The FCC determined the Windstream-Uniti merger is in the public interest. The agency approved the transfer of Windstream, Uniti (Nasdaq: UNIT) and their respective subsidiaries to the newly formed New Windstream LLC. The companies told the agency the merger would give the combined entities a greater ability to serve new and existing customers because it will be better positioned to realize efficiencies, leverage Windstream’s and Uniti’s combined resources, and attain greater economies of scale. They say Uniti’s and Windstream’s core competencies are complementary.
Privately-held Windstream and publicly-traded Uniti Group – two companies that once were a combined entity – announced last July they were reuniting in a proposed $13.4 billion merger. Uniti, a publicly traded Maryland corporation, operates two primary businesses: Uniti Leasing and Uniti Fiber, according to the FCC. Uniti Leasing owns, acquires, and leases communications assets nationwide to wholesale customers on both exclusive and shared-tenant basis. Its largest customer is Windstream.
Uniti Fiber is a provider of lit and dark fiber solutions for wireless operators, carriers, enterprises, schools, and governments. Its business includes cell-site backhaul, small cells, internet services, and wavelengths. Uniti Fiber’s primary service area is in the Southeastern United States. Between the two businesses, Uniti owns approximately 141,000 fiber route miles and 8.5 million fiber strand miles throughout the United States.
Windstream, a privately held Delaware limited liability company, through operating subsidiaries, provides broadband services to residential and small business customers in 18 states, managed cloud communications, networking and security services for mid-to-large enterprises and government entities across the United States, and customized wavelength and dark fiber solutions for carriers, content providers, and others in America. Windstream’s incumbent local exchange carrier operating subsidiaries offer services to residential, business, and government customers in 18 states.
Uniti Group Inc. said this April that its stockholders voted to approve the previously announced proposed merger with an affiliate of Windstream Holdings II, LLC. Under the terms of the merger agreement, an affiliate of Windstream will merge with and into Uniti, with Uniti surviving the merger as an indirect, wholly owned subsidiary of Windstream Parent. Windstream Parent, Inc. will be renamed “Uniti Group Inc.” and its common stock is expected to be listed on the Nasdaq Global Market under the symbol “UNIT.”
According to Uniti, Uniti stockholders will receive approximately 62 percent of the outstanding common stock of the combined company. Windstream shareholders will receive $425 million of cash, $575 million of preferred stock in the combined company and approximately 38 percent of the outstanding common stock of the combined company. Windstream shareholders will additionally receive non-voting warrants to acquire up to 6.9 percent of common stock of the combined company.
The FCC sought public input on the deal and said no one objected. It examined whether Windstream Parent would exceed the millimeter wave (mmW) spectrum threshold due to the transfer of Upper Microwave Flexible Use Service (UU) licenses as part of the transaction in order to identify geographic markets that would warrant further investigation. Post-transaction, Windstream Parent would be attributed with at most 825 MHz of mmW spectrum on a county-by-county basis and therefore would not exceed the 1,850 MHz mmW spectrum threshold.
The agency also said the transaction would not harm Universal Service Fund programs. “The record indicates that after consummation of the proposed transaction, Windstream’s affiliated Eligible Telecommunications Carriers (ETCs) that have committed to meeting the RDOF program’s public interest and performance requirements (RDOF Affiliates) will continue to have the required technical, financial, and managerial expertise necessary to meet those requirements,” stated the FCC in its decision.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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