24-Jan-2022: How do you stop a share price slide in a falling market? This is how:

Share Buyback Update

24 January 2022: Uniti Group Limited (UWL or Company) refers to its announcement to market on 27 October 2021, and subsequently on 17 November 2021, that the Company proposes to undertake an on-market share buyback subject to prevailing share price, market conditions and alternate uses of capital.

In the interests of ensuring that the market is fully informed prior to commencing the share buyback, the Company notes it has received approaches from more than one party indicating potential interest in an acquisition of the Company, which as of this time, do not include detail as to timing, price or conditions. Therefore, the Company notes that there is no guarantee that such approaches will result in any substantive proposal(s) emerging.

Authorised for release by the Board of Directors.

- ENDS -

Disclosure: I hold UWL shares IRL and here. UWL are up by almost 8% this morning on the back of this M&A talk confirmation. Nice to see some green in my portfolio today.

Thursday 10th June 2021:  https://www.ausbiz.com.au/media/the-call-thursday-10-june-?videoId=11113

That's a link to a "The Call" episode (from Ausbiz) featuring Ben Clark from TMS Capital and "friend-of-the-Strawman.com-site" Carl Capolingua from Think Markets, and they both like Uniti Group (UWL), and consider it a buy, even at these elevated levels, so it's gone into "The Call" portfolio.

The UWL coverage starts at the 38 minute mark.

[I hold UWL shares.]

27-Jan-2021:  Final Appendix 4C and Operational Update

Plus:  22-Jan-2021:  Results of Share Purchase Plan Offer

OPERATIONAL UPDATE & FINAL APPENDIX 4C (Q2-FY21)

Operating Cash Flow up 53% on prior quarter.  Free Cash Flow up 64% on prior quarter.

Highlights:

• Record Net Operating Cash Flow of $16.1M, up 53% on prior quarter (Q1-FY21)
• 544% increase in Net Operating Cash Flow vs prior corresponding period (Q2-FY20)
• Record Free Cash Flow in Q2 of $11.3M, up 64% on prior quarter (Q1-FY21)
• Free Cash Flow represents 70% of Net Operating Cashflow, after all capex
• Key financial performance metrics for first half of FY21 above forecast levels
• Materially above-forecast growth in net new FTTP activations in the quarter
• Completed OptiComm, HarbourISP and Telstra Velocity® acquisitions in the quarter
• OptiComm (owned for 1 month of Q2-FY21), HarbourISP (owned for 2 months of Q2- FY21), Telstra Velocity® assets (owned for 1 week of Q2-FY21)
• Integration of recent acquisitions on or ahead of schedule
• $45M in cash reserves. Net debt ~2.2 times proforma FY21 EBITDA $116M @ 31/12/20
• Net leverage reduced to ~2 times proforma FY21 EBITDA, following receipt of $20M from the upsized SPP completed on 20 Jan 2021
• This is Uniti’s final Appendix 4C, having filed the required 8 quarterly 4C’s since IPO

Also - UWL's recent SPP to raise an additional $10m (on top of the larger institutional placement to fund the Telstra Velocity® & South Brisbane Exchange acquisition) closed over-subscribed by more than seven times the initially announced SPP Offer amount of $10M.  Despite upsizing the offer to $20m, all eligible applications were scaled back to just 28.3% of what they applied for.  For instance, I applied for $10K worth of shares (you could apply for anywhere from $1K to $30K), and I got $2,833.50 worth of shares (1,889 UWL shares @ $1.50 each) and a $7,166.50 refund.  Plenty of support there from retail shareholders!  Mind you, the $1.50 offer price looked pretty good when the shares traded during the offer period at over $1.70 for the most part, and got up to $1.97 last Wednesday (20-Jan-2021) with an intra-day high of $2.05 the following day (21-Jan-2021).  They closed today at $1.885.  

[I hold UWL shares.  It's the same management team (Vaughan Bowen and Michael Simmons) that built up M2 Telecommunications Group until it merged with Vocus, and then led Vocus Group (VOC) for a while as well.  Many - including myself - believe that they are well on their way to repeating the magic once again with Uniti.]

About Uniti Group:  Uniti Group (ASX: UWL) is a diversified provider of telecommunications services, with ‘three pillars’ of strategic growth; Wholesale & Infrastructure (W&I), Consumer & Business (C&B), formerly Consumer & Business Enablement (CBE) and Specialty Services.  Uniti Group listed on the Australian Securities Exchange in February 2019 and has a stated strategy of becoming a market-leading constructor, owner and vertically integrated operator of privileged fibre infrastructure, and a provider of value-added telecommunications services in identified profitable niche markets. In the time since its listing, Uniti has made a number of acquisitions, each aligned to the three pillars stated above.  Notably, since mid-2019 Uniti has consolidated the majority of the ‘challenger’ participants in the greenfield fibre broadband networks market, to make the Uniti W&I business today the definitive challenger in greenfield markets.  At the core of Uniti Group is a commitment to deliver high quality, high speed telecommunications networks and associated services to its customers, in order to produce strong and growing annuity earnings and, in turn, exceptional long term returns to its shareholders.

About Michael Simmons (UWL'ce CEO & MD):  Michael has more than 40 years' industry experience.  Prior to joining Uniti, Michael held chief executive roles at Vocus Group, TPG Telecom (previously SPTelemedia Group) and TERRiA as well as other roles within those businesses prior to being appointed chief executive. Michael has also had board and advisory roles within the telco and media sectors, a four and-a-half-year advisory role with AAPT prior to its acquisition by TPG Telecom, and a 8 year term as a non-executive director of M2 Group Limited, which merged with Vocus Group Limited in 2016.  Shortly after joining the Vocus board, Michael stepped away as a Director to take on an executive role as Chief Executive of the Enterprise, Wholesale & Government business unit and subsequently interim CEO of Vocus Group.  In October 2018, he moved across to UWL (as CEO & MD), which was then called Uniti Wireless Ltd (hence the UWL ticker code).

About Vaughan Bowen (Executive Director):  Vaughan is a highly successful business builder, M&A practitioner & philanthropist.  As founder of ASX100 telecommunications company M2 Group (which became part of Vocus Group, following a merger in 2016), Vaughan took M2 from start-up to a business valued at greater than $2B, with more than 3,000 team members, nearly 1 million customer services across Australia & New Zealand and owner of household names including Dodo, iPrimus and Commander.  During the M2 journey, Vaughan led the identification, vendor negotiation and acquisition of more than 30 companies.  In 2012 Vaughan founded, seeded and continues to serve as Chairman of the Telco Together Foundation (“TTF”), the Australian telco industry’s only united charitable entity, endorsed by the federal government’s Department of Communications.  In only a few years, TTF has raised several million dollars for various disadvantaged communities and implemented national programs for the benefit of the not-for-profit sector as a whole, including carrier-unified text message giving.

17-Dec-2020:  Successful Completion of Placement and SPP Details

• Successful completion of over-subscribed institutional Placement, raising $50 million
• Placement shares issued at $1.50, a premium to the last traded share price
• Non-underwritten Share Purchase Plan will open on Wednesday 23 December 2020

17 December 2020: Uniti Group Limited (ASX: UWL) (Uniti) is pleased to announce the successful completion of its fully underwritten institutional placement (Placement), as announced to the market on 16 December 2020.

The Placement raised $50 million through the issue of approximately 33.3 million new fully paid Uniti shares (New Shares) at a price of $1.50 per New Share (Placement Price), representing a 1.4% premium to Uniti’s last traded share price on Tuesday, 15 December 2020 and also a premium to Uniti’s recent trading levels(*).  The compelling strategic rationale for the acquisition of Telstra Velocity® assets has meant that the Placement achieved an exceptional result of being priced at a premium.

The Placement was several times oversubscribed at the Placement Price, with applications for placement shares received from more than 40 institutional funds, such that Uniti was pleased to be able to predominantly allocate the Placement demand amongst existing institutional shareholders. Eligible existing institutional shareholders who bid received at least their ‘pro rata’(**) share of New Shares. The balance of New Shares under the Placement was then allocated amongst those shareholders having regard to a number of factors including, but not limited to, those shareholders who assisted Uniti to accumulate a relevant interest in OptiComm at an important stage of that acquisition, and existing investors’ long term support for Uniti.

Uniti Chairman, Graeme Barclay stated, “We are again delighted by the strong support from our institutional shareholders. The high level of demand for placement shares priced at a premium is an endorsement of the transaction’s economics and compelling strategic rationale to expand Uniti’s core fibre infrastructure network through the acquisition of the Telstra Velocity® assets.”

Proceeds received from the Placement will be used to partially fund Uniti’s acquisition of the Telstra Velocity® assets, further details of which are provided in the Investor Presentation lodged with the ASX on 16 December 2020.

Settlement of the Placement is expected to occur on Monday, 21 December 2020. New Shares are expected to be issued and commence trading on a normal settlement basis, on the following business day, Tuesday, 22 December 2020.

Notes:

1. (*) The Placement Price represents approximately a 1.4% premium to Uniti's 5-day volume weighted average price (VWAP) of $1.48 (rounded to the nearest cent) to 15 December 2020.
2. (**) For this purpose, an eligible institutional shareholder’s ‘pro rata’ share of New Shares under the Placement was estimated by reference to Uniti’s latest available beneficial share register as at 14 December 2020 and which is not necessarily fully up to date, but without undertaking any reconciliation processes. Institutional investors outside of Australia, New Zealand, Hong Kong or Singapore were not able to participate in the Placement. Uniti disclaims any duty or liability (including for negligence) in respect of the determination of a shareholder’s ‘pro rata’ share of New Shares under the Placement.

SHARE PURCHASE PLAN

Uniti will also offer eligible shareholders, being shareholders with a registered address in Australia or New Zealand on Uniti’s register as at 7:00pm (AEDT) on Tuesday, 15 December 2020, the opportunity to participate in a non-underwritten share purchase plan (SPP) to acquire up to $30,000 of New Shares per eligible shareholder, up to a total of $10 million in aggregate. If the SPP is oversubscribed, Uniti will scale back applications on a pro rata basis. New Shares issued under the SPP will rank equally with existing Uniti shares on issue.  The SPP is not underwritten.

The SPP will be priced at the lesser of the Placement Price and a 2% discount to the 5-day VWAP of Uniti shares up to, and including, the SPP closing date (currently scheduled for Wednesday, 20 January 2021).  Full details of the SPP will be set out in the SPP offer booklet which is expected to be released to the ASX and dispatched to eligible shareholders on Wednesday 23 December 2020.

[There is a timetable included in the announcement here - click on the link above for that.]

ADDITIONAL INFORMATION

Further details of the Placement and SPP are set out in the investor presentation released on the ASX on 16 December 2020. The investor presentation contains important information including key risks and foreign selling jurisdictions.

--- click on the link at the top for the full announcement ---

[I hold UWL shares and I believe I will almost certainly apply for shares in this SPP.  This is a roll-up model - growth via acquisition - by the same team that did a great job building up M2 Telecommunications into a decent sized telco before they merged with Vocus Communications (VOC).  The guys ended up running Vocus for a while, and then left and are now doing it all again with Uniti (UWL).  I am always wary of roll-ups but they can be very good investments in the early years when they're flying, which is where UWL are at currently.  It's when they start overpaying or running out of suitable acquisitions that you have to jump off them.  That hasn't happened yet with UWL.  This acquisition should get the market interested again.  It's positive that they were able to raise capital at a premium to the last traded price, which suggests they are going to open HIGHER today than they were before the trading halt.  I would suggest the SPP price is going to end up being the $1.50/share placement price, because the 2% discount to the 5-day VWAP (volume-weighted average price) up to Wednesday 20-Jan-2021 (being the SPP closing date) is likely to be higher than $1.50, and the SPP will be priced at the lower of those two.]

16-Dec-2020:  UWL: Uniti acquires Telstra Velocity Assets   plus   Investor Presentation - Telstra Velocity acquisition

UNITI ACQUIRES TELSTRA VELOCITY® & SOUTH BRISBANE EXCHANGE ASSETS

Adds ~50,000 Active FTTP Services.  Telstra to become a RSP of Uniti.  Highly Accretive.

• Telstra Velocity® & South Brisbane Exchange is Australia’s second largest private FTTP network
• ~ 68,000 premises passed, ~ 65,000 FTTP connected premises, ~50,000 active premises
• Telstra to become a RSP on Uniti’s national FTTP network (including OptiComm)
• Purchase Price of $140M, $85M payable on completion, $55M deferred with $20M payable over 3 years and $35M on completion of migration of the assets and services, with an ability to adjust the total purchase price subject to the size of the customer base at the time of migration
• Uniti commits to $70M spend for a 10-year term with Telstra Wholesale for essential backhaul, duct and exchange access to support delivery of services following customer migration being completed
• Forecast annual EBITDA contribution to Uniti of $21M, commencing from early January 2021 and potentially increasing post migration of assets and services
• ~13% EPS accretive(*) and increases FY21 pro forma EBITDA by more than 20%(**) to $116M
• Acquisition funded by mix of debt, underwritten equity placement and share purchase plan
• Uniti’s net debt to FY21 pro forma EBITDA(***) ~2.3 times ratio at completion

16 December 2020:  Uniti Group Limited (ASX:UWL) (Uniti) is pleased to announce that it has entered into a binding agreement to acquire certain fibre-to-the-premises (FTTP) assets owned by Telstra Corporation Ltd (ASX:TLS, Telstra) deployed to provide high speed broadband to the Telstra Velocity® estates and South Brisbane Exchange regions (Velocity). Telstra will become a Retail Service Provider (RSP) of the Uniti FTTP business (including the Velocity network), which recently adopted the OptiComm branding (following Uniti's acquisition of OptiComm Ltd).

Detail is provided below regarding Velocity, Uniti’s strategic rationale, transaction specifics and funding.

About Telstra Velocity®

Velocity is Telstra’s optical fibre network that uses FTTP technology to deliver high speed broadband, phone and pay phone, subscription TV and free-to-air services amounting to approximately 55,000 services, across 128 residential housing estates in all mainland Australian states as well as the South Brisbane Exchange region (a region previously serviced by Telstra copper before the sale of the exchange) currently serviced by FTTP networks. Approximately 68,000 premises are passed with the Velocity FTTP network in these estates and regions and Velocity is the sole FTTP network in the vast majority of these estates. Approximately 50,000 superfast broadband carriage services are active today.

Why Velocity / Strategic Rationale

Scale and reach: The Velocity assets will add considerable additional scale and national reach to Uniti’s Wholesale & Infrastructure (Uniti W&I) FTTP network, increasing active premises by approximately 40% to over 170,000 and further strengthening Uniti W&I’s position as the definitive challenger in the FTTP greenfield housing markets, encompassing broad-acre estates and multi-dwelling unit (MDU) developments.

Highly accretive: The acquisition of the Velocity assets is highly synergistic and is forecast to be materially earnings accretive for Uniti, delivering an increase in Earnings Per Share (EPS) of ~13% (excluding the impact of the SPP), with annual incremental EBITDA contribution expected to be not less than $21M effective from completion of the acquisition, a greater than 20% increase in Pro forma FY21 EBITDA to $116M.

The sole in-area FTTP network: Velocity is the sole FTTP network provider in the vast majority of the estates it services. Acquisition of the Velocity assets will see Uniti W&I be the primary wholesale provider of fixed network superfast broadband services in these estates, which is expected to deliver long term annuity revenue and earnings.

Enhanced retail competition: More than 40 RSPs on Uniti W&I’s wholesale network will have the opportunity to compete for the supply of superfast broadband services to residential customers in the Velocity estates with the transition to Uniti’s ownership and wholesale services, delivering enhanced competition to the market as Telstra was previously the dominant RSP to Velocity estates. There will be a managed transition process designed to minimise customer disruption. End user customers will be able to transition to the Uniti RSP of their choice, including Uniti-owned RSPs (operated under a functional separation undertaking with the ACCC).

Telstra as a RSP: Uniti W&I will welcome Telstra, for the first time, as a RSP on its national FTTP network in areas, where Telstra is able to utilise the RSP arrangements. Having Australia’s largest and most recognised retail telecommunications provider join its expanding RSP community provides Uniti W&I with an enhanced ability to compete for business from greenfield property developers, certain of which regard having Telstra as a RSP an important factor when choosing a FTTP network builder / operator.

--- click on the links at the top for the rest of this announcement - including Transaction Specifics - and the associated company presentation ---

[I hold UWL shares.]

Notes:

1. (*) Accretion excludes impact of SPP. Based on management unaudited financials, FY21 EPS accretion as if the acquisition was effective on 1 July 2020 and presented pre-integration costs, transaction costs and acquisition related amortisation.
2. (**) Uniti’s pro forma FY21 EBITDA of $95 million excluding noncash share based remuneration costs comprised of $86 million pro forma EBITDA for Uniti including OptiComm, $3 million for Harbour ISP and $6 million of run-rate cost synergies expected to be achieved from the OptiComm acquisition as at 30 June 2021 (out of a total of $10 million).
3. (***) Pro forma net debt of approximately $271 million, reflective of current net debt of $226 million plus additional net debt of $45 million ($50 million in new debt less $5 million in cash to balance sheet) to partially fund the upfront consideration. Pro forma FY21 EBITDA of $116 million, comprised of Uniti’s pro forma FY21 EBITDA of $95 million excluding non-cash share based remuneration costs plus c. $21 million EBITDA contribution from Telstra Velocity. Approximately 2.8x net leverage including deferred consideration of $55 million.

20-Nov-2020:  UWL:OptiComm Scheme Implementation and W&I Leadership Change

and:  OptiComm: Implementation of Scheme of Arrangement

IMPLEMENTATION OF OPTICOMM SCHEME OF ARRANGEMENT AND APPOINTMENT OF CHIEF EXECUTIVE, WHOLESALE & INFRASTRUCTURE

20 November 2020: Uniti Group Limited (ASX: UWL) (Uniti) is pleased to note the announcement by OptiComm Limited (OptiComm) that the scheme of arrangement between OptiComm and its shareholders (other than Uniti), which was approved on 6 November 2020, and by the Federal Court of Australia on 12 November 2020 (Scheme), was implemented today (OptiComm Announcement).

Uniti now holds all of the shares in OptiComm. As previously announced, former OptiComm shareholders (other than ineligible foreign shareholders) on the Scheme record date (17 November 2020) have today been paid $5.20 cash (inclusive of the Special Dividend of $0.10) and issued 1.07 Uniti shares per OptiComm Share. Ineligible foreign shareholders have been paid $6.67 cash (inclusive of the Special Dividend of $0.10).

We are pleased to announce that with effect from today, Geoff Aldridge (previously Chief Customer Officer of OptiComm) will take on the role of Chief Executive of Uniti’s Wholesale & Infrastructure (W&I) business unit. Geoff will be a member of the Uniti Group Executive Team.

Paul Cross (MD & CEO of OptiComm) and Stephen Picton (Chief Executive, Uniti W&I) will both be leaving the business.

The Uniti Board congratulates Steve Picton and Paul Cross on their outstanding careers, their contribution to the shareholders and the businesses conducted by both Uniti and OptiComm, and thank them for the tremendous legacy and opportunity they leave behind, for the combined business to capitalise on.

Moving forward, Uniti’s W&I business unit will be adopting the “OptiComm” brand as its customer facing and market brand for all of Uniti’s network construction, operation, maintenance and wholesale functions. The “LBNCo”, “Openetworks”, “Pivit”, “ClubLinks” and “Capital Fibre Networks” brands currently operated by Uniti will be retired.

The work of integration and maximizing the various opportunities presented by the transformational acquisition of OptiComm begins today. Uniti will provide its shareholders with a fulsome update on the progress made in these regards when it releases its half year financial results, in February 2021.

--- ends ---

[I hold UWL shares.]

17-Nov-2020:  Uniti acquires Harbour ISP

UNITI ACQUIRES RETAIL SERVICE PROVIDER, HARBOUR ISP

Specialist RSP in Greenfield Developments. Adds 30,000+ Broadband Customers

• Uniti acquires 100% of fast-growing, specialist Retail Service Provider (RSP), Harbour ISP
• Harbour ISP specialises in delivery of superfast retail broadband services in ‘greenfield’ developments
• Preferred broadband RSP with leading Australian greenfield property developers, including Mirvac
• More than 30,000 retail broadband customers, doubling Uniti’s current retail customer portfolio
• Purchase consideration of $9.25M + 1M options (at exercise price of $1.54) to acquire UWL shares
• Forecast earnings contribution, including synergies, of $3M+, a purchase multiple of ~3x EBITDA
• Consistent with the rationale for Uniti’s Functional Separation Undertaking accepted in October 2020
• Highly strategic & accretive acquisition, enabling greater penetration & revenue expansion on Uniti-owned fibre networks, including those added via the OptiComm acquisition

--- click on the link above for the full announcement ---

[I hold UWL shares.]

06-Nov-2020:  OPC: Scheme meeting Chairman script

[I hold UWL shares.]  I note UWL is up +11% today (at 11:20am Sydney time) on the back of this.

22-Oct-2020:  Uniti's Functional Separation Undertaking Accepted [by ACCC]

ACCC ACCEPTS UNITI’S FUNCTIONAL SEPARATION UNDERTAKING

Uniti’s Retail Broadband Services Now Available on All Uniti-Owned Networks

• Uniti’s Functional Separation Undertaking accepted by ACCC, following public review process
• Uniti is the first superfast broadband network owner to be able to operate as both a wholesale and retail provider, under new separation rules introduced in August 2020
• Provides opportunity to actively promote Uniti retail broadband services on Uniti-owned networks, to deepen network penetration and expand Average Revenue Per User
• Enables strategic acquisition opportunities to be pursued in retail service provider market
• Enhances Uniti’s competitiveness in winning FTTP network construction opportunities within its Wholesale & Infrastructure business unit

--- click on link above for the full announcement ---

[I hold UWL shares.]

19-Oct-2020:  Appendix 4C and Operational Update

Appendix 4C for Quarter Ended 30 September 2020 & Operational Performance Update

• Record Net Operating Cash Flow of $10.5M in Q1 FY21
• 880% increase in Net Operating Cash Flow vs prior corresponding period (Q1 FY20)
• Record Free Cash Flow of $6.9M, up 13% on prior quarter & up 771% on Q1 FY20
• Free Cash Flow represents 66% of Net Operating Cash Flow
• Key financial performance metrics for first 3 months of FY21 above budgeted levels
• Net Operating Cash Flow 55% of revenue & 52% of receipts from customers in Q1
• Above-budget growth in new FTTP connections & activations in the quarter
• No material COVID-related impact on any of Uniti’s three business units
• $278M in total Cash reserves at end of quarter & no debt - Secured a 19.5% relevant interest in OptiComm Ltd

--- click on the link above for the full report ---

[I hold UWL shares.]

15-Oct-2020:  UWL: OPTICOMM ACQ - REVISED SUPERIOR PROPOSAL   and   OPC: Superior Proposal received from Uniti

ACQUISITION OF OPTICOMM UPDATE

Uniti submits revised and superior offer:

• Uniti and OptiComm have entered into a further amended and restated OptiComm Board-recommended scheme of arrangement for Uniti to acquire OptiComm.
• Uniti to acquire OptiComm for $5.20 cash (less a $0.10 dividend, if declared) and 1.07 Uniti shares for each OptiComm share implying a value of approximately $6.67.* 
• Additional acquisition consideration to be funded through a $40 million increase in Uniti’s committed debt facilities and an additional 26 million Uniti sharesto be issued to OptiComm shareholders.
• Conservative pro forma net leverage following acquisition of 2.5x, including cost-only synergies.
• Double-digit EPS accretion based on FY20 pro forma, including cost-only synergies.

15 October 2020:  Uniti Group Limited (ASX: UWL) (Uniti or the Company) is pleased to announce that it has entered into a further amended and restated Scheme Implementation Deed (SID) with ASX-listed OptiComm Limited (ASX: OPC) (OptiComm) under which Uniti will acquire 100% of the issued capital that it does not already own** in OptiComm by way of a recommended revised scheme of arrangement (the Scheme or the Acquisition).

The Uniti Board elected to increase the value of its offer to acquire OptiComm after OptiComm notified Uniti that it was in receipt of a conditional competing proposal, which OptiComm believed triggered the matching rights available to Uniti under the previous SID dated 15 September 2020. The Uniti Board has high conviction that its increased offer is in the best interests of Uniti shareholders, both economically and strategically.

REVISED OFFER OVERVIEW

Under the terms of the revised offer, Uniti is offering OptiComm shareholders unconditional, revised consideration of $5.20 cash and 1.07 Uniti shares per OptiComm Share (together, the Scheme Consideration) which implies total offer consideration of approximately $6.67 per OptiComm share*** (other than ineligible foreign shareholders who will receive $6.67 cash per OptiComm share).

Under the SID, OptiComm has the discretion to declare and pay a dividend up to $0.10 per OptiComm share subject to the Scheme becoming effective (the Agreed Dividend). The $5.20 cash per OptiComm share component of the Scheme Consideration will be adjusted downwards by the Agreed Dividend. Subject to the payment of a potential Agreed Dividend, the Scheme Consideration is fixed and not subject to alternative options or pro rata scale back mechanisms.

OptiComm’s directors have unanimously recommended that its shareholders vote in favour of the Scheme in the absence of a superior proposal, and each OptiComm director has confirmed their intention for any OptiComm shares which they own or control to be voted in favour of the Scheme, in each case subject to the Independent Expert continuing to conclude that the transaction with Uniti is in the best interests of OptiComm shareholders.

ACQUISITION FUNDING

Uniti will fund the Acquisition via a combination of the issuance of approximately 105 million new Uniti shares to OptiComm shareholders, an upsized 3-year $290 million debt facility with Westpac and CBA and existing cash on balance sheet.

Uniti shareholders will own approximately 82.5% of the combined group following the issuance of Uniti shares as part of the Scheme Consideration to existing OptiComm shareholders.

As a result of the increased cash consideration and additional debt funding, Uniti will have estimated FY20 pro forma net leverage of approximately 2.5x**** , with cash reserves of approximately $70 million, upon completion of the Acquisition. The strong and growing free cash flow (EBITDA less capital expenditure) of Uniti facilitates a rapid reduction in leverage and the continued pursuit of strategic opportunities across Uniti’s three business units (‘pillars’).

The Acquisition remains double-digit EPS accretive to Uniti shareholders on a pro forma FY20 basis including $10 million of run-rate cost synergies.

CONDITIONALITY

The Scheme remains subject to limited customary conditions including OptiComm shareholder and court approval, Lonergan Edwards & Associates Limited (the Independent Expert) continuing to conclude that the Scheme is in the best interests of OptiComm shareholders and no material adverse change, prescribed occurrence or regulated event affecting either party.

Under the SID, OptiComm will continue to be bound by customary exclusivity protections in favour of Uniti including no talk and no due diligence (which are subject to the OptiComm directors’ fiduciary obligations), no shop and notification obligations and matching rights in the event of a competing proposal. The parties have also agreed increased reciprocal break fees of $6.95 million are payable in certain circumstances.

Please refer to the attached SID for further information.

ACQUISITION TIMETABLE

The Federal Court hearing to convene the postponed OptiComm scheme meeting will take place on 22 October 2020. It is expected that the OptiComm scheme meeting will take place on 6 November 2020, with implementation of the Scheme to occur on 23 November 2020.

The timetable is indicative only and dates are subject to change without notice.

UNITI’S 19.5% RELEVANT INTEREST IN OPTICOMM

As disclosed to ASX on 15 September 2020, Uniti now owns a 6% interest in OptiComm shares and has entered into call option agreements to acquire an additional 13.5% of OptiComm shares. The terms of the relevant call option agreements allow Uniti to acquire 13.5% of OptiComm shares if (a) a third party has publicly announced a takeover bid; or (b) OptiComm publicly recommends a rival scheme; or (c) OptiComm recommends or otherwise enters into a proposal or arrangement pursuant to which a third party will acquire a relevant interest in at least 50.1% of OptiComm shares or will otherwise acquire a material subsidiary or a material asset of OptiComm.

To the extent any of these scenarios occurs which results in Uniti not acquiring OptiComm, Uniti will exercise its rights under these call option agreements to acquire a further 13.5% of OptiComm (which would increase Uniti’s direct ownership in OptiComm shares to 19.5%) and not sell into any competing offer. Uniti is committed to maintaining at least a 19.5% strategic stake in OptiComm.

Under each of these scenarios, Uniti will of course act in the best interests of Uniti shareholders and work hard to ensure its rights as an OptiComm shareholder are enforced in full.

This announcement was authorised for release by the Board.

- ENDS -

Notes:

1. (*) Based on Uniti’s closing share price of $1.37 on 14 October 2020.
2. (**) Uniti currently owns 6,210,689 OptiComm shares.
3. (***) Based on Uniti’s closing share price of $1.37 on 14 October 2020.
4. (****) FY20 pro forma net leverage as at 30 June 2020 (excluding transaction costs) of approximately $219 million net debt divided by combined FY20 pro forma EBITDA of $88.4 million. Combined FY20 pro forma EBITDA comprised of $38.6 million, being Uniti's annualised 2H20 EBITDA of $19.3 million, plus $39.8 million being OptiComm's FY20 EBITDA plus $10 million of run-rate synergies.

[I hold UWL shares.  I wonder if Aware Super will lob in yet another even higher offer for OPC.  I hope not!]

13-Oct-2020:  OPC: Announcement re matching rights

Basically, Aware Super has upped their offer for OPC from $5.85 (which UWL subsequently matched) to $6.50 now:

Aware Takeover Proposal

OptiComm advises that on Monday, 12 October 2020, it received a proposal from Aware Super to make an offmarket takeover offer for all of the shares in OptiComm for $6.50 per share (including a fully franked special dividend of $0.10 per share) (Aware Takeover Proposal). The Aware Takeover Proposal is attached to this announcement.

The Aware Takeover proposal is subject to:

• (a) a minimum acceptance condition of 50.1%; and
• (b) customary conditions including there being no material adverse change, prescribed occurrence or regulated event affecting OptiComm.

The consideration offered under the Aware Takeover Proposal represents a 11.11% premium to the consideration offered under the Amended Uniti Scheme.

Commencement of Matching Rights Process

The OptiComm Board considers the value premium of the consideration offered under the Aware Takeover Proposal relative to the value of the consideration being offered under the Amended Uniti Scheme is sufficient to enable the OptiComm Board to commence the matching right process pursuant to the terms of the Amended and Restated SID. OptiComm has notified Uniti of the receipt of the Aware Takeover Proposal and Uniti now has the right, but not the obligation, to submit a counter proposal for the OptiComm Board to consider at any time during the next 3 business days.

OptiComm notes that under clause 11.6 of the Amended and Restated SID it may not enter into any agreement, arrangement or understanding with respect to a competing proposal until this time has lapsed without Uniti making a counter proposal.

OptiComm also notes that under the Amended and Restated SID, subject to certain conditions, Uniti will be entitled to receive a break fee of $6.1m from OptiComm in the event that the OptiComm Directors recommend or OptiComm completes a competing proposal instead of the Uniti Scheme.

Postponement of Scheme Meeting

OptiComm notes that the Scheme Meeting to consider the Amended Uniti Scheme was scheduled to occur tomorrow, being 13 October 2020. In light of the Aware Takeover Proposal, OptiComm intends to seek a Court postponement of the Scheme Meeting to a time and date to be determined.

No change to Directors’ recommendation

In accordance with the process outlined in the Amended and Restated SID, the formal recommendation of OptiComm Directors will not change, if at all, until the completion of the matching right process. In the meantime, the OptiComm Board continues to recommend the Uniti Scheme as announced on 15 September 2020.

--- click on the link above for the full announcement ---

[I do hold UWL shares, but do NOT hold OPC shares.  The successful acquisition of OPC by UWL was part of my investment thesis when I purchased UWL shares, but I have indulged in a little thesis creep since then, and I now believe that UWL will likely be a profitable investment from here with OR without them acquiring OptiComm (OPC).  I am therefore not overly concerned by this development.  I just hope UWL don't end up overpaying for OPC.  If they decline to match this higher offer, they will be entitled to the $6.1m break fee as detailed above, so it's almost a win-win scenario for them now.]

15-Sep-2020:  Revised OPC offer and Relevant Interest   plus   OPC: OPTICOMM AGREES TO AND SUPPORTS INCREASED UNITI OFFER

The short version is that UWL has increased their offer, which is now $5.85 per share, consisting of one fixed consideration offer to all OptiComm shareholders (other than foreign ineligible shareholders who will receive $5.85 cash per OptiComm share) of:

• $4.835 cash per OptiComm share (including a fully franked special dividend of $0.10 per share); and
• 0.80537 Uniti shares per OptiComm share (which implies $1.015 per OptiComm share calculated on the basis of the closing trading price of Uniti shares on 11 September 2020 of $1.26).

Which totals $5.85, the same value as the competing bid, except OPC has NOT yet received a binding offer from FSS Trustee Corporation as trustee for the First State Superannuation Scheme.  FSSTC has so far only lobbed in a non-binding and conditional competing proposal to acquire all of the OptiComm shares for $5.85 cash per OptiComm share.

With UWL's Revised Binding Uniti Proposal, there will be no elections in respect of scheme consideration and no scale-back. 

The OptiComm Board considers the Revised Binding Uniti (UWL) Proposal to be a superior proposal to the First State Non-Binding Competing Proposal.  Accordingly, OptiComm entered into a deed of amendment and restatement in relation to the SID this morning to give effect to the Revised Binding Uniti Proposal.  The Amended and Restated SID remains subject to limited customary conditions including OptiComm shareholder and court approval, the Independent Expert continuing to conclude that the Uniti Scheme is in the best interests of OptiComm shareholders and there being no material adverse change, prescribed occurrence or regulated event affecting either party.

On Friday 25 September 2020 there is a Federal Court hearing scheduled to convene the postponed OptiComm scheme meeting. It is currently expected that the scheme meeting will take place on Tuesday 13 October 2020, with implementation of the Scheme scheduled to occur on Friday, 30 October 2020. The timetable is indicative only and dates are subject to change without notice.

OptiComm notes that the recommendation and voting intentions of OptiComm directors have not changed and accordingly the directors of OptiComm continue to unanimously recommend that OptiComm shareholders vote in favour of the Uniti Scheme in the absence of a superior proposal, and subject to the Independent Expert continuing to conclude that the Uniti Scheme is in the best interests of OptiComm shareholders.  Subject to those same qualifications, each director of OptiComm intends to vote all the OptiComm shares held or controlled by her or him in favour of the Scheme.

UWL had the following to say today about their revised offer for OPC:

ACQUISITION FUNDING & EARNINGS ACCRETION

Prior to any adjustment for the Agreed Dividend, the Scheme Consideration implies a fully diluted OptiComm equity value of approximately $610 million.  Uniti will fund the Acquisition via a combination of the issuance of approximately 84 million Uniti shares to OptiComm shareholders, an upsized 3-year $250 million debt facility with Westpac and CBA and existing cash on balance sheet.  As at 21 August 2020, Uniti had approximately $302 million of cash on balance sheet following its successful and oversubscribed $270 million entitlement offer in June 2020.

Uniti shareholders will continue to own approximately 86% of the combined group following the issuance of Uniti shares as part of the Scheme Consideration to existing OptiComm shareholders.   As a result of the upsized debt facility, the increased cash consideration in the revised Acquisition has not diluted Uniti shareholders.   

As a result of the increased cash consideration and additional debt funding, Uniti will have estimated FY20 pro forma net leverage of approximately 2.1x , with cash reserves of approximately $65 million (before transaction costs), upon completion of the Acquisition.   

The strong and growing free cash flow (EBITDA less capital expenditure) of Uniti facilitates a rapid reduction in leverage and the continued pursuit of strategic opportunities across Uniti’s three business units (‘pillars’).

Given the absence of additional ownership dilution, combined with very competitive cost of debt funding, the Acquisition remains highly accretive to Uniti shareholders, of approximately 20%, based on proforma FY20 earnings of the combined business, inclusive of $10M in cost synergies.

--- end of excerpt - click on links above for more ---

I expect that UWL's SP should be up today, having been sold down when the competing bid was announced, and since.

[I hold UWL shares.]

08-Sep-2020:  OPC: Competing Proposal received

and:  UWL: Conditional Competing Proposal for OptiComm Received

[I hold UWL shares.]

28-Aug-2020:  OPC: Scheme of Arrangement - update (response to media speculation)

[I hold UWL shares.  My investment thesis does assume that this aquisition of OPC (OptiComm) does go ahead.  If it doesn't, I would need to reassess.]

24-Aug-2020:  FY20 Full Year Financial Results   and   FY20 Full Year Results - Investor Presentation   plus   Appendix 4E and 2020 Annual Financial Report

A transformational year by every measure

• 306% increase YoY (Year-on-Year) in revenue, from $14.3M to $58.2M
• 477% increase YoY in gross margin, from $7.7M to $44.4M
• $27.4M increase YoY in underlying EBITDA from negative $0.9M to positive $26.5M
• $41M annualised underlying EBITDA run rate, at 30 June 2020
• 24% growth in run-rate underlying EBITDA in H2, delivered wholly organically
• Net Operating Cash Flow of $21.6M, representing 82% of underlying EBITDA

24 August 2020: Uniti Group Limited (ASX: UWL) is pleased to release its financial results for the financial year ending 30 June 2020 (“FY20”).

FY20 was wholly transformational for Uniti, having completed three substantial acquisitions in the first half, namely LBNCo, OPENetworks and 1300 Australia, each of which therefore contributed to Uniti’s FY20 earnings for part of the year.

The organic growth achieved in the second half of FY20 by the now substantially enlarged Uniti business, combined with an effective integration program, resulted in the Company upgrading its underlying EBITDA guidance for the second half of FY20 and its forecast June 2020 underlying EBITDA run-rate on three separate occasions, twice in February and again in June. Uniti finished FY20 with an annualised underlying EBITDA exit run-rate of approximately $41M, a 24% increase in the second half of FY20 on the same measure as at December 2019, generated entirely organically.

Very pleasingly, Uniti continued to convert operating earnings into free cash flow with Net Operating Cash Flow in Q4 FY20 of $10.1M providing Uniti with the ability to fund any growth capital expenditure out of operating cash flow. Capex as a percentage of underlying EBITDA for FY20 was 31%, and for Q4 of FY20 was 38%.

In the midst of nationwide COVID-19 restrictions, Uniti undertook negotiation, due diligence and signed an agreement to acquire via a Scheme of Arrangement (“Scheme”), and secured funding for the acquisition of, 100% of Australia’s leading private fibre network builder and operator, OptiComm Limited (ASX: OPC) for $532M. This transaction was announced on 15 June 2020 with expected completion and earnings contribution from 1 October 2020, subject to satisfaction of all conditions, including OPC’s shareholders approval of the Scheme.

FY20 Highlights

• 306% increase YoY in revenue, from $14.3M to $58.2M
• 477% increase YoY in gross margin, from $7.7M to $44.4M
• $27.4M increase YoY in underlying EBITDA from negative $0.9M to positive $26.5M
• Net Operating Cash Flow of $21.6M, representing 82% of underlying EBITDA
• Q4 FY20 Net Operating Cash Flow of $10.1M compared to underlying EBITDA for the quarter of $10.4M (97%)
• Annualised underlying EBITDA run rate at 30 June 2020 of $41M
• Capital expenditure in FY20 of $8.2M, being 31% of underlying EBITDA, evidence of the capacity to self-fund organic growth
• Three highly accretive and significant acquisitions completed during H1 - LBNCo, OPENetworks and 1300 Australia
• H2 underlying EBITDA run rate growth of 24%, with positive contributions from all business units (or ‘pillars’), delivered wholly organically
• ~40K contracted and in-construction Fibre-to-the-Premises (“FTTP”) ports as at 30 June 2020, being greater than the total number of active ports the Wholesale and Infrastructure business unit has at 30 June 2020, providing the pathway to sustained future organic earnings growth
• $532M acquisition of OptiComm announced in June 2020, forecast 23% EPS accretive (inclusive of synergies) based on FY20 OptiComm earnings generated from ~71K active lots, with more than 150K additional lots contracted or in construction, at 30 June 2020
• Uniti admitted to S&P ASX300 in June 2020. S&P ASX200 eligibility expected upon OptiComm completion
• Successfully undertook three over-subscribed, fully underwritten capital raisings, totaling $455M, as funding for LBNCo, 1300 Australia and OptiComm acquisitions
• Net cash reserves of close to $41M, as at 30 June 2020, excluding proceeds of the initial component of the capital raising undertaken to partially fund the OptiComm acquisition just prior to 30 June
• Minimal impact upon business operations from COVID-19. No JobKeeper subsidies have been received by Uniti

Uniti Group Managing Director & CEO, Michael Simmons, said of Uniti’s FY20 performance:

“FY20 has seen Uniti Group completely transform from a loss-making, fledgling start-up to a highly profitable, diversified and growing organisation, with the platform set for further marked expansion over the coming years. Whilst we are pleased to have secured a number of materially accretive business acquisitions during FY20, what we are most proud of is that our team has delivered strong organic growth in the last 6 months, a period in which no new acquisitions were undertaken and the nation was (and remains) in the midst of dealing with the impacts of COVID-19 and with no financial contributions received from JobKeeper. This is evidence that we are building a business with highly defensive qualities, capable of making strategic acquisitions, integrating them effectively, and delivering forecast earnings accretion, enhanced by organic growth.”

Mr Simmons continued: “Uniti has delivered sector-leading operating cash conversion, accompanying our strong underlying earnings growth. This high cash generation comes notwithstanding sustained growth-related capital investment, highlighting that we can invest in the deployment of long-term annuity FTTP assets, whilst continuing to generate strong positive cashflows.

On the assumption that we successfully complete the OptiComm acquisition in early October, we will again transform the Company in FY21, by bringing Australia’s leading FTTP builder/operator into the fold, with an expectation we will be able to double group earnings and benefit from an increase in the pipeline of contracted and in-construction FTTP ports by more than 150,000. We are excited to shortly welcome team members and shareholders of OptiComm to the Uniti Group. We expect during FY21 we will join the S&P ASX200 group of companies, following completion of this acquisition.”

--- click on the links above for more ---   [I hold UWL shares.]

30-July-2020:  In this LivewireMarkets Buy-Hold-Sell segment, Vishal Teckchandani discusses CCX (City Chic Collective), TPW (Temple & Webster) and UWL (Uniti Group, formerly Uniti Wireless Group) with Tobias Yao from Wilsons (Wilson Asset Management Group) and Arden Jennings from Ausbill.

Tobias and Arden both rate CCX, TPW and UWL as BUYS, and Arden said that both UWL and CCX were high conviction positions for Ausbill, with CCX in both their Ausbil Small Cap Fund and their Ausbill Microcap Fund.  However, both WAM Funds (Wilsons) and Ausbill clearly hold all 3 companies in their respective funds.

Tobias also likes IFM (Infomedia) and Arden likes LIC (Lifestyle Communities).

Warning:  Vishal's puns could elicit the odd groan...

28-7-2020:  Appendix 4C - Quarter ended 30 June 2020

• 28% increase in like-for-like Net Operating Cash Flow on prior quarter to $10.1M  
• 20% increase in Free Cash Flow on prior quarter to $6.1M
• Free Cash Flow represents 61% of Net Operating Cashflow
• Annualised run-rate EBITDA as at June 2020 of ~$41M, up 24% since Dec 2019
• Above-forecast quarterly performance in all three UWL business units (‘pillars’)
• 64% increase in new FTTP connections constructed on prior quarter, totalling ~4,300
• Net cash reserves (ex-rights issue funds) up by 14% on prior quarter to $40.7M  
• Institutional tranche ($148.5M) of fully underwritten $270M rights issue completed  

28 July 2020:  Uniti Group Limited (ASX: UWL) is pleased to provide an overview of its June 2020 quarter cash flow and cash position, as reflected in the Appendix 4C accompanying this announcement.

Highlights

• Record positive Net Operating Cash Flow of $10.094M in the June quarter, a 28% increase on the prior quarter, on a like-for-like basis.
• Strong Free Cash Flow (Net Operating Cash Flow less Capital Expenditure) delivered of $6.1M, representing 61% of Net Operating Cashflow and 59% of EBITDA for the quarter, illustrating the strong cash generation credentials of UWL’s three business units (or ‘pillars’) and notwithstanding higher growth-related Capital Expenditure in Uniti’s Wholesale & Infrastructure (“W&I”) business unit compared to the prior quarter.
• Growth-related Capital Expenditure was $3.4M, predominantly driven by a particularly active period of fibre network construction.  Capital Expenditure associated with new FTTP connections constructed in the June quarter was $2.6M (~4,300 ports), representing a 64% increase in ports constructed from the prior quarter.   
• The strong operating performance of the Company during the June quarter is evidenced by the run-rate EBITDA(Note 1) for June 2020 (excluding one-off restructuring costs), annualised, of ~$41M, in line with upgraded guidance released on 15 June 2020.  This represents a 24% increase in the same measure for December 2019, delivered solely through organic growth and operating efficiency improvements.
• All three Uniti business units once again performed above forecast in all key financial performance metrics in the June quarter, including revenue, earnings and cash collections.  No material negative impacts as a result of COVID-19 have been experienced across Uniti.
• Uniti ended the June quarter with $40.7M in cash, an increase of 14% over the prior period.  This cash balance excludes the cash proceeds received from the $148.5M institutional tranche of the $270M rights issue completed in June 2020, related to the proposed acquisition of OptiComm Limited (ASX: OPC).  

Note 1:  Run-rate EBITDA excludes acquisition and restructuring costs and share based payments.

OptiComm Acquisition Update 

As announced on 15 June 2020, Uniti entered into a binding agreement (Scheme Implementation Deed) to acquire OptiComm Limited for $532M, by way of an OptiComm Board-recommended scheme of arrangement (“Scheme”).

Prior to completion OptiComm shareholders will also receive a fully franked dividend of $0.10 per share (approximately ~$10M in total value) payable in accordance with the Scheme Implementation Deed.

Since the date of the announcement of the OptiComm transaction, Uniti has successfully completed its fully underwritten $270M non-renounceable rights issue, with all proceeds (less costs of the issue) received during June and July 2020.  These funds, together with a $150M term debt facility, means that Uniti is fully funded and in a position to settle the transaction once remaining conditions are satisfied.   The balance of the OptiComm purchase consideration will be funded by the issue of UWL shares to OptiComm shareholders, on terms described in the Scheme Implementation Deed.

The various necessary steps associated with the Scheme are in progress, including preparation of the cornerstone document, the Scheme Booklet, a draft of which has been lodged for review with the Australian Securities and Investments Commission (“ASIC”) by OptiComm on 20 July 2020.  

On the basis it receives ASIC approval, the Scheme Booklet will be presented to the Federal Court on 7 August 2020 for approval.  When approved, the Scheme Booklet will be dispatched to OptiComm shareholders on or around 10 August 2020.   The Scheme Booklet will detail the date of the meeting at which OptiComm shareholders will be provided the opportunity to vote on the Scheme, expected to be on or around 10 September 2020.    The Directors of OptiComm have unanimously recommended the Scheme, in the absence of a superior proposal.

Other than the abovementioned ASIC and Federal Court approvals, together with the OptiComm shareholder vote, there are no additional regulatory or statutory approvals required in order for the Scheme to proceed. Uniti and OptiComm are targeting completion of the transaction, on schedule, by the end of September 2020.

Summary

The June 2020 quarter saw another strong performance by Uniti in terms of Net Operating Cash Flow and Free Cash Flow, reflected in growing cash reserves, at ~ $41M at the end of June 2020 (excluding rights issue proceeds received in June).  This continued operating performance improvement is a direct result of organic growth being delivered across the three operating business units, stringent cash disciplines and further operating efficiencies being realised.  

The June 2020 quarter operating performance (as was the case also in the March quarter) did not benefit from any new inorganic / growth-by-acquisition contributions.  The growth in Net Operating Cash Flow, Free Cash Flow and run-rate EBITDA(Note 2) delivered between January and June 2020 is a result of organic growth and identified operating efficiencies being realised.

The June 2020 quarter also saw the announcement of Uniti’s most significant and transformational transaction to date, the proposed OptiComm acquisition.   When successfully completed and synergies realised, Uniti pro forma FY20 EBITDA will more than double, delivering material earnings per share accretion to shareholders and position UWL as eligible for admittance to the S&P ASX200, having recently entered the S&P ASX300, in June 2020.

Note 2:  Run-rate EBITDA excludes acquisition and restructuring costs and share based payments.

--- click on link above for the full announcement --- 

[I hold UWL shares]

15-June-2020:  Acquisition of OptiComm Limited and Equity Raising

Investor Presentation - Acquisition and Equity Raise

OPC: Scheme of Arrangement

As expected, another acquisition and capital raising from the management team at UWL (Uniti Group Ltd, formerly Uniti Wireless Ltd), the same team that built up M2 Telecommunications (MTU) back in the day, until they merged with Vocus (VOC). 

This is their usual MO, and the market likes it, based on the indicative opening price of UWL (set to open around 7% to 8% higher based on the bids/offers so far) once they resume trading after they announce the completion of the accelerated institutional investor component of a non-renounceable entitlement offer (which is expected no later than commencement of trading tomorrow, 16 June 2020).

Addition:  UWL now looking to open around 20 cps (or +13%) higher - as at 2pm Sydney Time.  The market may remember just how successful Vaughan Bowen and Michael Simmons were at M2 with their growth-via acquisition strategy at that time, and it looks like they are attempting to repeat that winning formula at UWL now.  I like these roll-up models in the early stages, but they often come unstuck at some point - usually after a few really good years - when the acquisition opportunities begin to dry up, and/or the prices become too high.  My view is that the better roll-ups are great to jump on and ride in those early years (which is certainly where UWL still are) but you need to keep a close eye on them and jump off when they hit trouble, because they can come down even faster than they went up.  Or wait for the takeover, and then cash in your chips.  I just don't regard them as set-and-forget investments.  They need to be closely monitored IMO.

23-Apr-2020:  Appendix 4C - Quarter ended 31 March 2020

At a glance (summary):

• 217% increase in like-for-like (LFL) Net Operating Cash Flow on prior quarter  
• 754% increase in Free Cash Flow on prior quarter
• Free Cash Flow exceeds 72% of Net Operating Cashflow
• Annualised run-rate EBITDA as at 31 March 2020 tracking above forecast
• March 2020 quarter saw record net growth of FTTP connections in W&I division
• Above-forecast quarterly performance in all three UWL business units (‘pillars’)
• Cash reserves increased by 12% on prior quarter to $37.7m

23 April 2020: Uniti Group Limited (UWL) is pleased to provide an overview of its March 2020 quarter cash flow and cash position, as reflected in the Appendix 4C which accompanies this announcement [click on link above for that]. 
 
Highlights: 

• Record positive Net Operating Cash Flow of $7.9M in the March quarter, a 217% increase on the prior quarter, on a like for like basis
• Free Cash Flow (Net Operating Cash Flow less Capital Expenditure) of $5.7M, an increase of 754% on the prior quarter, illustrating the strong cash generation credentials of all three business units (or ‘pillars’).
• Free Cash Flow increased to 72% of Net Operating Cashflow, up from 27% in the prior quarter, placing UWL amongst the strongest sector performers in terms of cash conversion.
• Growth-related capital expenditure in the Wholesale & Infrastructure business unit was $2.2M, in line with forecasts, due to another active period of fibre network deployments and an amount of contingency infrastructure inventory purchasing, in light of COVID-19.  Pleasingly, no supply chain issues have arisen or are currently anticipated.
• The strong operating performance of the Company during the period is evidenced by the March 2020 run-rate EBITDA (excluding one-off restructuring costs), annualised, tracking above internal forecasts which underpinned the upgraded FY20 EBITDA ‘run-rate’ guidance released on 17 February, which was upgraded again on 24 February and reaffirmed on 20 March 2020.  
• All three UWL business units performed above forecast in all key financial performance metrics in the March quarter, including revenue, earnings and cash collections.
• Increased levels of work-from-home, online learning and domestic internet consumption, due to restrictions associated with COVID-19, have strengthened underlying demand for the Company’s superfast fibre-to-the-premises (“FTTP”) services provided by its Wholesale and Infrastructure (“W&I”) business unit, delivering record net new FTTP connections in March 2020.
• The Company ended the March quarter with $37.7M in cash, an increase of 12% over the prior quarter, providing further financial capacity to pursue its aggressive growth agenda, both organically and via strategic acquisitions. 

--- click on link above for more ---