Uniti Group shareholders sitting on big gains after strong year

Uniti Group has delivered a strong profit increase on surging revenues, while paying down debt. The company’s shares have responded strongly.

Uniti has substantially increased its fibre to the premises order book.

Uniti Group stock surged on the company’s full year profit results with shareholders now sitting on a return of more than 150 per cent for the past 12 months.

The diversified telecommunications company’s shares were trading at about $1.50 a year ago, and closed more than 8 per cent higher at $4.26 on Tuesday.

The company’s full year revenue increased 175 per cent to $159.9m while net profit was up 83 per cent to $29.19m.

The underlying result, stripping out acquisition and other costs, was up 182 per cent to $61.3m

Free cash flow increased almost fourfold to $64.2m.

“The EBITDA delivered by Uniti in FY21 exceeded broker analyst consensus expectations, highlighting both strong organic growth and operational efficiency gains,’’ the company told the ASX.

“Furthermore, forecast integration synergies from acquisitions made in late 2020 have been realised ahead of expectations.

“As a result of exceptional free cash flow generation, Uniti significantly reduced its net debt and, in turn, net leverage.’’

Net debt fell 19 per cent to $208m in the last six months of the financial year.

Uniti said its fibre to the premises order book increased from 202,000 to more than 250,000 in the second half.

“This takes Uniti’s combined premises (connected, ready-to-connect, contracted/in-construction and Telstra Velocity premises) to more than 565,000,’’ the company said.

“The material expansion in the wholesale and infrastructure contracted / in-construction FTTP order book in the first six months of 2021 evidences the strong market penetration of W&I’s OptiComm brand, including numerous contract wins with property developers which had not previously contracted with OptiComm and execution of strategic partnership agreements with a number of large-scale developers, delivering a secured flow of new FTTP premises, via long-term pipeline commitments,’’ the company said.

“Uniti’s retail telecommunications and platform services businesses both met forecast expectations in FY21, contributing strong free cash flow to the group, given the inherently modest capital expenditure demands of these businesses.

Uniti listed at 25c in early 2019 and has grown rapidly through acquisition, with more than 10 deals under its belt.

These included buying OptiComm for about $700m and Telstra Velocity for $140m, both in 2020.

READ MORE:How we turned Uniti into a $2.7bn company | Uniti’s $100m-plus board

The management team, many of whom are Vocus and M2 Telecommunications alumni, have more than doubled the market value of the company since the start of this year, and it’s now worth north of $2.7bn.

Managing director Michael Simmons told the ASX in the results announcement that the company had been transformed in just two and a half years from a loss-making entity into a “high-profitable, growing, ASX200 organisation’’.

“Today, Uniti is a ‘group of one’, an integrated digital infrastructure company, which is the definitive challenger in the residential FTTP market, with a platform to further expand market share and presence in adjacent markets,’’ he said.

Uniti Group managing director Michael Simmons.

“We are committed to a simple strategy; winning new business, building and owning fibre

The company said it its annual report, also released on Tuesday, that the outlook was strong.

“The group has a strong balance sheet, ownership of core infrastructure businesses, more diverse products and services and a pipeline of already contracted sites and further organic growth targets such that the directors are highly confident the group can capitalise on the work undertaken to date and continue to grow earnings in the future networks and filling them up with satisfied users of our high-speed fibre broadband services,’’ the company said.

Mr Simmons was paid $1.1m, up more than 100 per cent on the previous year, including $456,662 in fixed pay and the rest in equity.

Uniti did not declare a final dividend.