We are like a bad 3rd marriage at this point with alot of baggage. Alimony is due, late car payments, 3 kids in college. I am not sure how many wireline providers would pick us up and see any future value.
How would we "break up" with the REIT side?
Who would buy CLEC? ILEC? IP (Intellectual Property)?
"The REIT owns all of the outside plant, WIN is just the provider of the services that ride those cables and fiber."
Yes, the REIT, Uniti, owns all the outside plant – but Windstream controls it. Windstream can sell their lease for a particular cable to another party.
I don't know if Uniti has to approve any transfers but I know they would since Wall Street is pressuring Uniti to diversify away from its reliance on Windstream for 2/3 of its business.
Leasing rights to valuable CLEC cables are assets Windstream can sell to pay down creditors.
Construction costs are high – it's usually cheaper to replace obsolete equipment at the end of a cable than it is to bore a new underground route or pay for a lot of pole make-ready where you don't already have pole space. Starting from scratch building your own stuff probably costs $100k/mile in the suburbs, much more in urban areas. More in heavily unionized areas, too, at least for pole make-ready.
Does the CLEC lease much fiber from Uniti or does it mostly rely on other carriers for service?
For the cables it leases from Uniti, could those leases be valuable to other companies?
"Does the CLEC control much fiber in the ground?"
The REIT owns all of the outside plant, WIN is just
the provider of the services that ride those cables
and fiber.
Most of the CLEC assets are TDM technologies that have
a diminishing marginal returns. Why would anyone buy something
that is going to be worth ZERO in the next 3 to 5 years.
Does the CLEC control much fiber in the ground? I would think that’s valuable, even if much of the CLEC is wound down?
One idea that’s been offered is that Uniti would lower Windstream’s lease payments in exchange for Windstream giving up exclusive rights to dark fiber in the cable it leases.
Does that make sense?
Not much to be desired on the CLEC side. Its mostly old TDM technology, DS0/DS1/DS3. The fiber nodes are old equipment that has been manufacture discontinued for 5-10yrs or more. They need to just shut the entire CLEC network down and roll with UCaaS and SD-WAN. Just need a few racks in a data center to provide that service, not that bloated network made up of countless bankrupt CLECs.
My guess:
The company may sell some small pieces of the ILEC to nearby, smaller independent telcos. For instance, Comporium might buy some Windstream assets in SC that would be a good geographic fit. They’d assume Windstream’s lease of those assets from Uniti. Uniti would be delighted to diversify away from one customer that controls 2/3 of its business. It raises some cash for creditors.
The bulk of the ILEC would kept independent in order to maximize the value of its tax loss carry forwards. The old shareholders would be wiped out. Senior secured creditors would get bonds. Junior secured creditors would get bonds and stock. Unsecured creditors would probably get mostly stock.
Unsecured bonds are trading at 10¢ to 15¢ on the dollar. That implies that financial markets believe that debt payments and profits over time from a future restructured Windstream (+ the value of any asset sales) will be worth billions — enough to cover all that secured debt at close to full value over time with a little bit still left for the unsecureds. That in turn suggests financial types don’t see Windstream (overall) getting liquidated.
Every dollar the company can trim from Uniti in lease payment reductions adds to the value for the creditors. Reportedly, “experts” think Uniti has a strong legal position but might offer some concession to avoid the uncertainties of a trial. (A lot of “experts“ thought Windstream had a strong case in the Aurelius trial.)
The new Windstream stock would start trading right away, as would bonds. Many involuntary holders (former creditors) would sell to new investors.
Elliott Management, as the largest creditor, would take the lead in restructuring the company to profitability.
Elliott is trying to force AT&T to stop buying businesses, downsize some and focus on its core businesses. I suspect that’ll be their theme at Uniti.
In another thread, someone said Windstream’s consultants (Alvarez and Marshall) were recommending something similar for Windstream.
I don’t fully understand the CLEC. It sounds like a mixed bag at best from other comments here. Some of it may be in a dead end business — renting other carriers’ facilities and reselling them. From others’ comments here, it sounds like there are a lot of unhappy CLEC customers — that’s a tough basis for a profitable business. Maybe some of the CLEC business would wind down? Are there attractive parts of the CLEC business that could be hived off for someone to buy?
(A lot of ILEC customers aren’t happy either but they have fewer alternatives)
I’ve read here that the ILEC uses some CLEC facilities- I reckon they would have to be retained.
I’m not clear as to whether Windstream is required to keep paying Uniti for stuff it stops using and doesn’t sell.
Any other ideas, observations?
A smart person.. Too much value despite the stupidity of WE management.