. At Fiber Infrastructure, Uniti and Windstream combined to record consolidated bookings MRR of approximately $1.2 million, with Uniti contributing $0.8 million of MRR to that total. This level of bookings at Uniti is consistent with the past several quarters. Slide 25 highlights the sustained momentum we are seeing within Kinetic Fiber. Fiber penetration was up 20 basis points sequentially and 120 basis points year-over-year, while fiber ARPU increased 6% sequentially and 11% year-over-year. Turning to Slide 26. I'd now like to cover Uniti's stand-alone results for the second quarter. Uniti reported consolidated revenues of $301 million, consolidated adjusted EBITDA of $243 million, AFFO attributed to common shareholders of $96 million and AFFO per diluted common share of $0.36, all of which were ahead of our expectations. As we mentioned previously, analyst consensus estimates for stand-alone Uniti were too high for the second quarter and too low for the second half of 2025. At Uniti Leasing, we reported segment revenues of $226 million and adjusted EBITDA of $220 million, representing an adjusted EBITDA margin of 97% for the quarter. During the second quarter, Uniti Leasing net success-based CapEx was approximately $2 million as GCI funding for the calendar year 2025 was fully satisfied during the first quarter. At Uniti Fiber, we reported revenues of $74 million and adjusted EBITDA of $29 million during the second quarter, resulting in an adjusted EBITDA margin of 39%. Uniti Fiber net success-based CapEx was $21 million in the second quarter, which represents a net capital intensity of approximately 28%. We also incurred about $2 million of maintenance CapEx during the quarter. In addition to these stand-alone Uniti results, we also wanted to provide a pro forma view of new Uniti consolidated performance for the quarter. Slide 27 provides this pro forma view of new Uniti consolidated second quarter results. Consolidated pro forma revenue was down approximately 6% year-over-year during the quarter, primarily driven by the continued decline in legacy TDM services and in Uniti Solutions. However, top line growth in other parts of the business was strong with Fiber Infrastructure growing 7% year-over-year and Kinetic fiber-based revenue inclusive of consumer, business, and wholesale services growing 19% year-over-year. As we continue to execute on and accelerate our fiber overbuild plan, we expect fiber services at Kinetic will continue to deliver consistent strong growth quarter-over-quarter. Please turn to Slide 28, and I'll now cover our 2025 outlook for the combined company. We have provided two views of estimates for 2025 on this slide. 2025 as-reported outlook includes 7 months of stand-alone Uniti results plus 5 months of combined Uniti and Windstream. This is our formal guidance for 2025 and matches what was included in our earnings release that was filed earlier this morning. We have also provided a pro forma view for 2025, similar to what we have provided in prior quarters. Both the as-reported and pro forma views for 2025 reflect the completion of the resegmentation work at Windstream that has been in progress over the past couple of quarters and also reflects how we plan to present the different segments going forward. The following comments on our 2025 guidance will be based on the as-reported outlook view. Beginning with Kinetic, we expect revenues and adjusted EBITDA to be $945 million and $385 million, respectively, at the midpoint. We expect to deploy $510 million of net CapEx at the midpoint of our guidance, primarily related to the continued build-out of fiber within the Kinetic footprint. At Fiber Infrastructure, we expect revenues and adjusted EBITDA to be $1.1 billion and $735 million, respectively, at the midpoint for full year 2025. Although we are no longer providing separate formal guidance for Uniti Fiber and Uniti Leasing, our 2025 outlook for both of those segments is unchanged from our prior guidance. Our outlook for net CapEx at Fiber Infrastructure this year is $310 million at the midpoint of our guidance and represents a capital intensity of approximately 30%. As a reminder, both Kinetic and Fiber Infrastructure consists of a highly predictable core recurring revenue base that continues to grow and yield attractive margins. Turning to Uniti Solutions, which we referred to in the past as Managed Solutions or Windstream Enterprise. We expect revenues and adjusted EBITDA of $320 million and $155 million at the midpoint. Altogether, we expect consolidated revenue and adjusted EBITDA of $2.2 billion and $1.1 billion at the midpoint of our 2025 outlook with consolidated net CapEx of $875 million. Using the legacy Uniti shares outstanding that is on the cover of our most recent 10-Q filing and excluding the impact of the warrants that were issued to Windstream shareholders as a part of the merger, total shares outstanding for the combined company is approximately 238.6 million. As we've mentioned multiple times already this morning, we are on a multiyear journey to overbuild the majority of the Kinetic copper network with fiber, and we are greatly accelerating and expanding that fiber build plan. Accordingly, Slide 29 lays out our key targets for Kinetic this year. We expect to reach 2 million homes passed with fiber by the end of the year, reaching 45% fiber coverage within the Kinetic footprint. We also expect to add approximately 530,000 fiber subscribers and realize approximately $500 million of consumer fiber revenue in 2025, an increase of roughly 25% from the prior year. In terms of cost per passing, Kinetic has historically achieved a cost per passing on strategic nonsubsidized bills of approximately $650. As we push fiber deeper into the Kinetic footprint and shift our construction mix to using more external crews, we expect the strategic cost per passing to increase, but to still compare very favorably to industry benchmarks. We estimate cost per passing going forward will likely be in the $850 to $950 range, giving us a blended cost of $750 to $850 per passing over the life of the fiber build program. Finally, I'd like to provide some brief comments on our capital structure. Slide 30 illustrates how Uniti'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 today, and our debt is currently yielding around 7% on a blended basis, a 550 basis point improvement in 2.5 years. Slide 31 provides an overview of our outstanding debt maturities. Over the past year, we have done meaningful work to extend our debt maturities, reducing our combined near-term maturities in 2027 and 2028 from over $6 billion a year ago to just over $3 billion today. Most recently, in June, we issued new unsecured notes using the majority of the proceeds to redeem a portion of our 10.5% secured notes due in 2028. Going forward, we will continue to be opportunistic in our approach to continue to push out near-term maturities and drive significant interest expense out of the business. I also want to highlight that yesterday, we successfully completed the steps to collapse the legacy Uniti and Windstream debt silos into one unified structure. Completing this debt collapse was a critical part of our strategy as it greatly simplifies our capital structure, unlocks significant opportunity for ABS on the Windstream assets, and sets the stage for optimizing our combined capital structure going forward. Combined net leverage at the time of our merger closing is around 5.5 times, and we expect to end the year with a combined net leverage of between 5.5 times and 6.0 times, consistent with the target we set for standalone Uniti. With that, we'd be happy to take your questions.

The first one is just on, Kenny, as you move to the inference phase, how do the deal constructs change? I imagine it's a lot more lease-up, better margin, maybe lower upfront costs for you guys, but maybe there'd be more competition as well? And what would the yields be compared to the training data center yields? Second question is just on the funnel you mentioned. I think you said the wholesale funnel represents $1.5 billion of total contract value. What's your typical win rate on a funnel?

Good morning, Greg. You asked some great questions. I'll address your second question first about the $1.5 billion of hyperscaler deals. As we've consistently mentioned over the last 18 months, our success rate for large hyperscaler deals is very high. We're selective about which opportunities we pursue, focusing only on those that are strategically aligned with our network. We're not interested in every single deal, especially those that are not connected to our key areas. We remain committed to pursuing deals that enhance our existing metro areas or allow us to strategically expand our network. Despite our selectiveness, we have a substantial pipeline of $1.5 billion, which I believe is the first time we've publicly shared that figure. When we pursue these deals, we tend to have a strong success rate. Generally, hyperscalers don’t always choose based on price; they prioritize reliability, the ability to deliver on time, within budget, and to specifications. Being a well-established provider is crucial for them because they prefer having a manageable list of reliable partners to work with regularly. So to summarize, our success rate is quite high, although we haven’t defined it as a percentage. Regarding your first question, we're really excited about the inference phase. It's more thrilling than our current endeavors with hyperscalers. We're forming valuable partnerships and building significant network capabilities we've missed out on in the past. However, we anticipate that real growth in recurring revenue and EBITDA will come when we fully enter the inference phase. We've previously estimated that this might happen in three to four years, but it’s beginning to seem like it could happen sooner than that. Additionally, distinguishing between AI tasks and others is becoming increasingly difficult as they are blending. We believe we need more distributed fiber endpoints to facilitate the inference phase effectively. For instance, we have 3.5 million fiber homes and over a million connected buildings, data centers, and small cells. We think demand for these will rise, particularly from non-hyperscaler customers. As for your question about future hyperscaler deals related to inference, you’re correct that we anticipate more lease-up arrangements rather than new anchor developments. A recent example is the deal with Windstream we highlighted, which is a lease-up deal involving a 20-year IRU on existing assets, requiring minimal capital and operational expense. This leads to high margins and low capital intensity. This particular arrangement included 296 strands and an option for additional strands, which is exciting news. We've seen hyperscalers come back for additional deals after securing large strand count deals from us. When the inference phase gains momentum, we expect to see higher margins and lower capital intensity deals from hyperscalers, leading to an overall improvement in monthly recurring revenue across the board.

What is the time frame for the $1.5 billion funnel? What are those deals over? And then as far as the Kinetic build-out going forward, how much of that 20% of your footprint that doesn't have any cable competition is economical to build? And how much of the 40% penetration goal is reliant on being able to construct in that part of the footprint?

I'll address both of those points, and Paul may want to add to the second one. First, regarding the funnel, I tend to be cautious about revealing funnel information since it tends to fluctuate. If we only show a growing funnel, a pessimistic interpretation would suggest insufficient sales on the other side. Hence, we don't typically share this information regularly. However, in this instance, we felt it was important to illustrate the funnel's growth, which is primarily driven by the increasing size of the hyperscaler segment. This quarter marks the first time that hyperscalers represent the largest customer segment in our funnel at 40%. We wanted to convey these themes. To answer your question, Frank, deals in the funnel typically take about 12 to 18 months to materialize, although it can often be shorter, ranging from a month to around 12 months or slightly longer. For the current $1.5 billion in the funnel, I anticipate that most of it will progress over the next 6, 12, or 18 months, ideally followed by new demand. The deals in the funnel are ones we have qualified alongside our customers, and we are aware of many more through private discussions. Public comments from hyperscalers indicate a strong commitment to ongoing investment in this area, which we find very encouraging. Regarding the 40% of the footprint lacking the so-called cable bundle, we're looking at around 3.5 million homes, which is approximately 75% of the footprint. We believe we can reach a significant portion of the remainder using fixed wireless or other technologies developed from our past fiber-to-the-node investments. It's a noteworthy aspect of the Kinetic footprint that while it is primarily rural and denser than larger metropolitan areas, there is substantial fiber already embedded in the network. The historical cost of $650 to $700 per passing is accurate, and as Paul mentioned earlier, we expect this to rise to a range of $750 to $850 for builds over the coming years, particularly in less dense markets. This cost efficiency is achieved thanks to the historical investment in fiber. Additionally, we are increasingly collaborating with third-party contractors to establish a more predictable build cadence and enhance our overall construction efforts. With that in mind, Frank, we are confident about reaching 75% to 80% of the footprint with direct fiber-to-the-home, while the remaining areas will be served by leveraging our fiber-to-the-node investments. Paul, would you like to add anything?

Yes, Frank, it's Paul. I would like to add that regarding your question about the portion of our Kinetic network that does not have a cable competitor, that area is primarily rural. Therefore, we are focusing on building fiber in these regions. These fiber projects are often subsidized, utilizing funding from RDOF, PPP, or potentially BEAD in the future. This approach is certainly included in our plans. Through these subsidized projects in rural areas, we can develop fiber, although they are mainly focused on subsidized initiatives in that overall category.

Thanks for all the details in some of these slides. I'm curious if we could turn back to Slide 28. And when you look at the pro forma for each of the new segmentations, Kinetic, Fiber Infrastructure, Uniti Solutions, curious if you could give us a perspective of aggregate growth for each of these pieces, or in the case of solutions, potential declines? And then how do you think about the multiyear progression of margin for each of those pieces? And then I have a follow-up on Kinetic after that.

Yes, Michael, that's a great question. Regarding the Fiber Infrastructure segment, we anticipate that its top-line growth will align closely with what Uniti has experienced over the years, which we expect to be in the mid-single-digit range moving forward. We forecast similar growth in EBITDA as well. The Windstream wholesale business is dealing with some legacy services, specifically TDM, that are being phased out, which does impact its growth slightly. However, we expect that mid-single-digit growth to continue for this business going forward. For Kinetic, year-over-year growth has been complicated due to recent resegmentation. This should stabilize in the future as we integrate the Kinetic Wholesale and Kinetic segments into one comprehensive Kinetic business. This integration might introduce some TDM impact, affecting Kinetic more than before when it was strictly related to the consumer business. We are optimistic that this business will turn into a growth segment soon as we enhance our fiber capabilities. In the near term, we aim for flat to low single-digit growth. As for Uniti Solutions, Drew, would you like to provide insights on the expected outlook for Uniti Solutions in terms of top-line growth and EBITDA?

Yes, thank you, Paul. Good morning, this is Drew Smith. Regarding Uniti Solutions, there are currently two main activities within that business. A significant part of our revenue comes from technology and connectivity as we sell managed services. However, we are also in the process of exiting the TDM component. As we have previously stated at Windstream, we will completely exit the TDM business related to Uniti Solutions by the end of this year. Looking ahead, we are experiencing some revenue losses, but we are also observing good margin and free cash flow conversion. Currently, the revenue losses are in the mid-teens, and we expect this to remain similar in the near term. In the long term, we aim for stability as we focus on supporting our larger customers within that base.

And then just going back to the Kinetic Fiber business, the Slide 25. So the ARPU trajectory from what I'm reading, I think that excludes the modem rental charge of $10.99. So when you add that back to the fiber ARPU, it suggests that you're over $80 of ARPU. I'm just curious if you could talk about the strength of ARPU, what is driving that all-in strength of spend from the customer? And how you see the opportunity to continue to grow that customer bill over time?

Yes, Michael, I'll start with that one. I believe you described the slide accurately. You're interpreting it correctly, and it's true that we have a solid ARPU that has been increasing well over the years, which we are pleased about. We consistently compare our ARPU to that of our competition in the market. When we look at other cable companies and smaller cable operators, or even consider the limited overbuilders in our markets, we find that our figures are in line with the competition. We don't have ARPUs or pricing plans that exceed those of our competitors. This indicates that these markets offer somewhat more pricing power for service providers, and we are leveraging this advantage. However, we are also aware of the competition and will remain attentive to it over time. As we forecast ARPU growth in our various models, we take a conservative approach regarding our expectations. At this point, we do not want to provide forward guidance on ARPU growth, but we are conscious that our current number is strong and we hope it will continue to be so, while recognizing potential pressures in the future. To grow this figure, it's not only about pricing power but also about upselling customers to higher speeds. Currently, around 20% to 25% of our customer base is utilizing the maximum speeds available to them, which presents a significant upselling opportunity, especially as we enter the phase of AI inference where more people will need higher bandwidth at home.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.