Uniti, Windstream settlement best outcome for both companies

There was a peaceful resolution last week to the Arkansas business version of a family feud, with Windstream Holdings and Uniti Group dodging a courtroom shootout.

The two Little Rock companies ultimately agreed that a healthier Windstream is more profitable for both of them.

The companies share a common heritage – their assets were inherited from local telephone properties and network infrastructure that Alltel Corp. either built out or acquired over its 60-year history.

Both were created through spinoffs: Windstream with the spinoff of Alltel’s local telephone properties in 2006 and Uniti through the spinoff of Windstream’s infrastructure backbone in 2015.

Each company has expanded its reach through organic growth and acquisitions and now they have an opportunity to create a future that is profitable for both.

The settlement provides the ability to “reset” their ongoing relationship, as Windstream Chief Executive Officer Tony Thomas puts it.

Uniti Chief Financial Officer Mark Wallace said the agreement is a momentum boost. “As important as anything, it gives us clarity on a path forward,” he told telecom analysts and investors at a conference last week.

Windstream, operating under bankruptcy protection, has been paying about $650 million annually to access the copper and fiber lines owned by Uniti.

The leasing agreement was a linchpin for both companies – access to Uniti’s fiber network was critical to Windstream serving its customers and the revenue from Windstream was essential to Uniti’s profitability.

Settling was a better alternative than litigating. A court decision in favor of Windstream could have pushed Uniti into bankruptcy. A decision in favor of Uniti could have closed the doors at Windstream – and also led to bankruptcy for Uniti with the loss of its top customer.

“The trial that was supposed to take place remained a risky bet for both sides,” Bloomberg Intelligence analyst Negisa Balluku wrote last week. “It was clearly going to be a fact-intensive inquiry with no clear winners. It was no surprise that it concluded this way.”

The two rely on each other to drive revenue growth. Uniti still derives 63% of its $1.1 billion in revenues through the Windstream contract. Likewise, Uniti’s fiber and copper allows Windstream to connect with many of the 1.3 million customers it serves in 18 states. Windstream declines to reveal how many of its customers rely on the Uniti backbone.

The “key cornerstone” of the settlement, Wallace said, is Uniti’s commitment to invest $1.75 billion over the next 10 years to upgrade the network. “That makes our network more valuable” to Uniti going forward, Wallace said. Improvements will be made on Uniti-owned infrastructure that is leased by Windstream.

At the same time, those upgrades open the way for Windstream to deliver faster broadband services to customers, increase its competitive position and “ultimately improve their cash flows and margins over time,” Wallace said.

Under the agreement,

Windstream will turn over 1.8 million fiber strand miles to Uniti, which also will acquire another 450,000 fiber strand miles owned by Windstream. That gives Uniti ability to generate new revenue, diversify its customer base and pursue potential acquisitions, Wallace said.

By settling the conflict, both companies have a clearer path to success: Windstream gained a capital infusion that will help lift it out of bankruptcy and allow it to keep upgrading service to customers.

Uniti gained additional fiber from Windstream that it can market to other providers and diversify its revenue stream. More importantly, Uniti helped ensure its top customer is financially healthier.

STARTUP WINNER

Eksplor Gaming of Springdale walked away with $5,000 in cash after winning the Ark Tank pitch competition.

The event was held last week in Fort Smith as part of the 2020 Arkansas Governor’s Conference on Tourism at the Fort Smith Convention Center.

Eksplor creates locationbased games for cultural destinations such as museums, historical locations and zoos. The locations use the company’s digital-gaming platform to engage families and promote educational opportunities.

Eksplor won the top prize among a group of five finalists. Participants were tourism-related startups and were judged on their ability to interact with tourists, deal with businesses that cater to tourists and encourage tourism in and travel to Arkansas.

“Not only is Ark Tank an entertaining competition to watch, it also encourages new ideas and new ways of thinking about business,” said Kristine Puckett, interim director of Arkansas Tourism. “It gives the competitors a chance to make connections with industry leaders and promote their business ideas.”

DIGITAL FARMING

The Arkansas Cooperative Extension Service has a new texting service available to help farmers manage weeds, soil fertility and crops. The service is being offered to farmers in Arkansas, Mississippi and Texas who would like to receive justin-time farming information.

About 700 farmers have subscribed to the service in the first week of availability, the extension service said.

The system allows for twoway communication and is quicker than traditional email or other messaging platforms, the extension service said.

When it comes to getting information “texts jump to the top,” said Jarrod Hardke, extension rice agronomist for the University of Arkansas System Division of Agriculture.

“Email is still an excellent form of contact, but we’d gotten some feedback that whether it’s a producer, consultant, specialist or county agent, email gets pretty cluttered,” he said. “We are striving to be more and more timely.”

More information is available at uaex.edu. The division provides information on best practices in farming that help strengthen agriculture families and local communities.

ARTISTIC RANKING

Arkansas didn’t fare so well in a ranking of the “most creative” states in the union, finishing 47th with less than 1% of the state’s population employed in creative arts positions.

Research showed that Arkansas has 18,103 residents working in the arts and has just more than 3,300 art businesses. New York, Colorado and Massachusetts have the greatest percentage of their population involved in the arts while West Virginia comes in at the bottom of the list.

In raw numbers, California has the most residents employed in the arts, with more than 500,000 arts-related jobs in the state. Wyoming has the fewest with 4,396 residents employed in art-related fields.

The rankings were developed by Canva, a multimedia design platform based in Sydney.