Bankrupt Windstream Reports Billions in Losses as Uniti Trial Looms

Windstream, which filed chapter 11 bankruptcy nearly a year ago, still is heading to court with Uniti as negotiations haven’t yet yielded a settlement.

That’s what Tony Thomas, Windstream’s president and CEO, said during Thursday’s fourth-quarter and full-year 2019 earnings call. Windstream continues to work to modify its arrangement with Uniti, a publicly traded real estate investment trust (REIT) consisting of network assets that Windstream divested in 2015.

Windstream pays Uniti about $650 million annually to use Uniti’s network.

Windstream’s Tony Thomas

“To increase the likelihood of an optimal result, Windstream is pursuing both litigation against and negotiations with Uniti,” Thomas said. “We are hopeful this process will lead to a mutually satisfactory agreement between Windstream, Uniti and our other key stakeholders. Absent an acceptable negotiated resolution, Windstream is prepared to pursue its litigation claims to conclusion. The trial is currently scheduled to begin in the first week of March. As has been the case in past quarters, and pursuant to a confidentiality agreement associated with the ongoing mediation, we are unable to provide any additional information regarding the discussions with Uniti.”

Earlier this week, Windstream said “in no event will the company assume the arrangement with Uniti without significant amendment.”

In the meantime, Windstream has until April to submit its reorganization plan to emerge from chapter 11 bankruptcy. Windstream previously said it needed until Aug. 25 to complete its plan and exit bankruptcy. That request was opposed by its creditors.

“Windstream remains focused on securing [a] result that maximizes value for all company stakeholders,” Thomas said.

Revenue and sales totaled $5.1 billion in 2019, down from $5.5 billion in 2018. The company reported a $3 billion loss compared to a $723 million loss for 2018. Windstream recorded a $2.7 billion non-cash goodwill impairment charge in the first quarter of 2019 that largely drove the loss for the year.

Windstream grew its Kinetic broadband customer base for the seventh consecutive quarter, adding 9,300 new subscribers in the fourth quarter. The company added about 28,000 new broadband subscribers for the year, achieving its second consecutive year of consumer broadband growth.

Enterprise strategic revenues grew 38% year over year. Sales of strategic products and services, including SD-WAN, UCaaS and OfficeSuite UC, now represent an annualized run-rate of about $300 million in revenue.

Enterprise service revenues were $623 million in the fourth quarter, compared to $723 million in the year-ago quarter, and $2.6 billion in 2019 compared to $3 billion in 2018.

“In 2020, we plan on exiting restructuring with a new capital structure and expect to make additional strides in future-proofing our network, specifically by continuing to increase speed capabilities across our Kinetic footprint,” Thomas said. “Windstream remains the largest SD-WAN service provider in the country and will continue to drive adoptions and conversions of our strategic products and services, which offer businesses powerful tools to operate more efficiently and grow their businesses.”