UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~

2022

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-36708

Uniti Group Inc.

(Exact name of registrant as specified in its charter)

~~Maryland~~	~~46-5230630~~
Maryland		46-5230630
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
~~10802 Executive Center~~
2101 Riverfront Drive, ~~Benton Building~~ Suite ~~300~~ A Little Rock, Arkansas		~~72211~~ 72202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (501) 850-0820

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	UNIT	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒x No ☐o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☒x

As of October ~~31, 2021,~~27, 2022, the registrant had ~~236,070,969~~237,200,050 shares of common stock, $0.0001 par value per share, outstanding.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements as defined under U.S. federal securities law. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: our expectations regarding the settlement we have entered into with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”); the future prospects and financial health of Windstream; our expectations about our ability to maintain our status as a real estate investment trust (a “REIT”); our expectations regarding the effect of the COVID-19 pandemic on our results of operations and financial condition, including the potential need to perform an interim goodwill analysis and report an impairment charge related thereto; our expectations regarding the effect of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Consolidated Appropriations Act of 2021 (the “2021 Appropriations Act”) and other tax related legislation on our tax position; our expectations regarding the future growth and demand of the telecommunication industry, future financing plans, business strategies, growth prospects, operating and financial performance, and our future liquidity needs and access to capital; ~~our~~expectations regarding future deployment of fiber strand miles and small cell networks and recognition of revenue related thereto; expectations regarding levels of capital expenditures; expectations regarding the deductibility of goodwill for tax purposes; ~~our~~ expectations regarding reclassification of accumulated other comprehensive income (loss) related to derivatives to interest expense; ~~our~~ expectations regarding the amortization of intangible assets; our expectations regarding remediation of the material weakness in our internal control over financial reporting as discussed in Part II, Item 9A of our Annual Report on Form 10-K filed with the U.S. Securities and ~~Exchange Commission (“SEC”) on March 5, 2021, as amended by Amendment No. 1 thereto filed on Form 10-K/A with the SEC on March 30, 2021 (the “Annual Report”); and our~~ expectations regarding the payment of dividends.

Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:

•

~~the future prospects of our largest customer, Windstream, following its emergence from bankruptcy;~~

to:

•the future prospects of our largest customer, Windstream, following its emergence from bankruptcy;•

~~adverse impacts of the COVID-19 pandemic on our employees, our business, the business of our customers and other business partners and the global financial markets;~~

•adverse impacts of the COVID-19 pandemic, inflation and rising interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets;•

~~the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements;~~

•the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements;•

~~the ability of our customers to comply with laws, rules and regulations in the operation of the assets we lease to them;~~

•the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant;•

the ability and willingness of our customers to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant;

•the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses;•

~~our ability to renew, extend or retain our contracts or to obtain new contracts with significant customers (including customers of the businesses that we acquire);~~

•our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments;•

the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses;

•our ability to access debt and equity capital markets;•

~~our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments;~~

•the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates;•

~~our ability to access debt and equity capital markets;~~

•our ability to retain our key management personnel;•

~~the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates;~~

•changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs;•

~~adverse impacts of litigation or disputes involving us or our customers;~~

•covenants in our debt agreements that may limit our operational flexibility;•

~~our ability to retain our key management personnel;~~

•the possibility that we may experience equipment failures, natural disasters, cyber attacks or terrorist attacks for which our insurance may not provide adequate coverage;•

~~our ability to maintain our status as a REIT;~~

•the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire;

•other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and

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•

changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs, including the impact of the 2017 U.S. tax reform legislation, the CARES Act, the Families First Coronavirus Response Act and the 2021 Appropriations Act;

•additional factors discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, as well as those described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (the “SEC”).•

~~covenants in our debt agreements that may limit our operational flexibility;~~

•

~~the possibility that we may experience equipment failures, natural disasters, cyber attacks or terrorist attacks for which our insurance may not provide adequate coverage;~~

•

~~the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire;~~

•

other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and

•

additional factors discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" of our Annual Report, as well as those described from time to time in our future reports filed with the SEC.

Forward-looking statements speak only as of the date of this Quarterly Report. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

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Uniti Group Inc.

Table of Contents

		~~Page~~
~~PART I.~~			~~FINANCIAL INFORMATION~~		Page
PART I.			FINANCIAL INFORMATION

Item 1.			Financial Statements (Unaudited)		5
			Uniti Group Inc.
			Condensed Consolidated Balance Sheets		5
			Condensed Consolidated Statements of Income ~~(Loss)~~		6
			Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~		7
			Condensed Consolidated Statements of Shareholders’ Deficit		8
			Condensed Consolidated Statements of Cash Flows		11 9
			Notes to Condensed Consolidated Financial Statements		12 11
			1.Organization and Description of Business		12 11
			2.Basis of Presentation and Summary of Significant Accounting Policies		12 11
			3.Revenues~~Revenues~~		14
			4.Leases~~Leases~~		16 15
			5.~~Assets Acquisitions and Dispositions~~		19
	6.Investments in Unconsolidated Entities	20 17
			7.6.Fair Value of Financial Instruments		21 17
			8.7.Property Plant and Equipment		23 19
			9.8.Derivative Instruments and Hedging Activities		23 19
			~~10.~~9.Goodwill and Intangible Assets and Liabilities		25 22
			~~11.~~10.Notes and Other Debt		26 22
			~~12.~~11.Earnings Per Share		28 24
			~~13.~~12.Segment Information		29 25
			~~14.~~13.Commitments and Contingencies		33 28
			~~15.~~14.Accumulated Other Comprehensive ~~(Loss) Income~~Loss		35 31
			~~16.~~15.Capital Stock		35 31
			~~17.Subsequent Events~~		35

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			36 32
			1.Overview~~Overview~~		36 32
			2.Results of Operations		39 34
			3.Non-GAAP Financial Measures		53 48
			4.Liquidity and Capital Resources		56 51
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		60 57
Item 4.			Controls and Procedures		60 57

PART II.			OTHER INFORMATION

Item 1.			Legal Proceedings		62 58
Item 1A.			Risk Factors		62 58
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		62 58
Item 3.			Defaults Upon Senior Securities		62 58
Item 4.			Mine Safety Disclosures		62 58
Item 5.			Other Information		62 58
Item 6.			Exhibits		62 59

Signatures					63 60

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Uniti Group Inc.

Condensed Consolidated Balance Sheets


	(Unaudited)
(Thousands, except par value)	September 30, 2022		December 31, 2021
Assets:
Property, plant and equipment, net	$	3,693,581	$	3,508,939
Cash and cash equivalents	43,394		58,903
Accounts receivable, net	41,317		38,455
Goodwill	385,878		601,878
Intangible assets, net	342,291		364,630
Straight-line revenue receivable	62,137		41,323
Operating lease right-of-use assets, net	86,212		80,271
Other assets	83,762		38,900
Investment in unconsolidated entities	38,990		64,223
Deferred income tax assets, net	33,444		11,721
Total Assets	$	4,811,006	$	4,809,243
Liabilities and Shareholders' Deficit:
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	137,019	$	86,868
Settlement payable (Note 13)	248,117		239,384
Intangible liabilities, net	169,765		177,786
Accrued interest payable	57,848		109,826
Deferred revenue	1,197,375		1,134,236
Derivative liability, net	822		10,413
Dividends payable	658		1,264
Operating lease liabilities	64,681		57,355
Finance lease obligations	15,569		15,348
Notes and other debt, net	5,179,327		5,090,537
Total liabilities	7,071,181		6,923,017

Commitments and contingencies (Note 13)

Shareholders' Deficit:
Preferred stock, $0.0001 par value, 50,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.0001 par value, 500,000 shares authorized; issued and outstanding: 235,741 shares at September 30, 2022 and 234,779 at December 31, 2021	24		23
Additional paid-in capital	1,227,905		1,214,830
Accumulated other comprehensive loss	(688)		(9,164)
Distributions in excess of accumulated earnings	(3,489,718)		(3,333,481)
Total Uniti shareholders' deficit	(2,262,477)		(2,127,792)
Noncontrolling interests:
Operating partnership units	2,052		13,893
Cumulative non-voting convertible preferred stock, $0.01 par value, 6 shares authorized, 3 issued and outstanding	250		125
Total shareholders' deficit	(2,260,175)		(2,113,774)
Total Liabilities and Shareholders' Deficit	$	4,811,006	$	4,809,243

(Thousands, except par value)

(Unaudited)
September 30, 2021

December 31, 2020

Assets:

Property, plant and equipment, net

$
3,472,642

$
3,273,353

Cash and cash equivalents

69,751

77,534

Accounts receivable, net

39,014

62,952

Goodwill

601,878

601,878

Intangible assets, net

372,076

390,725

Straight-line revenue receivable

33,839

13,107

Other assets, net

122,901

152,883

Investment in unconsolidated entities

64,659

66,043

Deferred income tax assets, net

7,524

-

Assets held for sale

-

93,343

Total Assets

$
4,784,284

$
4,731,818

Liabilities and Shareholders' Deficit:

Liabilities:

Accounts payable, accrued expenses and other liabilities, net

$
156,428

$
146,144

Settlement payable (Note 14)

358,329

418,840

Intangible liabilities, net

180,459

187,886

Accrued interest payable

60,726

95,338

Deferred revenue

1,143,301

995,123

Derivative liability, net

13,606

22,897

Dividends payable

964

36,725

Deferred income tax liabilities, net

-

10,540

Finance lease obligations

15,538

15,468

Contingent consideration

-

2,957

Notes and other debt, net

4,973,174

4,816,524

Liabilities held for sale

-

55,752

Total liabilities

6,902,525

6,804,194

Commitments and contingencies (Note 14)

Shareholders' Deficit:

Preferred stock, $0.0001 par value, 50,000 shares authorized, 0 shares issued and outstanding

-

-

Common stock, $0.0001 par value, 500,000 shares authorized, issued and outstanding: 234,495 shares at September 30, 2021 and 231,262 at December 31, 2020

23

23

Additional paid-in capital

1,208,611

1,209,141

Accumulated other comprehensive loss

(11,984
)

(20,367
)
Distributions in excess of accumulated earnings

(3,333,686
)

(3,330,455
)
Total Uniti shareholders' deficit

(2,137,036
)

(2,141,658
)
Noncontrolling interests:

Operating partnership units

18,670

69,157

Cumulative non-voting convertible preferred stock, $0.01 par value, 3 shares authorized, 1 issued and outstanding

125

125

Total shareholders' deficit

(2,118,241
)

(2,072,376
)
Total Liabilities and Shareholders' Deficit

$
4,784,284

$
4,731,818

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Income ~~(Loss)~~

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands, except per share data)	2021			2020			2021			2020			(Thousands, except per share data)	2022		2021		2022		2021
Revenues:													Revenues:
Leasing	$	199,485		$	182,370		$	590,478		$	552,042		Leasing	$	208,623	$	199,485	$	618,878	$	590,478
Fiber Infrastructure		67,262			76,395			217,035			232,942		Fiber Infrastructure	74,480		67,262		226,234		217,035
Tower		-			-			-			6,112
Consumer CLEC		-			-			-			651
Total revenues		266,747			258,765			807,513			791,747		Total revenues	283,103		266,747		845,112		807,513
Costs and Expenses:													Costs and Expenses:
Interest expense		94,793			102,791			341,762			388,427
Interest expense, net													Interest expense, net	97,731		94,793		290,280		341,762
Depreciation and amortization		70,530			79,880			211,165			250,970		Depreciation and amortization	73,516		70,530		217,276		211,165
General and administrative expense		25,077			26,659			75,800			81,686		General and administrative expense	26,863		25,077		75,818		75,800
Operating expense (exclusive of depreciation and amortization)		34,167			37,831			105,436			118,308		Operating expense (exclusive of depreciation and amortization)	36,291		34,167		108,184		105,436
Settlement expense		-			-			-			650,000
Goodwill impairment (Note 2)													Goodwill impairment (Note 2)	216,000		—		216,000		—
Transaction related and other costs		1,063			20,816			5,624			55,344		Transaction related and other costs	2,375		1,063		7,324		5,624
Gain on sale of real estate		-			(22,908	)		(442	)		(86,726	)	Gain on sale of real estate	(94)		—		(344)		(442)
Gain on sale of operations (Note 5)		-			-			(28,143	)		-
Other expense, net		283			3,098			8,758			12,186
Gain on sale of operations													Gain on sale of operations	(176)		—		(176)		(28,143)
Other (income) expense, net													Other (income) expense, net	74		283		(8,254)		8,758
Total costs and expenses		225,913			248,167			719,960			1,470,195		Total costs and expenses	452,580		225,913		906,108		719,960

Income (loss) before income taxes and equity in earnings from unconsolidated entities		40,834			10,598			87,553			(678,448	)
(Loss) income before income taxes and equity in earnings from unconsolidated entities													(Loss) income before income taxes and equity in earnings from unconsolidated entities	(169,477)		40,834		(60,996)		87,553
Income tax (benefit) expense		(2,244	)		2,801			283			(7,650	)	Income tax (benefit) expense	(13,056)		(2,244)		(10,183)		283
Equity in (earnings) from unconsolidated entities		(604	)		342			(1,549	)		342
Net income (loss)		43,682			7,455			88,819			(671,140	)
Net income (loss) attributable to noncontrolling interests		316			190			984			(11,808	)
Net income (loss) attributable to shareholders		43,366			7,265			87,835			(659,332	)
Equity in earnings from unconsolidated entities													Equity in earnings from unconsolidated entities	(672)		(604)		(1,696)		(1,549)
Net (loss) income													Net (loss) income	(155,749)		43,682		(49,117)		88,819
Net (loss) income attributable to noncontrolling interests													Net (loss) income attributable to noncontrolling interests	(70)		316		135		984
Net (loss) income attributable to shareholders													Net (loss) income attributable to shareholders	(155,679)		43,366		(49,252)		87,835
Participating securities' share in earnings		(283	)		(229	)		(864	)		(853	)	Participating securities' share in earnings	(226)		(283)		(897)		(864)
Dividends declared on convertible preferred stock		(3	)		(2	)		(8	)		(6	)	Dividends declared on convertible preferred stock	(5)		(3)		(15)		(8)
Net income (loss) attributable to common shareholders	$	43,080		$	7,034		$	86,963		$	(660,191	)
Net (loss) income attributable to common shareholders													Net (loss) income attributable to common shareholders	$	(155,910)	$	43,080	$	(50,164)	$	86,963

Income (loss) per common share:
(Loss) income per common share:													(Loss) income per common share:
Basic	$	0.18		$	0.04		$	0.37		$	(3.40	)	Basic	$	(0.66)	$	0.18	$	(0.21)	$	0.37
Diluted	$	0.17		$	0.04		$	0.37		$	(3.40	)	Diluted	$	(0.66)	$	0.17	$	(0.21)	$	0.37

Weighted-average number of common shares outstanding:													Weighted-average number of common shares outstanding:
Basic		233,513			198,054			232,269			194,278		Basic	235,739		233,513		235,483		232,269
Diluted		264,421			198,373			232,540			194,278		Diluted	235,739		264,421		235,483		232,540

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(Thousands)

2021

2020

2021

2020

Net income (loss)

$
43,682

$
7,455

$
88,819

$
(671,140
)
Other comprehensive income (loss):

Unrealized loss on derivative contracts

-

-

-

(7,036
)
Interest rate swap termination

2,830

2,829

8,488

7,325

Other comprehensive income:

2,830

2,829

8,488

289

Comprehensive income (loss)

46,512

10,284

97,307

(670,851
)
Comprehensive income (loss) attributable to noncontrolling interest

338

237

1,089

(11,806
)
Comprehensive income (loss) attributable to common shareholders

$
46,174

$
10,047

$
96,218

$
(659,045
)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2022		2021		2022		2021
Net (loss) income	$	(155,749)	$	43,682	$	(49,117)	$	88,819
Other comprehensive income:
Interest rate swap termination	2,829		2,830		8,488		8,488
Other comprehensive income	2,829		2,830		8,488		8,488
Comprehensive (loss) income	(152,920)		46,512		(40,629)		97,307
Comprehensive (loss) income attributable to noncontrolling interest	(69)		338		147		1,089
Comprehensive (loss) income attributable to shareholders	$	(152,851)	$	46,174	$	(40,776)	$	96,218

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Shareholders’ Deficit

(unaudited)


	For the Three Months Ended September 30,																										For the Three Months Ended September 30,
(Thousands, except share data)	Preferred Stock				Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Accumulated Earnings			Noncontrolling Interest - OP Units			Noncontrolling Interest - Non-voting Preferred Shares		Total Shareholders' Deficit			(Thousands, except share data)	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings		Noncontrolling Interest - OP Units		Noncontrolling Interest - Non- voting Preferred Shares		Total Shareholders' Deficit
	Shares		Amount		Shares		Amount
Balance at June 30, 2020		-	$	-		192,523,083	$	19	$	957,656		$	(25,937	)	$	(3,219,623	)	$	70,622		$	125	$	(2,217,138	)
Net income		-		-		-		-		-			-			7,265			190			-		7,455
Other comprehensive income		-		-		-		-		-			2,782			-			47			-		2,829
Common stock dividends declared ($0.15 per share)		-		-		-		-		-			-			(35,731	)		-			-		(35,731	)
Distributions to noncontrolling interest declared		-		-		-		-		-			-			-			(521	)		-		(521	)
Payments related to tax withholding for stock-based compensation		-		-		-		-		88			-			-			-			-		88
Stock-based compensation		-		-		34,830		-		3,341			-			-			-			-		3,341
Issuance of common stock - employee stock purchase plan		-		-		52,939		-		-			-			-			-			-		-
Settlement Common Stock		-		-		38,633,470		4		244,546			-			-			-			-		244,550
Balance at September 30, 2020		-	$	-		231,244,322	$	23	$	1,205,631		$	(23,155	)	$	(3,248,089	)	$	70,338		$	125	$	(1,995,127	)
																											Shares	Amount		Shares	Amount
Balance at June 30, 2021		-	$	-		231,804,921	$	23	$	1,153,707		$	(14,792	)	$	(3,341,371	)	$	68,868		$	125	$	(2,133,440	)	Balance at June 30, 2021	—	$	—	231,804,921	$	23	$	1,153,707	$	(14,792)	$	(3,341,371)	$	68,868	$	125	$	(2,133,440)
Net income		-		-		-		-		-			-			43,366			316			-		43,682		Net income	—	—		—	—		—		—		43,366		316		—		43,682
Other comprehensive income		-		-		-		-		-			2,808			-			22			-		2,830		Other comprehensive income	—	—		—	—		—		2,808		—		22		—		2,830
Common stock dividends declared ($0.15 per share)		-		-		-		-		-			-			(35,681	)		-			-		(35,681	)	Common stock dividends declared ($0.15 per share)	—	—		—	—		—		—		(35,681)		—		—		(35,681)
Distributions to noncontrolling interest declared		-		-		-		-		-			-			-			(141	)		-		(141	)	Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		(141)		—		(141)
Exchange of noncontrolling interest		-		-		2,528,199		-		50,395			-			-			(50,395	)		-		-		Exchange of noncontrolling interest	—	—		2,528,199	—		50,395		—		—		(50,395)		—		—
Payments related to tax withholding for stock-based compensation		-		-		-		-		(10	)		-			-			-			-		(10	)	Payments related to tax withholding for stock-based compensation	—	—		—	—		(10)		—		—		—		—		(10)
Stock-based compensation		-		-		123,050		-		4,166			-			-			-			-		4,166		Stock-based compensation	—	—		123,050	—		4,166		—		—		—		—		4,166
Issuance of common stock - employee stock purchase plan		-		-		39,186		-		353			-			-			-			-		353		Issuance of common stock - employee stock purchase plan	—	—		39,186	—		353		—		—		—		—		353
Balance at September 30, 2021		-	$	-		234,495,356	$	23	$	1,208,611		$	(11,984	)	$	(3,333,686	)	$	18,670		$	125	$	(2,118,241	)
Balance at September 30 2021																										Balance at September 30 2021	—	—		234,495,356	23		1,208,611		(11,984)		(3,333,686)		18,670		125		(2,118,241)

Balance at June 30, 2022																										Balance at June 30, 2022	—	$	—	235,699,513	$	24	$	1,224,427	$	(3,516)	$	(3,298,455)	$	2,072	$	250	$	(2,075,198)
Net loss																										Net loss	—	—		—	—		—		—		(155,679)		(70)		—		(155,749)
Other comprehensive income																										Other comprehensive income	—	—		—	—		—		2,828		—		1		—		2,829
Common stock dividends declared ($0.15 per share)																										Common stock dividends declared ($0.15 per share)	—	—		—	—		—		—		(35,584)		—		—		(35,584)
Distributions to noncontrolling interest declared																										Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		49		—		49
Payments related to tax withholding for stock-based compensation																										Payments related to tax withholding for stock-based compensation	—	—		—	—		2		—		—		—		—		2
Stock-based compensation																										Stock-based compensation	—	—		1,201	—		3,151		—		—		—		—		3,151
Issuance of common stock - employee stock purchase plan																										Issuance of common stock - employee stock purchase plan	—	—		40,530	—		325		—		—		—		—		325
Balance at September 30, 2022																										Balance at September 30, 2022	—	—		235,741,244	24		1,227,905		(688)		(3,489,718)		2,052		250		(2,260,175)

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	For the Nine Months Ended September 30,																										For the Nine Months Ended September 30,
(Thousands, except share data)	Preferred Stock				Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Accumulated Earnings			Noncontrolling Interest - OP Units			Noncontrolling Interest - Non-voting Preferred Shares		Total Shareholders' Deficit			(Thousands, except share data)	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings		Noncontrolling Interest - OP Units		Noncontrolling Interest - Non- voting Preferred Shares		Total Shareholders' Deficit
	Shares		Amount		Shares		Amount
Balance at December 31, 2019		-	$	-		192,141,634	$	19	$	951,295		$	(23,442	)	$	(2,494,740	)	$	83,704		$	-	$	(1,483,164	)
Net loss		-		-		-		-		-			-			(659,332	)		(11,808	)		-		(671,140	)
Other comprehensive income		-		-		-		-		-			287			-			2			-		289
Common stock dividends declared ($0.15 per share)		-		-		-		-		-			-			(94,017	)		-			-		(94,017	)
Distributions to noncontrolling interest declared		-		-		-		-		-			-			-			(1,560	)		-		(1,560	)
Cumulative non-voting convertible preferred stock		-		-		-		-		-			-			-			-			125		125
Payments related to tax withholding for stock-based compensation		-		-		-		-		(962	)		-			-			-			-		(962	)
Stock-based compensation		-		-		372,430		-		10,446			-			-			-			-		10,446
Issuance of common stock - employee stock purchase plan		-		-		96,788		-		306			-			-			-			-		306
Settlement Common Stock		-		-		38,633,470		4		244,546			-			-			-			-		244,550
Balance at September 30, 2020		-	$	-		231,244,322	$	23	$	1,205,631		$	(23,155	)	$	(3,248,089	)	$	70,338		$	125	$	(1,995,127	)
																											Shares	Amount		Shares	Amount
Balance at December 31, 2020		-	$	-		231,261,958	$	23	$	1,209,141		$	(20,367	)	$	(3,330,455	)	$	69,157		$	125	$	(2,072,376	)	Balance at December 31, 2020	—	$	—	231,261,958	$	23	$	1,209,141	$	(20,367)	$	(3,330,455)	$	69,157	$	125	$	(2,072,376)
Cumulative effect adjustment for adoption of new accounting standard		-		-		-		-		(59,908	)		-			14,598			-			-		(45,310	)	Cumulative effect adjustment for adoption of new accounting standard	—	—		—	—		(59,908)		—		14,598		—		—		(45,310)
Net income		-		-		-		-		-			-			87,835			984			-		88,819		Net income	—	—		—	—		—		—		87,835		984		—		88,819
Other comprehensive income		-		-		-		-		-			8,383			-			105			-		8,488		Other comprehensive income	—	—		—	—		—		8,383		—		105		—		8,488
Common stock dividends declared ($0.15 per share)		-		-		-		-		-			-			(105,664	)		-			-		(105,664	)
Common stock dividends declared ($0.45 per share)																										Common stock dividends declared ($0.45 per share)	—	—		—	—		—		—		(105,664)		—		—		(105,664)
Distributions to noncontrolling interest declared		-		-		-		-		-			-			-			(1,181	)		-		(1,181	)	Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		(1,181)		—		(1,181)
Exchange of noncontrolling interest		-		-		2,528,199		-		50,395			-			-			(50,395	)		-		-		Exchange of noncontrolling interest	—	—		2,528,199	—		50,395		—		—		(50,395)		—		—
Payments related to tax withholding for stock-based compensation		-		-		-		-		(2,652	)		-			-			-			-		(2,652	)	Payments related to tax withholding for stock-based compensation	—	—		—	—		(2,652)		—		—		—		—		(2,652)
Stock-based compensation		-		-		630,249		-		10,963			-			-			-			-		10,963		Stock-based compensation	—	—		630,249	—		10,963		—		—		—		—		10,963
Issuance of common stock - employee stock purchase plan																										Issuance of common stock - employee stock purchase plan	—	—		74,950	—		672		—		—		—		—		672
Balance at September 30 2021																										Balance at September 30 2021	—	—		234,495,356	23		1,208,611		(11,984)		(3,333,686)		18,670		125		(2,118,241)

Balance at December 31, 2021																										Balance at December 31, 2021	—	$	—	234,779,247	$	23	$	1,214,830	$	(9,164)	$	(3,333,481)	$	13,893	$	125	$	(2,113,774)
Net (loss) income																										Net (loss) income	—	—		—	—		—		—		(49,252)		135		—		(49,117)
Other comprehensive income																										Other comprehensive income	—	—		—	—		—		8,476		—		12		—		8,488
Common stock dividends declared ($0.45 per share)																										Common stock dividends declared ($0.45 per share)	—	—		—	—		—		—		(106,860)		—		—		(106,860)
Distributions to noncontrolling interest declared																										Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		(111)		—		(111)
Cumulative non-voting convertible preferred stock																										Cumulative non-voting convertible preferred stock	—	—		—	—		—		—		(125)		—		125		—
Exchange of noncontrolling interest																										Exchange of noncontrolling interest	—	—		244,682	—		7,257		—		—		(11,877)		—		(4,620)
Payments related to tax withholding for stock-based compensation																										Payments related to tax withholding for stock-based compensation	—	—		—	—		(4,434)		—		—		—		—		(4,434)
Stock-based compensation																										Stock-based compensation	—	—		647,461	1		9,663		—		—		—		—		9,664
Issuance of common stock - employee stock purchase plan																										Issuance of common stock - employee stock purchase plan	—	—		69,854	—		589		—		—		—		—		589
Balance at September 30, 2022																										Balance at September 30, 2022	—	—		235,741,244	24		1,227,905		(688)		(3,489,718)		2,052		250		(2,260,175)

~~Table of Contents~~

Issuance of common stock - employee stock purchase plan

-

-

74,950

-

672

-

-

-

-

672

Balance at September 30, 2021

-

$
-

234,495,356

$
23

$
1,208,611

$
(11,984
)

$
(3,333,686
)

$
18,670

$
125

$
(2,118,241
)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,
(Thousands)	2022		2021
Cash flow from operating activities
Net (loss) income	$	(49,117)	$	88,819
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	217,276		211,165
Amortization of deferred financing costs and debt discount	13,510		13,723
Loss on debt extinguishment	—		43,369
Interest rate swap termination	8,488		8,488
Deferred income taxes	(21,723)		(2,270)
Equity in earnings of unconsolidated entities	(1,696)		(1,549)
Distributions of cumulative earnings from unconsolidated entities	2,959		2,933
Cash paid for interest rate swap settlement	(9,591)		(9,291)
Straight-line revenues and amortization of below-market lease intangibles	(31,066)		(22,455)
Stock-based compensation	9,664		10,963
Change in fair value of contingent consideration	—		21
Goodwill impairment (see Note 2)	216,000		—
Gain on sale of unconsolidated entity (see Note 5)	(7,923)		—
Gain on sale of real estate	(344)		(442)
Gain on sale of operations	(176)		(28,143)
Loss (gain) on asset disposals	902		(232)
Accretion of settlement obligation	8,733		13,006
Other	(126)		97
Changes in assets and liabilities:
Accounts receivable	(2,863)		23,938
Other assets	7,756		(150)
Accounts payable, accrued expenses and other liabilities	(75,556)		1,363
Net cash provided by operating activities	285,107		353,353
Cash flow from investing activities
Capital expenditures	(292,666)		(276,010)
Proceeds from sale of unconsolidated entity (see Note 5)	32,527		—
Proceeds from sale of real estate, net of cash	575		1,034
Proceeds from sale of operations	541		62,113
Proceeds from sale of other equipment	338		1,143
Net cash used in investing activities	(258,685)		(211,720)
Cash flow from financing activities
Repayment of debt	—		(1,660,000)
Proceeds from issuance of notes	—		1,680,000
Dividends paid	(107,362)		(105,941)
Payments of settlement payable	—		(73,516)
Payments of contingent consideration	—		(2,979)
Distributions paid to noncontrolling interest	(217)		(1,700)
Payment for exchange of noncontrolling interest	(4,620)		—
Borrowings under revolving credit facility	180,000		290,000
Payments under revolving credit facility	(105,000)		(220,000)
Finance lease payments	(887)		(1,745)
Payments for financing costs	—		(25,755)
Payment of tender premium	—		(25,800)
Employee stock purchase program	589		672
Payments related to tax withholding for stock-based compensation	(4,434)		(2,652)
Net cash used in financing activities	(41,931)		(149,416)

Net increase in cash and cash equivalents	(15,509)		(7,783)
Cash and cash equivalents at beginning of period	58,903		77,534
Cash and cash equivalents at end of period	$	43,394	$	69,751

Non-cash investing and financing activities:
Property and equipment acquired but not yet paid	$	12,751	$	22,586
Tenant capital improvements	120,239		140,996

Nine Months Ended September 30,

(Thousands)

2021

2020

Cash flow from operating activities

Net income (loss)

$
88,819

$
(671,140
)
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

211,165

250,970

Amortization of deferred financing costs and debt discount

13,723

27,703

Loss on debt extinguishment

43,369

73,952

Interest rate swap termination

8,488

7,325

Deferred income taxes

(2,270
)

(8,506
)
Equity in earnings of unconsolidated entities

(1,549
)

342

Distributions of cumulative earnings from unconsolidated entities

2,933

960

Cash paid for interest rate swap settlement

(9,291
)

(4,886
)
Straight-line revenues

(22,455
)

(1,036
)
Stock-based compensation

10,963

10,446

Change in fair value of contingent consideration

21

8,086

Gain on sale of real estate

(442
)

(86,726
)
Gain on sale of operations

(28,143
)

-

(Gain) loss on asset disposals

(232
)

1,483

Accretion of settlement obligation

13,006

-

Other

97

(300
)
Changes in assets and liabilities, net of acquisitions:

Accounts receivable

23,938

17,699

Other assets

(150
)

4,331

Accounts payable, accrued expenses and other liabilities

1,363

43,535

Settlement payable (Note 15)

-

438,577

Net cash provided by operating activities

353,353

112,815

Cash flow from investing activities

Other capital expenditures

(276,010
)

(214,150
)
Proceeds from sale of real estate, net of cash

1,034

392,011

Proceeds from sale of operations (Note 5)

62,113

-

Proceeds from sale of other equipment

1,143

-

Windstream asset acquisition

-

(73,127
)
Net cash (used in) provided by investing activities

(211,720
)

104,734

Cash flow from financing activities

Repayment of debt

(1,660,000
)

(2,044,728
)
Proceeds from issuance of notes

1,680,000

2,250,000

Dividends paid

(105,941
)

(100,759
)
Payment of settlement obligation

(73,516
)

-

Payments of contingent consideration

(2,979
)

(15,713
)
Distributions paid to noncontrolling interest

(1,700
)

(1,802
)
Borrowings under revolving credit facility

290,000

140,000

Payments under revolving credit facility

(220,000
)

(585,019
)
Finance lease payments

(1,745
)

(2,890
)
Payments for financing costs

(25,755
)

(47,775
)
Settlement Common Stock issuance

-

244,550

Costs related to the early repayment of debt

(25,800
)

-

Employee stock purchase program

672

306

Payments related to tax withholding for stock-based compensation

(2,652
)

(962
)
Net cash used in financing activities

(149,416
)

(164,792
)

Net (decrease) increase in cash and cash equivalents

(7,783
)

52,757

Cash and cash equivalents at beginning of period

77,534

142,813

Cash and cash equivalents at end of period

$
69,751

$
195,570

Non-cash investing and financing activities:

Property and equipment acquired but not yet paid

$
22,586

$
15,242

Tenant capital improvements

140,996

101,877

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The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Uniti Group Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1. Organization and Description of Business

Uniti Group Inc. (the “Company,” “Uniti,” “we,” “us,” or “our”) was incorporated in the state of Maryland on September 4, 2014. We are an independent internally managed real estate investment trust (“REIT”) engaged in the acquisition, construction and leasing of mission critical infrastructure in the communications industry. We are principally focused on acquiring and constructing fiber optic, copper and coaxial broadband networks and data centers. We ~~have historically managed our operations in 4~~ separate lines of business: Uniti Fiber, Uniti Towers, Uniti Leasing, and the Consumer CLEC Business. On June 1, 2020, the Company completed the sale of its Uniti Towers business, and as of the end of the second quarter of 2020, the Company had substantially completed the wind down of its Consumer CLEC business. ~~As a result, effective January 1, 2021, we~~ manage our operations focused on our 2two primary lines of business: Uniti Fiber and Uniti Leasing.

The Company operates through a customary “up-REIT” structure, pursuant to which we hold substantially all of our assets through a partnership, Uniti Group LP, a Delaware limited partnership (the “Operating Partnership”), that we control as general ~~partner,~~ with the only significant difference between the financial position and results of operations of the Operating Partnership and its subsidiaries compared to the consolidated financial position and consolidated results of operations of Uniti is that the results for the Operating Partnership and its subsidiaries do not include Uniti’s Consumer CLEC segment, which consists of Talk America Services (“Talk America”), which we substantially completed the wind down of the business as of the end of the second quarter of 2020.partner. The up-REIT structure is intended to facilitate future acquisition opportunities by providing the Company with the ability to use common units of the Operating Partnership as a tax-efficient acquisition currency. As of September 30, ~~2021,~~2022, we are the sole general partner of the Operating Partnership and own approximately ~~99.6%~~99.96% of the partnership interests in the Operating Partnership.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and/or controlled subsidiaries, including the Operating Partnership. Under the Accounting Standards Codification 810, Consolidation (“ASC 810”), the Operating Partnership is considered a variable interest entity and is consolidated in the Condensed Consolidated Financial Statements of Uniti Group Inc. because the Company is the primary beneficiary. All material intercompany balances and transactions have been ~~eliminated~~.eliminated.

ASC 810 provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on ~~March 5, 2021,~~February 25, 2022, as amended by Amendment No. 1 thereto filed on Form 10-K/A with the SEC on March ~~30, 2021~~22, 2022 (the “Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our Annual Report.

~~Table of Contents~~

Concentration of Credit Risks—Prior to September 2020, wewe were party to a long-term exclusive triple-net lease (the “Master Lease”) with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”) pursuant to which a substantial portion of our real property was leased to Windstream and from which a substantial portion of our leasing revenues were derived. On September 18, 2020, Uniti and Windstream

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bifurcated the Master Lease and entered into two structurally similar master leases (collectively, the “Windstream Leases”), which amended and restated the Master Lease in its entirety. Revenue under the Windstream Leases provided 66.4% and ~~the Master Lease provided~~ 67.6% ~~and 66.1%~~ of our revenue for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Because a substantial portion of our revenue and cash flows are derived from lease payments by Windstream pursuant to the Windstream Leases, there could be a material adverse impact on our consolidated results of operations, liquidity, financial condition and/or ability to pay dividends and service debt if Windstream were to default under the Windstream Leases or otherwise experiences operating or liquidity difficulties and becomes unable to generate sufficient cash to make payments to us.

Prior to its emergence from bankruptcy on September 21, 2020, Windstream was a publicly traded company subject to the periodic filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Windstream’s historic filings through their quarter ended ~~September~~June 30, 2020 can be found at www.sec.gov. Additionally, the Windstream audited financial statements as of December 31, 2021, and for the year ended December 31, 2021, as of December 31, 2020 and for the period from September 22, 2020 to December 31, 2020 and ~~as of December 31, 2019 and~~ for the period from January 1, 2020 to September 21, 2020 and for ~~each of~~ the ~~two years in the period~~year ended December 31, 2019 are included as an exhibit to our Annual Report. On September 22, 2020, Windstream filed a Form 15 to terminate all filing obligations under Sections 12(g) and 15(d) under the Exchange Act. Windstream filings are not incorporated by reference in this Quarterly Report on Form 10-Q.

We monitor the credit quality of Windstream through numerous methods, including by (i) reviewing credit ratings of Windstream by nationally recognized credit agencies, (ii) reviewing the financial statements of Windstream that are required to be delivered to us pursuant to the Windstream Leases, (iii) monitoring news reports regarding Windstream and its business, (iv) conducting research to ascertain industry trends potentially affecting Windstream, (v) monitoring Windstream’s compliance with the terms of the Windstream Leases and (vi) monitoring the timeliness of its payments under the Windstream Leases.

As of the date of this Quarterly Report on Form 10-Q, Windstream is current on all lease payments. We note that in August 2020, Moody’s Investor Service assigned a B3 corporate family rating with a stable outlook to Windstream in connection with its post-emergence exit financing. At the same time, S&P Global Ratings assigned Windstream a B- issuer rating with a stable outlook. Both ratings remain current as of the date of this filing. In order to assist us in our continuing assessment of Windstream’s creditworthiness, we periodically receive certain confidential financial information and metrics from Windstream.

Goodwill—As of September 30, 2022 and December 31, 2021, all of our goodwill is included in our Fiber Infrastructure segment. Goodwill is recognized for the excess of purchase price over the fair value of net assets of businesses acquired. Goodwill is reviewed for impairment on an annual basis during the fourth quarter. Application of the goodwill impairment test requires significant judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; and assignment of goodwill to reporting units. In accordance with ASC 350-20, Intangibles-Goodwill and Other, we evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount (a “Triggering Event”). On the occurrence of a Triggering Event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If it is more likely than not that goodwill is impaired, the fair value of the reporting unit must be compared with its carrying value.

In performing the quantitative assessment of goodwill, we estimate the fair value of our fiber reporting unit using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market data of comparable businesses, and acquisition multiples paid in recent transactions. Inherent in our preparation of cash flow projections are significant assumptions and estimates derived from a review of our operating results and business plans, which include expected revenue and expense growth rates, capital expenditure plans and discount rate. In determining these assumptions, we consider our ability to execute on our plans, future economic conditions, interest rates and other market data. Many of the factors used in assessing fair value are outside the control of management, and these assumptions and estimates may change in future periods. Small changes in these assumptions or estimates could materially affect our cash flow projections, and therefore could affect the likelihood and amount of potential impairment in future periods. Potential events that could negatively impact these assumptions or estimates may include customer losses or poor execution of our business plans, which impact revenue growth, cost escalation impacting margin, the level of capital expenditures required to sustain our growth and market factors, including stock price fluctuations and increased interest rates, impacting our discount rate. For example, if we were to experience a significant delay in our permitting process in the construction of our fiber networks, the timing of effected cash flows could impact long term growth rates and negatively impact the income approach, leading to potential impairment. As a result, should our expectations of average projected revenue growth percentage, average projected EBITDA margin percentage and/or average projected capital expenditures as a percentage of revenue change, we may experience future impairment to goodwill (while other assumptions remain constant). Furthermore, a deterioration in market factors such as stock prices or increased interest rates

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and/or declines in acquisition multiples utilized in the market approach could affect the likelihood and amount of potential impairment. We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each methodology in the determination of the concluded fair value. If the carrying amount of a reporting unit's net assets is less than its fair value, no impairment exists. If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be recognized for the excess and recorded in the Consolidated Statements of (Loss) Income not to exceed the carrying amount of goodwill.

In connection with the preparation of the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022, the Company identified a Triggering Event and, therefore, performed a qualitative and quantitative goodwill impairment test. The Triggering Event was a result of macroeconomic and financial market factors, specifically increased interest rates, impacting our discount rate. As a result of this interim assessment of goodwill, we concluded that the fair value of the Fiber Infrastructure reporting unit, estimated using a combination of the income approach and market approach, is less than its carrying amount. Accordingly, we recorded a $216.0 million goodwill impairment charge in the Fiber Infrastructure reporting unit during the three months ended September 30, 2022.

Reclassifications—Certain prior year asset and liability categories and related amounts have been reclassified to conform with current year presentation.

Recently Adopted Accounting Pronouncements

In ~~August 2020,~~May 2021, the FASB issued ASU ~~2020-06,~~ 2021-04, ~~Debt - Debt with Conversion~~Earnings Per Share (Topic 260), Debt—Modifications and ~~Other Options~~Extinguishments (Subtopic ~~470- 20)~~470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and ~~Hedging -~~ Hedging—Contracts in Entity’s Own Equity (Subtopic ~~815-40)~~815- 40):Issuer’s Accounting for ~~Convertible Instruments~~Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which clarifies and ~~Contracts~~reduces diversity in an ~~Entity’s Own Equity~~issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange (“ASU ~~2020-06”~~2021-04”). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted ASU 2021-04 effective January 1, 2022, and there was no impact on our consolidated financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments (“ASU 2021-05”), which ~~simplifies~~requires lessors to classify leases as operating leases if they (1) have variable lease payments that do not depend on a reference index or rate, and (2) would have resulted in the ~~accounting~~recognition of a selling loss at lease commencement if classified as sales-type or direct financing. ASU 2021-05 is effective for certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requiresall entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method.

In ~~addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. ASU 2020-06 is effective~~which have previously adopted Topic 842 for fiscal years beginning after December 15, 2021, ~~and~~including interim periods within those fiscal ~~years, with early adoption permitted.~~years. The Company ~~elected to early adopt the guidance~~adopted ASU ~~2020-06 as of~~2021-05 effective January 1, ~~2021 using the modified retrospective transition method.~~ ~~Pursuant to the transition guidance, the Company is required to apply the guidance to all impacted~~2022, and there was no impact on our consolidated financial ~~instruments that were outstanding as of January 1, 2021 with the cumulative effect recognized as an adjustment to the opening balance of retained earnings.~~

~~As a result of early adopting ASU 2020-06, the Company made certain adjustments to its accounting for the outstanding exchangeable senior unsecured notes.~~ statements.

The adoption of ASU 2020-06 resulted in the re-combination of the liability and equity components of these notes into a single liability instrument. The carrying value as of December 31, 2020, totaled approximately $275.4 million and as a result of the adoption increased by $61.1 million to $336.5 million as of January 1, 2021. Because of this adoption, the effective interest rate on the exchangeable senior unsecured notes went from 11.1% to 4.8%. Additional paid-in-capital was reduced by $59.9

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~~million and deferred tax liabilities were reduced by $15.8~~ ~~million. Approximately $14.6 million of cumulative effect of adoption was recognized to the opening balance of retained earnings as of January 1, 2021.~~

Note 3. Revenues

~~The following is a description of principal activities, separated by reportable segments~~ ~~(see Note 13),~~ ~~from which the Company generates its revenues.~~

~~Leasing~~

Leasing revenue represents the results from our leasing program, Uniti Leasing, which is engaged in the acquisition of mission-critical communications assets and leasing them to anchor customers on either an exclusive or shared-tenant basis. ~~See Note 4.~~

~~Fiber Infrastructure~~

The Fiber Infrastructure segment represents the operations of our fiber business, Uniti Fiber, which provides (i) consumer, enterprise, wholesale and backhaul lit fiber, (ii) E-rate, (iii) small cell, (iv) construction services, (v) dark fiber and (vi) other revenue generating activities.

~~Consumer, enterprise, wholesale, and backhaul lit fiber fall under the guidance of ASC 606,~~ ~~Revenue from Contracts with~~ ~~Customers~~ ~~(“ASC 606”)~~. Revenue is recognized over the life of the contracts in a pattern that reflects the satisfaction of Uniti’s stand-ready obligation to provide lit fiber services. The transaction price is equal to the monthly-recurring charge multiplied by the contract term, plus any non-recurring or variable charges. For each contract, the customer is invoiced monthly.

~~ii.~~

E-rate contracts involve providing lit fiber services to schools and libraries, and is governed by ASC 606. Revenue is recognized over the life of the contract in a pattern that reflects the satisfaction of Uniti’s stand-ready obligation to provide lit fiber services. The transaction price is equal to the monthly-recurring charge multiplied by the contract term, plus any non-recurring or variable charges. For each contract, the customer is invoiced monthly.

~~iii.~~

Small cell contracts provide improved network connection to areas that may not require or accommodate a tower. Small cell arrangements typically contain five streams of revenue: site development, radio frequency (“RF”) design, dark fiber lease, construction services, and maintenance services. Site development, RF design and construction are each separate services and are considered distinct performance obligations under ASC 606. Dark fiber and associated maintenance services constitute a lease, and as such, they are outside the scope of ASC 606 and are governed by other applicable guidance.

~~iv.~~

Construction revenue is generated from contracts to provide various construction services such as equipment installation or the laying of fiber. Construction revenue is recognized over time as construction activities occur as we are either enhancing a customer’s owned asset or constructing an asset with no alternative use to us and we would be entitled to our costs plus a reasonable profit margin if the contract was terminated early by the customer. We are utilizing our costs incurred as the measure of progress of satisfying our performance obligation.

~~Dark fiber arrangements represent operating leases under ASC 842,~~ ~~Leases~~ (“ASC 842”) and are outside the scope of ASC 606. When (a) a customer makes an advance payment or (b) a customer is contractually obligated to pay any amounts in advance, which is not deemed a separate performance obligation, deferred leasing revenue is recorded. This leasing revenue is recognized ratably over the expected term of the contract, unless the pattern of service suggests otherwise.

~~vi.~~

The Company generates revenues from other services, such as consultation services and equipment sales. Revenue from the sale of customer premise equipment and modems that are not provided as an essential part of the telecommunications services, including broadband, long distance, and enhanced services is recognized when products are delivered to and accepted by the customer. Revenue from customer premise equipment and modems provided as an essential part of the telecommunications services, including broadband, long distance, and enhanced services are recognized over time in a pattern that reflects the satisfaction of the service performance obligation.

~~Towers~~

The Towers segment represents the operations of our former towers business, Uniti Towers, through which we acquired and constructed tower and tower-related real estate, which we then leased to our customers in the United States and Latin America. Revenue from our towers business qualifies as a lease under ASC 842 and is outside the scope of ASC 606. Starting in 2019, the Company completed a series of transactions to largely divest of its towers business and on April 2, 2019, May 23, 2019 and June 1,

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~~2020, the Company completed the sales of its Latin American business, substantially all of its U.S. ground lease business, and~~ ~~its U.S. tower business, respectively~~.

~~Consumer CLEC~~

The Consumer CLEC segment represents the operations of Talk America through which we operated the Consumer CLEC Business, which provided local telephone, high-speed internet and long-distance services to customers in the eastern and central United States. Customers are billed monthly for services rendered based on actual usage or contracted amounts. The transaction price is equal to the monthly-recurring charge multiplied by the initial contract term (typically 12 months), plus any non-recurring or variable charges. As of the end of the second quarter of 2020, we substantially completed a wind down of our Consumer CLEC business.

Disaggregation of Revenue

The following table presents our revenues disaggregated by revenue stream.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2021		2020		2021		2020		(Thousands)	2022		2021		2022		2021
Revenue disaggregated by revenue stream									Revenue disaggregated by revenue stream
Revenue from contracts with customers									Revenue from contracts with customers
Fiber Infrastructure									Fiber Infrastructure
Lit backhaul	$	19,381	$	25,160	$	67,404	$	80,568	Lit backhaul	$	19,969	$	19,381	$	59,344	$	67,404
Enterprise and wholesale		20,863		19,875		63,190		58,761	Enterprise and wholesale	21,423		20,863		63,359		63,190
E-Rate and government		13,505		17,375		48,795		60,133	E-Rate and government	15,245		13,505		48,026		48,795
Other		839		2,345		2,479		3,648	Other	703		839		2,076		2,479
Fiber Infrastructure	$	54,588	$	64,755	$	181,868	$	203,110	Fiber Infrastructure	$	57,340	$	54,588	$	172,805	$	181,868
Consumer CLEC		-		-		-		651
Leasing		1,070		177		3,237		177	Leasing	1,201		1,070		3,553		3,237
Total revenue from contracts with customers		55,658		64,932		185,105		203,938	Total revenue from contracts with customers	58,541		55,658		176,358		185,105
Revenue accounted for under other applicable guidance		211,089		193,833		622,408		587,809
Revenue accounted for under leasing guidance									Revenue accounted for under leasing guidance
Leasing									Leasing	207,422		198,415		615,325		587,241
Fiber Infrastructure									Fiber Infrastructure	17,140		12,674		53,429		35,167
Total revenue accounted for under leasing guidance									Total revenue accounted for under leasing guidance	224,562		211,089		668,754		622,408
Total revenue	$	266,747	$	258,765	$	807,513	$	791,747	Total revenue	$	283,103	$	266,747	$	845,112	$	807,513

At September 30, ~~2021,~~2022 and December 31, ~~2020,~~2021, lease receivables were ~~$15.1~~$23.8 million and ~~$17.5~~$19.4 million, respectively, and receivables from contracts with customers were ~~$16.9~~$17.2 million and ~~$45.1~~$14.7 million, respectively.

Contract Assets (Unbilled Revenue) and Liabilities (Deferred Revenue)

Contract assets primarily consist of unbilled construction revenue where we are utilizing our costs incurred as the measure of progress of satisfying our performance obligation. Contract assets are reported within accounts receivable, net on our Condensed Consolidated Balance ~~Sheet.~~Sheets. When the contract price is invoiced, the related unbilled receivable is reclassified to trade accounts receivable, where the balance will be settled upon the collection of the invoiced amount. Contract liabilities are generally comprised of upfront fees charged to the customer for the cost of establishing the necessary components of the Company’s network prior to the commencement of use by the customer. Fees charged to customers for the recurring use of the Company’s network are recognized during the related periods of service. Upfront fees that are billed in advance of providing services are deferred until such time the customer accepts the Company’s network and then are recognized as service revenues ratably over a period in which substantive services required under the revenue arrangement are expected to be performed, which is the initial term of the arrangement. During the three and nine months ended September 30, ~~2021,~~2022, we recognized revenues of ~~$1.3~~$2.6 million and ~~$9.4~~$5.6 million, respectively, which was included in the December 31, ~~2020~~2021 contract liabilities balance.

The following table provides information about contract assets and contract liabilities accounted for under ASC 606.

(Thousands)

Contract Assets

Contract Liabilities

Balance at December 31, 2020

$
3,462

$
18,601

Balance at September 30, 2021

$
614

$
13,942


(Thousands)	Contract Assets		Contract Liabilities
Balance at December 31, 2021	$	4,066	$	9,099
Balance at September 30, 2022	$	391	$	11,061

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Transaction Price Allocated to Remaining Performance Obligations

Performance obligations within contracts to stand ready to provide services are typically satisfied over time or as those services are provided. Contract liabilities primarily relate to deferred revenue from upfront customer payments. The deferred revenue is recognized, and the liability reduced, over the contract term as the Company completes the performance obligation. As of September 30, ~~2021,~~2022, our future revenues (i.e., transaction price related to remaining performance obligations) under contract accounted for under ASC 606 totaled ~~$451.7~~$564.2 million, of which ~~$353.1~~$464.1 million is related to contracts that are currently being invoiced and have an average remaining contract term of ~~1.8~~2.4 years,, while ~~$98.6~~$100.1 million represents our backlog for sales bookings which have yet to be installed and have an average ~~remaining~~ contract term of 6.0 years.~~6.0~~ ~~years~~.

~~Practical Expedients and Exemptions~~

We do not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.

~~We exclude from the transaction price any amounts collected from customers for sales taxes and therefore, such amounts are not included in revenue.~~

Note 4. Leases

Lessor Accounting

We lease communications towers, ground, colocation, and dark fiber to tenants under operating leases. Our leases have initial lease terms ranging from less than one year to 35 years, most of which include options to extend or renew the leases for less than one year to 20 years (based on the satisfaction of certain conditions as defined in the lease agreements), and some of which may include options to terminate the leases within one to six ~~months.~~months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.

The components of lease income for the three and nine months ended September 30, ~~2021~~ 2022 and ~~2020,~~2021, respectively, are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2021		2020		2021		2020		(Thousands)	2022		2021		2022		2021
Lease income - operating leases	$	211,089	$	193,833	$	622,408	$	587,809	Lease income - operating leases	$	224,562	$	211,089	$	668,754	$	622,408

Lease payments to be received under non-cancellable operating leases where we are the lessor for the remainder of the lease terms as of September 30, ~~2021~~2022 are as follows:


(Thousands)	September 30, 2021⁽¹⁾		(Thousands)	September 30, 2022⁽¹⁾
2021	$	185,067
2022		753,180	2022	$	191,496
2023		760,567	2023	777,937
2024		762,163	2024	784,400
2025		763,786	2025	785,568
2026			2026	787,169
Thereafter		3,749,758	Thereafter	3,066,497
Total lease receivables	$	6,974,521	Total lease receivables	$	6,393,067
⁽¹⁾ Total future minimum lease payments to be received include $6.0 billion relating to the Windstream Leases.
(1) Total future minimum lease payments to be received include $5.5 billion relating to the Windstream Leases.			(1) Total future minimum lease payments to be received include $5.5 billion relating to the Windstream Leases.

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The underlying assets under operating leases where we are the lessor are summarized as follows:


(Thousands)	September 30, 2021			December 31, 2020			(Thousands)	September 30, 2022		December 31, 2021
Land	$	26,596		$	26,596		Land	$	26,550	$	26,593
Building and improvements		342,907			335,495		Building and improvements	344,836		343,624
Poles		278,565			266,758		Poles	293,504		281,130
Fiber		3,224,832			2,994,465		Fiber	3,465,878		3,278,276
Equipment		428			421		Equipment	428		428
Copper		3,919,421			3,850,988		Copper	3,955,180		3,918,281
Conduit		89,831			89,773		Conduit	89,925		89,859
Tower assets		1,397			1,397		Tower assets	1,397		1,397
Finance lease assets		28,126			32,660		Finance lease assets	28,126		28,126
Other assets		10,647			10,425		Other assets	10,434		10,649
		7,922,750			7,608,978			8,216,258		7,978,363
Less: accumulated depreciation		(5,364,117	)		(5,222,731	)	Less: accumulated depreciation	(5,502,245)		(5,391,479)
Underlying assets under operating leases, net	$	2,558,633		$	2,386,247		Underlying assets under operating leases, net	$	2,714,013	$	2,586,884

Depreciation expense for the underlying assets under operating leases where we are the lessor for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, is summarized as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2021		2020		2021		2020		(Thousands)	2022		2021		2022		2021
Depreciation expense for underlying assets under operating leases	$	44,763	$	50,841	$	134,783	$	160,278	Depreciation expense for underlying assets under operating leases	$	44,127	$	44,763	$	130,858	$	134,783

Lessee Accounting

We have commitments under operating leases for communications towers, ground, colocation, dark fiber lease arrangements and buildings. We also have finance leases for dark fiber lease ~~arrangements and other communications equipment.~~arrangements. Our leases have initial lease terms ranging from less than one year to 30 years, most of which include options to extend or renew the leases for less than one year to 20 years, and some of which may include options to terminate the leases within one to six ~~months.~~months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.

As of September 30, ~~2021~~,2022, we have short term lease commitments amounting to approximately ~~$2.7~~ ~~million~~.

~~The components of lease cost for the three and nine months ended September 30,~~ ~~2021 and 2020, respectively, are as follows:~~

$2.8 million.

Three Months Ended September 30,

Nine Months Ended September 30,

(Thousands)

2021

2020

2021

2020

Finance lease cost

Amortization of ROU assets

$
1,024

$
920

$
3,721

$
2,890

Interest on lease liabilities

392

943

2,019

2,890

Total finance lease cost

1,416

1,863

5,740

5,780

Operating lease cost

3,658

5,313

11,873

19,272

Short-term lease cost

907

542

2,347

1,551

Variable lease cost

95

41

391

124

Less sublease income

(3,211
)

(2,733
)

(9,439
)

(9,503
)
Total lease cost

$
2,865

$
5,026

$
10,912

$
17,224

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~~Amounts reported in the Condensed Consolidated Balance Sheets for leases where we are the lessee were as follows:~~

(Thousands)

Location on Condensed Consolidated Balance Sheets

September 30, 2021

December 31, 2020

Operating leases

ROU assets, net

Other assets, net

$
72,965

$
97,850

Lease liabilities

Accounts payable, accrued expenses and other liabilities, net

49,902

71,483

Finance leases

ROU asset, gross

Property, plant and equipment, net

$
72,254

$
128,098

Lease liabilities

Finance lease obligations

15,538

48,724

Weighted-average remaining lease term

Operating leases

8.9 years

12.2 years

Finance leases

13.0 years

13.3 years

Weighted-average discount rate

Operating leases

9.2
%

9.9
%
Finance leases

9.8
%

8.0
%

~~Other information related to leases as of September 30, 2021 and 2020, respectively,~~ ~~are as follows:~~

(Thousands)

2021

2020

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from finance leases

$
2,019

$
2,890

Operating cash flows from operating leases

14,197

22,573

Financing cash flows from finance leases

1,745

2,890

Non-cash items:

New operating leases and remeasurements, net

$
4,649

$
426

New finance leases

-

31

Future lease payments under non-cancellable leases as of September 30, ~~2021~~ 2022 are as follows:


(Thousands)	Operating Leases			Finance Leases			(Thousands)	Operating Leases		Finance Leases
2021	$	3,807		$	610
2022		13,149			2,334		2022	$	4,079	$	625
2023		10,963			2,281		2023	15,588		2,497
2024		8,558			2,082		2024	13,201		2,307
2025		5,896			2,021		2025	10,529		2,254
2026							2026	7,739		2,254
Thereafter		33,072			16,667		Thereafter	47,463		14,878
Total undiscounted lease payments	$	75,445		$	25,995		Total undiscounted lease payments	$	98,599	$	24,815
Less:�� imputed interest		(25,543	)		(10,457	)
Less: imputed interest							Less: imputed interest	(33,918)		(9,246)
Total lease liabilities	$	49,902		$	15,538		Total lease liabilities	$	64,681	$	15,569

~~Future sublease rentals as of September 30, 2021 are as follows:~~

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(Thousands)

Sublease Rentals

2021

$
2,896

2022

9,175

2023

9,252

2024

9,331

2025

9,411

Thereafter

136,554

Total

$
176,619

~~Note 5. Asset Acquisitions and Dispositions~~

~~2021 Transaction~~

~~Everstream OpCo-PropCo Transaction~~

~~On May 28, 2021, the Company completed its previously announced strategic transaction with Everstream Solutions LLC (“Everstream”).~~ As part of the transaction, Uniti entered into two 20-year dark fiber indefeasible rights of use (“IRU”) lease agreements with Everstream on Uniti owned fiber. Concurrently, Uniti sold its Uniti Fiber Northeast operations and certain dark fiber IRU contracts acquired as part of the Windstream settlement to Everstream. Total cash consideration, including upfront IRU payments, was approximately $135 million. In addition to the upfront proceeds, Uniti will receive fees of approximately $3 million annually from Everstream over the initial 20-year term of the IRU lease agreements, subject to an annual escalator of 2%. During the quarter ended June 30, 2021, we recorded a gain of $28.1 million related to this transaction, which is included in gain on sale of operations in our Condensed Consolidated Statements of Income (Loss).

(Thousands)

Assets and liabilities sold:

Assets:

Property, plant and equipment, net

$
44,685

Goodwill

17,794

Intangible assets, net

7,264

Right of use assets, net

19,841

Total assets

$
89,584

Liabilities:

Lease liabilities

$
18,779

Intangible liabilities, net

4,492

Finance lease obligations

32,343

Total liabilities

$
55,614

Cash consideration

$
62,113

Less: total assets and liabilities sold, net

(33,970
)
Gain on sale of operations

$
28,143

~~2020 Transactions~~

~~Windstream Settlement Agreement~~

~~On September 18, 2020, and in furtherance of our settlement agreement with Windstream (see Note 14~~), Uniti and Windstream closed an asset purchase agreement, as amended by a letter agreement (collectively, the “Asset Purchase Agreement”), pursuant to which (a) Uniti paid to Windstream approximately $284.6 million and (b) Windstream (i) granted to Uniti exclusive rights to use 1.8 million fiber strand miles leased by Windstream under the CLEC MLA, which fiber strands are either unutilized or utilized under certain dark fiber indefeasible rights of use (“IRUs”) that were simultaneously transferred to Uniti, (ii) conveyed to Uniti fiber assets (and

~~Table of Contents~~

underlying rights) consisting of 0.4 million fiber strand miles (covering 4,000 route miles) owned by Windstream, and (iii) transferred and assigned to subsidiaries of Uniti dark fiber IRUs relating to (x) the fiber strand miles granted to Uniti under the CLEC MLA (and described in clause (i), and (y) the fiber assets (and underlying rights) for the 0.4 million fiber strand miles conveyed to Uniti (and described in clause (ii)), which IRUs generated $28.9 million of annual EBITDA in the aggregate as of the closing of the Asset Purchase Agreement. In addition, upon the transfer of the Windstream owned fiber assets (described in clause (ii) above), Uniti granted to Windstream a 20-year IRU for certain strands included in the transferred fiber assets.

~~The Company concluded that the Asset Purchase Agreement, and the obligation for Uniti to make cash payments to Windstream in accordance with the terms of the Settlement Agreement (see Note 14), should be combined for the accounting purpose of ASC 842. As such, total consideration provided to Windstream under the Settlement has been allocated as follows:~~

(Thousands)

Consideration:

Asset Purchase Agreement

$
284,550

Fair value of settlement obligation

438,577

Total consideration

$
723,127

Fair values of the assets acquired and liabilities assumed as of the acquisition date:

Property, plant and equipment

$
170,754

Intangible assets, net

69,832

Other assets

27,632

Intangible liabilities, net

(195,091
)
Total assets acquired, net

73,127

Settlement expense

650,000

Total

$
723,127

~~Of the $69.8~~ ~~million of intangible assets acquired, $59.3 million is related to contracts (~~8 year weighted-average life) and $10.5 million is related to underlying rights agreements (30 year life). The Company determined the useful life of the contract intangible assets using the weighted-average remaining term and the rights of way intangible asset by aligning the useful life of the intangible with that of the underlying fiber assets acquired. The intangible liabilities represents below market leases, where we are the lessor, and has a weighted-average useful life of 19 years, which aligns with the term of the agreement. Acquired right of use assets $27.6 million are recorded within other assets on our Condensed Consolidated Balance Sheets.

~~Sale of Midwest Fiber Network~~

On July 1, 2020, the Company completed the sale of the entity that controlled the Company’s Midwest fiber network assets (the “Propco”) to Macquarie Infrastructure Partners (“MIP”), selling net assets having a book value of $186.5 million for total cash consideration of $167.6 million. The Company retained a 20% investment interest in the Propco, having a fair value of $41.9 million, through a newly-formed limited liability company with MIP (~~see Note 6). During the quarter ended September 30, 2020, we recorded a gain of $23.0 million related to this transaction.~~

~~Sale of U.S. Tower Portfolio~~

On June 1, 2020, the Company completed the sale of its U.S. tower business to Melody Investment Advisors LP (“Melody”), selling net assets having a book value of $190.0 million for total cash consideration of $225.8 million. The Company retained a 10% investment interest in the tower business, having a fair value of $26.0 million, through a newly formed limited partnership with Melody (~~see Note 6~~), and will receive incremental earn-out payments, estimated to be $1.6 million, which is included in other assets on the Condensed Consolidated Balance Sheet as of December 31, 2020. During the quarter ended June 30, 2020, we recorded a gain of $63.4 million related to this transaction.

Note 6.5. Investments in Unconsolidated Entities

~~As of September 30, 2021, the Company had an aggregate investment of $64.7 million in its equity method unconsolidated entities, which included a 42% interest in~~

Fiber Holdings

BB Fiber Holdings LLC (“(“Fiber Holdings”) ~~and an 8% interest in~~ ~~Harmoni Towers LP (“Harmoni”)~~.

~~Fiber Holdings~~

~~Table of Contents~~

~~Fiber Holdings~~ was primarily established to develop fiber networks as real estate property for long-term investment. On July 1, 2020, the Company completed the sale of an ownership stake in the entity that controls the Company’s Midwest fiber network assets (the “Propco”). Fiber Holdings has a 47.5% ownership in the Propco that is under a long-term, triple net lease with our joint venture partner. Our ownership interest in Fiber Holdings represents approximately a 20% economic interest in the Propco. The Company’s current investment and maximum exposure to loss as a result of its involvement with Fiber Holdings, an equity method unconsolidated entity, was approximately ~~$40.3~~$39.0 million as of September 30, ~~2021.~~2022. The Company has not provided financial support to Fiber Holdings.

Harmoni

~~Harmoni~~

~~was primarily established to develop wireless communication towers as real estate property for long-term investment. We concluded that Harmoni is a VIE; however,~~On June 21, 2022, the Company ~~determined that it was not~~completed the ~~primary beneficiary~~sale of its investment in Harmoni Towers L~~because~~P (“Harmoni”) to Palistar Communications Infrastructure GP LLC, our partner in the ~~Company lacks the power to direct the activities that most significantly impact its economic performance. The Company’s current~~ investment, ~~and maximum exposure to loss as~~for total cash consideration of $32.5 million. As a result of ~~its involvement with Harmoni was approximately $24.4~~the transaction, during the second quarter of 2022 we recorded a pre-tax gain of $7.9 million aswithin other income (expense), net and $6.7 million of ~~September 30, 2021. The Company has not provided financial support to~~ ~~Harmoni~~.

We provide transition services to Harmoni in exchange for fees and reimbursements. Total transition service fees earned in connection with Harmoni for the three and nine months ended September 30, 2021 were $0.1 million and $0.3 million, respectively, which is included in operatingincome tax expense ~~on a net basis in~~within our Condensed Consolidated Statements of ~~Income (Loss).~~

Income.

Note 7.6. Fair Value of Financial Instruments

FASB ASC 820, Fair ValueMeasurements, establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring assets and liabilities at fair values. This hierarchy establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the assessment date;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – Unobservable inputs for the asset or liability.

Our financial instruments consist of cash and cash equivalents, accounts and other receivables, derivative assets and liabilities, our outstanding notes and other debt, settlement payable, contingent consideration and accounts, interest and dividends payable.

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The following table summarizes the fair value of our financial instruments at September 30, ~~2021~~2022 and December 31, ~~2020:~~

2021:


(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)		(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At September 30, 2021
At September 30, 2022									At September 30, 2022
Liabilities									Liabilities
Senior secured notes - 7.875%, due February 15, 2025	$	2,376,990	$	-	$	2,376,990	$	-	Senior secured notes - 7.875%, due February 15, 2025	$	2,198,565	$	—	$	2,198,565	$	—
Senior secured notes - 4.75%, due April 15, 2028		579,519		-		579,519		-	Senior secured notes - 4.75%, due April 15, 2028	451,640		—		451,640		—
Senior unsecured notes - 7.125%, due December 15, 2024		616,770		-		616,770		-
Senior unsecured notes - 6.50%, due February 15, 2029		1,131,073		-		1,131,073		-
Senior unsecured notes - 6.50% , due February 15, 2029									Senior unsecured notes - 6.50% , due February 15, 2029	748,728		—		748,728		—
Senior unsecured notes - 6.00%, due January 15, 2030									Senior unsecured notes - 6.00%, due January 15, 2030	447,965		—		447,965		—
Exchangeable senior notes - 4.00%, due June 15, 2024		428,897		-		428,897		-	Exchangeable senior notes - 4.00%, due June 15, 2024	316,517		—		316,517		—
Senior secured revolving credit facility, variable rate, due December 10, 2024		179,982		-		179,982		-	Senior secured revolving credit facility, variable rate, due December 10, 2024	274,972		—		274,972		—
Settlement payable		348,500		-		348,500		-	Settlement payable	235,225		—		235,225		—
Derivative liability, net		13,606		-		13,606		-	Derivative liability, net	822		—		822		—
Total	$	5,675,337	$	-	$	5,675,337	$	-	Total	$	4,674,434	$	—	$	4,674,434	$	—

~~Table of Contents~~

(Thousands)

Total

Quoted Prices in Active Markets
(Level 1)

Prices with Other Observable Inputs
(Level 2)

Prices with Unobservable Inputs (Level 3)

At December 31, 2020

Liabilities

Senior secured notes - 6.00%, due April 15, 2023

$
561,000

$
-

$
561,000

$
-

Senior secured notes - 7.875%, due February 15, 2025

2,410,313

-

2,410,313

-

Senior unsecured notes - 8.25%, due October 15, 2023

1,112,775

-

1,112,775

-

Senior unsecured notes - 7.125%, due December 15, 2024

601,500

-

601,500

-

Exchangeable senior unsecured notes - 4.00%, due June 15, 2024

426,058

-

426,058

-

Senior secured revolving credit facility, variable rate, due April 24, 2022

110,000

-

110,000

-

Settlement payable

418,840

-

418,840

-

Derivative liability, net

22,897

-

22,897

-

Contingent consideration

2,957

-

-

2,957

Total

$
5,666,340

$
-

$
5,663,383

$
2,957


(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2021
Liabilities
Senior secured notes - 7.875%, due February 15, 2025	$	2,351,576	$	—	$	2,351,576	$	—
Senior secured notes - 4.75%, due April 15, 2028	560,857		—		560,857		—
Senior unsecured notes - 6.50% , due February 15, 2029	1,087,844		—		1,087,844		—
Senior unsecured notes - 6.00%, due January 15, 2030	659,992		—		659,992		—
Exchangeable senior notes - 4.00%, due June 15, 2024	453,104		—		453,104		—
Senior secured revolving credit facility, variable rate, due December 10, 2024	199,980		—		199,980		—
Settlement payable	254,725		—		254,725		—
Derivative liability, net	10,413		—		10,413		—
Total	$	5,578,491	$	—	$	5,578,491	$	—

The carrying value of cash and cash equivalents, accounts and other receivables, and accounts, interest and dividends payable approximate fair values due to the short-term nature of these financial instruments.

The total principal balance of our outstanding notes and other debt was ~~$5.06~~$5.25 billion at September 30, ~~2021,~~2022, with a fair value of ~~$5.31~~$4.44 billion. The estimated fair value of our outstanding notes and other debt was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy. Derivative assets and liabilities are carried at fair value.See Note 98. The fair value of an interest rate swap is determined based on the present value of expected future cash flows using observable, quoted LIBOR swap rates for the full term of the swap and also incorporate credit valuation adjustments to appropriately reflect both Uniti’s own non-performance risk and non-performance risk of the respective counterparties. The Company has

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determined that the majority of the inputs used to value its derivative assets and liabilities fall within Level 2 of the fair value hierarchy; however, the associated credit valuation adjustments utilized Level 3 inputs, such as estimates of credit spreads, to evaluate the likelihood of default by the Company and its counterparties. As of September 30, ~~2021,~~2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustment is not significant to the overall value of the derivatives. As such, the Company classifies its derivative assets and liabilities valuation in Level 2 of the fair value ~~hierarchy~~.

hierarchy.

Given the limited trade activity of the Exchangeable Notes, the fair value of the Exchangeable Notes (see Note 1110) is determined based on inputs that are observable in the market and have been classified as Level 2 in the fair value hierarchy. Specifically, we estimated the fair value of the Exchangeable Notes based on readily available external pricing information, quoted market prices, and current market rates for similar convertible debt instruments.

Uniti is required to make $490.1 million of cash payments to Windstream in equal installments over 20 consecutive quarters beginning ~~the first month after Windstream’s emergence~~October 2020 (the “Settlement Payable”).See Note 1413. The Settlement Payable was recorded at fair value, using the present value of future cash flows. The future cash flows are discounted using discount rate input based on observable market data. Accordingly, we classify inputs used as Level 2 in the fair value hierarchy. ~~The~~As of September 30, 2022, the remaining Settlement Payable is ~~$358.3~~$248.1 million and is reported on our Condensed Consolidated Balance ~~Sheet at September 30, 2021.~~Sheets. There have been no changes in the valuation methodologies used since the initial recording.

We acquired Tower Cloud, Inc. (“Tower Cloud”) on August 31, 2016. As part of the Tower Cloud acquisition, we were obligated to pay contingent consideration upon achievement of certain defined operational and financial milestones from the date of acquisition through December 31, 2021. During the three months ended March 31, 2021, the Company paid $3.0 million for the achievement of the final remaining milestone in accordance with the Tower Cloud merger agreement. During the nine months ended September 30, 2020~~, we paid $15.7 million for the achievement of certain milestones in accordance with the Tower Cloud merger agreement.~~

Changes in the fair value of contingent consideration arrangements are recorded in our Condensed Consolidated Statements of Income (Loss) in the period in which the change occurs. The final measurement of the contingent consideration was recorded during the three months ended March 31, 2021, resulting in an increase in the fair value of less than $0.1 million. For the three and nine months ended September 30, ~~2020, there was a~~ $~~1.9~~ million and $8.1 million, respectively, increase in the fair value of the contingent consideration that was recorded in other (income) expense on the Condensed Consolidated Statements of Income (Loss).

~~The following is a roll forward of our liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3):~~

~~Table of Contents~~

(Thousands)

December 31, 2020

Transfers into Level 3

(Gain)/Loss included in earnings

Settlements

September 30, 2021

Contingent consideration

$
2,957

$
-

$
22

$
(2,979
)

$
-

Note 8.7. Property, Plant and Equipment

The carrying value of property, plant and equipment is as follows:


(Thousands)	Depreciable Lives			September 30, 2021			December 31, 2020			(Thousands)	Depreciable Lives	September 30, 2022		December 31, 2021
Land	Indefinite			$	28,157		$	27,945		Land	Indefinite	$	28,678	$	28,449
Building and improvements	3 - 40 years				359,045			351,305		Building and improvements	3 - 40 years	361,592		359,980
Poles	30 years				278,565			266,758		Poles	30 years	293,504		281,130
Fiber	30 years				4,033,649			3,737,372		Fiber	30 years	4,354,532		4,107,519
Equipment	5 - 7 years				321,324			298,912		Equipment	5 - 7 years	375,340		331,761
Copper	20 years				3,919,421			3,850,987		Copper	20 years	3,955,180		3,918,281
Conduit	30 years				89,831			89,773		Conduit	30 years	89,925		89,859
Tower assets	20 years				8,545			8,571		Tower assets	20 years	8,544		8,544
Finance lease assets		(1	)		72,254			74,103		Finance lease assets	(1)	73,203		72,284
Other assets	15 - 20 years				10,648			10,553		Other assets	15 - 20 years	10,451		10,652
Corporate assets	3 - 7 years				13,924			13,475		Corporate assets	3 - 7 years	14,775		14,326
Construction in progress		(1	)		31,953			47,086		Construction in progress	(1)	40,141		27,366
					9,167,316			8,776,840				9,605,865		9,250,151
Less accumulated depreciation					(5,694,674	)		(5,503,487	)	Less accumulated depreciation		(5,912,284)		(5,741,212)
Net property, plant and equipment				$	3,472,642		$	3,273,353		Net property, plant and equipment		$	3,693,581	$	3,508,939
(1) See our Annual Report for property, plant and equipment accounting policies.

(1) See our Annual Report for property, plant and equipment accounting policies.

Depreciation expense for the three and nine months ended September 30, ~~2021~~ 2022 was ~~$65.7~~$66.1 million and ~~$196.8~~$194.9 million, respectively. Depreciation expense for the three and nine months ended September 30, ~~2020~~ 2021 was ~~$73.3~~$65.7 million and ~~$228.3~~$196.8 million, respectively.

Note 9.8. Derivative Instruments and Hedging Activities

The Company uses derivative instruments to mitigate the effects of interest rate volatility inherent in our variable rate debt, which could unfavorably impact our future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes.

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On April 27, 2015, we entered into fixed for floating interest rate swap agreements to mitigate the interest rate risk inherent in our variable rate senior secured term loan B facility. These interest rate swaps were designated as cash flow hedges and have a notional value of ~~$2.01~~$2.0 billion and mature on October 24, 2022. As a result of the repayment of the Company’s senior secured term loan B facility in February 2020, the Company entered into receive-fixed interest rate swaps to offset its existing pay-fixed interest rate swaps. As a result, the Company discontinued hedge accounting as the hedge accounting requirements were no longer met. Amounts in accumulated other comprehensive ~~(loss) income~~loss as of the date of de-designation will be reclassified to interest expense as the hedged transactions impact earnings. Prospectively, changes in fair value of all interest rate swaps will be recorded directly to earnings.

~~Table of Contents~~

The Company has elected to offset derivative positions that are subject to master netting arrangements with the same counterparty in our Condensed Consolidated Balance Sheets. The following tables present the gross amounts of our derivative instruments subject to master netting arrangements with the same counterparty as of September 30, ~~2021~~2022 and December 31, ~~2020:~~

2021:


Offsetting of Derivative Assets and Liabilities (Thousands)	Gross Amounts of Recognized Assets or Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets			Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets		Offsetting of Derivative Assets and Liabilities (Thousands)	Gross Amounts of Recognized Assets or Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets
At September 30, 2021
At September 30, 2022								At September 30, 2022
Assets								Assets
Interest rate swaps	$	16,355	$	(16,355	)	$	-	Interest rate swaps	$	1,278	$	(1,278)	$	—
Total	$	16,355	$	(16,355	)	$	-	Total	$	1,278	$	(1,278)	$	—

Liabilities								Liabilities
Interest rate swaps	$	29,961	$	(16,355	)	$	13,606	Interest rate swaps	$	2,100	$	(1,278)	$	822
Total	$	29,961	$	(16,355	)	$	13,606	Total	$	2,100	$	(1,278)	$	822


Offsetting of Derivative Assets and Liabilities (Thousands)	Gross Amounts of Recognized Assets or Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets			Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets		Offsetting of Derivative Assets and Liabilities (Thousands)	Gross Amounts of Recognized Assets or Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets
At December 31, 2020
At December 31, 2021								At December 31, 2021
Assets						��		Assets
Interest rate swaps	$	27,869	$	(27,869	)	$	-	Interest rate swaps	$	10,788	$	(10,788)	$	—
Total	$	27,869	$	(27,869	)	$	-	Total	$	10,788	$	(10,788)	$	—

Liabilities								Liabilities
Interest rate swaps	$	50,766	$	(27,869	)	$	22,897	Interest rate swaps	$	21,201	$	(10,788)	$	10,413
Total	$	50,766	$	(27,869	)	$	22,897	Total	$	21,201	$	(10,788)	$	10,413

The following table summarizes the fair value and the presentation in our Condensed Consolidated Balance Sheets:

(Thousands)

Location on Condensed

Consolidated Balance

Sheets

September 30, 2021

December 31, 2020

(Thousands)

Location on Condensed

Consolidated Balance

Sheets

September 30, 2022

December 31, 2021

Interest rate swaps

Derivative liability, net

13,606

22,897

Interest rate swaps

Derivative liability, net

822

10,413

As of September 30, ~~2021, all of~~2022, the interest rate swaps were valued in net unrealized loss positions and recognized as liability balances within ~~the~~ derivative liability, net in our Condensed Consolidated Balance ~~Sheets~~.Sheets. As hedge accounting is no longer

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applied beginning in February 2020, the unrealized loss amounts are now being recorded directly to earnings. The amount reclassified out of other comprehensive income into interest expense on our Condensed Consolidated Statements of ~~Loss~~Income for the three and nine months ended September 30, ~~2021~~2022 was $2.8 million and $8.5 million, respectively. The amount reclassified out of other comprehensive income into interest expense on our Condensed Consolidated Statements of ~~Loss~~Income for the three and nine months ended September 30, ~~2020~~2021 was $2.8 million and ~~$8.0~~$8.5 million, respectively.

During the next twelve months, beginning October 1, ~~2021,~~2022, we estimate that ~~$11.3~~$0.8 million will be reclassified as an increase to interest expense.

Exchangeable Notes Hedge Transactions

On June 25, 2019, concurrently with the pricing of the Exchangeable Notes, (~~see Note 11~~), and on June 27, 2019, concurrently with the exercise by the initial purchasers involved in the offering of the Exchangeable Notes (the “Initial Purchasers”) of their option to purchase additional Exchangeable Notes, Uniti Fiber Holdings Inc., the issuer of the Exchangeable Notes, entered into exchangeable note hedge transactions with respect to the Company’s common stock (the “Note Hedge Transactions”) with certain of the Initial Purchasers or their respective affiliates (collectively, the “Counterparties”). The Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of the Company’s common stock that initially underlie the Exchangeable Notes in the aggregate and are exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions have an initial strike price that corresponds to the initial exchange price of the Exchangeable Notes, subject to

~~Table of Contents~~

anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes. The Note Hedge Transactions will expire upon the maturity of the Exchangeable Notes, if not earlier exercised. The Note Hedge Transactions are intended to reduce potential dilution to the Company’s common stock upon any exchange of the Exchangeable Notes and/or offset any cash payments Uniti Fiber is required to make in excess of the principal amount of exchanged Exchangeable Notes, as the case may be, in the event that the market value per share of the Company’s common stock, as measured under the Note Hedge Transactions, at the time of exercise is greater than the strike price of the Note Hedge Transactions.

The Note Hedge Transactions are separate transactions, entered into by Uniti Fiber Holdings Inc. with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Note Hedge Transactions. The Note Hedge Transactions meet certain accounting criteria under GAAP, are recorded in additional paid-in capital on our Condensed Consolidated Balance Sheets and are not accounted for as derivatives that are remeasured each reporting period.

Warrant Transactions

On June 25, 2019, concurrently with the pricing of the Exchangeable Notes, and on June 27, 2019 concurrently with the exercise by the Initial Purchasers of their option to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties Warrants (the “Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately 27.8 million shares of the Company’s common stock in the aggregate at an exercise price of approximately $16.42 per share. The maximum number of shares of the Company’s common stock that could be issued pursuant to the Warrants is approximately 55.5 million. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. If the market value per share of the Company’s common stock, as measured under the Warrants, at the time of exercise exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on the Company’s common stock unless, subject to the terms of the Warrants, the Company elects to cash settle the Warrants. The Warrants will expire over a period beginning in September 2024.

The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Warrants. The Warrants meet certain accounting criteria under GAAP, are recorded in additional paid-in capital on our Condensed Consolidated Balance Sheets and are not accounted for as derivatives that are remeasured each reporting period.

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Note ~~10.~~9. Goodwill and Intangible Assets and Liabilities

~~There were 0 changes~~

Changes in the carrying amount of goodwill occurring during the ~~three and~~ nine months ended September 30, ~~2021.~~ ~~The balance of goodwill recorded in our Fiber Infrastructure segment~~ 2022 are as ~~of September 30, 2021 and December 31, 2020 is as~~ follows:

(Thousands)

Fiber Infrastructure

Total

Goodwill at December 31, 2020

$
601,878

$
601,878

Goodwill at September 30, 2021

601,878

601,878


(Thousands)	Fiber Infrastructure		Total
Goodwill at December 31, 2021	$	601,878	$	601,878
Goodwill impairment (Note 2)	(216,000)		$	(216,000)
Goodwill at September 30, 2022	$	385,878	$	385,878

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(Thousands)	September 30, 2021						December 31, 2020						(Thousands)	September 30, 2022				December 31, 2021
	Original Cost			Accumulated Amortization			Original Cost			Accumulated Amortization				Original Cost		Accumulated Amortization		Original Cost		Accumulated Amortization
Finite life intangible assets:													Finite life intangible assets:
Customer lists	$	416,104		$	(100,144	)	$	416,104		$	(82,989	)	Customer lists	$	416,104	$	(123,012)	$	416,104	$	(105,861)
Contracts		52,536			(6,567	)		48,269			(1,068	)	Contracts	52,536		(13,134)		52,536		(8,209)
Underlying Rights		10,497			(350	)		10,497			(87	)	Underlying Rights	10,497		(700)		10,497		(437)

Total intangible assets	$	479,137					$	474,870					Total intangible assets	$	479,137			$	479,137
Less: accumulated amortization		(107,061	)					(84,145	)				Less: accumulated amortization	(136,846)				(114,507)
Total intangible assets, net	$	372,076					$	390,725					Total intangible assets, net	$	342,291			$	364,630

Finite life intangible liabilities:													Finite life intangible liabilities:
Below-market leases	$	191,154			(10,695	)	$	190,086			(2,200	)	Below-market leases	$	191,154	(21,389)		$	191,154	(13,368)

Finite life intangible liabilities:													Finite life intangible liabilities:
Below-market leases	$	191,154					$	190,086					Below-market leases	$	191,154			$	191,154
Less: accumulated amortization		(10,695	)					(2,200	)				Less: accumulated amortization	(21,389)				(13,368)
Total intangible liabilities, net	$	180,459					$	187,886					Total intangible liabilities, net	$	169,765			$	177,786

As of September 30, ~~2021,~~2022, the remaining weighted average amortization period of the Company’s intangible assets ~~and liabilities~~ was ~~15.1~~ ~~years~~ ~~and 18.1 years, respectively.~~

14.4 years.

Amortization expense for the three and nine months ended September 30, ~~2021 was $4.8~~ 2022 was $7.5 million and ~~$14.3~~$22.3 million, respectively. Amortization expense for the three and nine months ended September 30, ~~2020 was $6.5~~ 2021 was $4.8 million and ~~$22.6~~$14.3 million, respectively.

Amortization expense is estimated to be $~~19.1~~$29.8 million for the full year of ~~2021, $19.1 million in~~ 2022, ~~$19.0~~$29.8 million in 2023, ~~$19.0~~$29.7 million in 2024, $29.7 million in 2025, and ~~$19.0~~$29.7 million for ~~2025.~~

2026.

We recognize the amortization of below-market leases in revenue. Revenue related to the amortization of the below-market leases for the three and nine months ended September 30, 2022 was $2.7 million and $8.0 million. During the three and nine months ended September 30, 2021, $2.7 million and $8.0 million was recorded as a benefit to amortization expense, and subsequently reclassified to revenue during the fourth quarter of 2021. As of September 30, 2022, the remaining weighted average amortization period of the Company’s intangible liabilities was 17.2 years. Revenue due to the amortization of the below-market leases is estimated to be $10.7 million for the full year of 2022, $10.7 million in 2023, $10.7 million in 2024, $10.7 million in 2025, and $10.7 million in 2026.

Note ~~11.~~10. Notes and Other Debt

All debt, including the senior secured credit facility and notes described below, are obligations of the Operating Partnership and/or certain of its subsidiaries as discussed below. The Company is, however, a guarantor of such debt.

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Notes and other debt are as follows:


(Thousands)	September 30, 2021			December 31, 2020			(Thousands)	September 30, 2022		December 31, 2021
Principal amount	$	5,055,000		$	4,965,000		Principal amount	$	5,250,000	$	5,175,000
Less unamortized discount, premium and debt issuance costs		(81,826	)		(148,476	)	Less unamortized discount, premium and debt issuance costs	(70,673)		(84,463)
Notes and other debt less unamortized discount, premium and debt issuance costs	$	4,973,174		$	4,816,524		Notes and other debt less unamortized discount, premium and debt issuance costs	$	5,179,327	$	5,090,537

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Notes and other debt at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:


	September 30, 2021					December 31, 2020						September 30, 2022				December 31, 2021
(Thousands)	Principal		Unamortized Discount, Premium and Debt Issuance Costs			Principal		Unamortized Discount, Premium and Debt Issuance Costs			(Thousands)	Principal		Unamortized Discount, Premium and Debt Issuance Costs		Principal		Unamortized Discount, Premium and Debt Issuance Costs
Senior secured notes - 6.00%, due April 15, 2023 (discount is based on imputed interest rate of 6.49%)	$	-	$	-		$	550,000	$	(4,053	)
Senior secured notes - 7.875%, due February 15, 2025 (discount is based on imputed interest rate of 8.38%)		2,250,000		(33,589	)		2,250,000		(39,852	)	Senior secured notes - 7.875%, due February 15, 2025 (discount is based on imputed interest rate of 8.38%)	$	2,250,000	$	(24,604)	$	2,250,000	$	(31,411)
Senior secured notes - 4.75%, due April 15, 2028 (discount is based on imputed interest rate of 5.04%)		570,000		(9,184	)		-		-		Senior secured notes - 4.75%, due April 15, 2028 (discount is based on imputed interest rate of 5.04%)	570,000		(7,968)		570,000		(8,886)
Senior unsecured notes - 8.25%, due October 15, 2023 (discount is based on imputed interest rate of 9.06%)		-		-			1,110,000		(22,024	)
Senior unsecured notes - 4.00%, due June 15, 2024 (discount is based on imputed interest rate of 4.77%)		345,000		(6,776	)		345,000		(69,608	)	Senior unsecured notes - 4.00%, due June 15, 2024 (discount is based on imputed interest rate of 4.77%)	345,000		(4,376)		345,000		(6,187)
Senior unsecured notes - 7.125% due December 15, 2024 (discount is based on imputed interest rate of 7.38%)		600,000		(4,526	)		600,000		(5,316	)
Senior unsecured notes - 6.50%, due February 15, 2029 (discount is based on imputed interest rate of 6.83%)		1,110,000		(21,721	)		-		-		Senior unsecured notes - 6.50%, due February 15, 2029 (discount is based on imputed interest rate of 6.83%)	1,110,000		(18,840)		1,110,000		(20,797)
Senior unsecured notes - 6.00% due January 15, 2030 (discount is based on imputed interest rate of 6.27%)											Senior unsecured notes - 6.00% due January 15, 2030 (discount is based on imputed interest rate of 6.27%)	700,000		(10,831)		700,000		(11,689)
Senior secured revolving credit facility, variable rate, due December 10, 2024		180,000		(6,030	)		110,000		(7,623	)	Senior secured revolving credit facility, variable rate, due December 10, 2024	275,000		(4,054)		200,000		(5,493)
Total	$	5,055,000	$	(81,826	)	$	4,965,000	$	(148,476	)	Total	$	5,250,000	$	(70,673)	$	5,175,000	$	(84,463)

At September 30, ~~2021,~~2022, notes and other debt included the following: (i) ~~$180.0~~$275.0 million under the Revolving Credit Facility (as defined below) pursuant to the credit agreement by and among Uniti Group LP, Uniti Group Finance 2019 Inc. and CSL Capital, LLC (the “Borrowers”), the guarantors and lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “Credit Agreement”); (ii) $2.25 billion aggregate principal amount of 7.875% Senior Secured Notes due 2025 (the “2025 Secured Notes”); (iii) $570.0 million aggregate principal amount of 4.75% Senior Secured Notes due 2028 (the “2028 Secured Notes”); (iv) ~~$600.0 million aggregate principal amount of 7.125% Senior Unsecured Notes due December 15, 2024 (the “2024 Notes”); (v)~~ $1.11 billion aggregate principal amount of 6.50% Senior Notes due February 15, 2029 (the “2029 Notes”); and ~~(vi)~~(v) $345.0 million aggregate principal amount of 4.00% Exchangeable Senior Notes due June 15, 2024 (the “Exchangeable Notes”); and (vi) $700.0 million aggregate principal amount of 6.00% Senior Unsecured Notes due January 15, 2030 (the “2030 Notes” and collectively with the 2025 Secured Notes, the 2028 Secured Notes, ~~2024~~the 2029 Notes and ~~2029~~the Exchangeable Notes, the “Notes”). U~~ntil our net leverage ratio is below 5.75 : 1.00, o~~ T~~ur 2025 Secured Notes~~ limit our ability to make cash distributions to our shareholders in amounts exceeding 90% of our good faith estimate, as of the date on which the first quarterly dividend for the relevant year is declared, of our REIT taxable income for such year, determined without regard to the dividends paid deduction and excluding any capital gains. ~~Except as disclosed herein with respect to the 2030 Notes, as described below, (see Note 17), the~~he terms of the Notes are as described in the Company’s Annual Report ~~and Quarterly Reports~~ on Form ~~10-Q~~10-K for the ~~quarters~~year ended ~~March~~December 31, ~~2021 and June 30,~~ 2021.

On October 13, 2021, the Operating Partnership, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC (the “Issuers”) issued $700 million aggregate principal amount of 6.00% Senior Unsecured Notes due 2030 (the “2030 Notes” and used the proceeds to fund the redemption in full of the 2024 Notes on December 15, 2021. On October 13, 2021, the Issuers deposited amounts sufficient to fund the redemption of the 2024 Notes with the trustee of the 2024 Notes, and to pay any related premiums, fees and expenses in connection with the foregoing, and satisfied and discharged their respective obligations under the indenture governing the 2024 Notes. ~~See Note 17~~.

Credit Agreement

The

The Borrowers are party to the Credit Agreement, which ~~after the Seventh Amendment (as defined below), provided~~provides for ~~a $60.5 million non-extended revolving credit facility that matures on April 24, 2022 (the “Non-Extended Revolving Credit Facility”) and~~ a $500 million revolving credit facility ~~extended~~ that will mature on December 10, 2024 (the ~~“Extended Revolving Credit Facility” and together with Non-Extended Revolving Credit facility, the~~ “Revolving Credit Facility”)~~, which provide~~ and provides us with the ability to obtain revolving loans as well as swingline loans and letters of credit from time to time. All obligations under the Credit Agreement are guaranteed by (i) the

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Company and (ii) certain of the Operating Partnership’s subsidiaries (the “Subsidiary Guarantors”) and are secured by substantially all of the assets of the Borrowers and the Subsidiary Guarantors.

The Borrowers are subject to customary covenants under the Credit Agreement, including an obligation to maintain a consolidated secured leverage ratio, as defined in the Credit Agreement, not to exceed 5.00 to 1.00. We are permitted, subject to customary conditions, to incur other indebtedness, so long as, on a pro forma basis after giving effect to any such indebtedness, our consolidated total leverage ratio, as defined in the Credit Agreement, does not exceed 6.50 to 1.00 and, if

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such debt is secured, our consolidated secured leverage ratio, as defined in the Credit Agreement, does not exceed 4.00 to 1.00. In addition, the Credit Agreement contains customary events of default, including a cross default provision whereby the failure of the Borrowers or certain of their subsidiaries to make payments under other debt obligations, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the Credit Agreement. In particular, a repayment obligation could be triggered if (i) the Borrowers or certain of their subsidiaries fail to make a payment when due of any principal or interest on any other indebtedness aggregating $75.0 million or more, or (ii) an event occurs that causes, or would permit the holders of any other indebtedness aggregating $75.0 million or more to cause, such indebtedness to become due prior to its stated maturity. As of September 30, ~~2021,~~2022, the Borrowers were in compliance with all of the covenants under the Credit Agreement.

A termination of either Windstream Lease would result in an “event of default” under the Credit Agreement if a replacement lease is not entered into within ninety (90) calendar days and we do not maintain pro forma compliance with a consolidated secured leverage ratio, as defined in the Credit Agreement, of 5.00 to 1.00.

~~On December 10, 2020, we entered into an amendment (the “Seventh Amendment”) to our Credit Agreement. Pursuant to the Seventh Amendment, commitments from new and existing lenders~~

Borrowings under the Revolving Credit Facility have increased to $500 million and the maturity date of such commitments has been extended to December 10, 2024. Certain non-extending lender commitments of $60.5 million will mature on April 24, 2022 and will continue to bear interest at rates previously in effect. Prior to the expiration of these commitments, the aggregate size of the Revolving Credit Facility will be $560.5 million from all lenders.

Borrowings under (a) the Non-Extended Revolving Credit Facility bear interest at a rate equal to either a base rate plus an applicable margin ranging from 3.75% to 4.25% or a eurodollar rate plus an applicable margin ranging from 4.75% to 5.25% and (b) effective April 17, 2021, following the receipt of certain routine regulatory approvals, ~~the Extended~~ Revolving Credit Facility bear interest at a rate equal to either a base rate plus an applicable margin ranging from 2.75% to 3.50% or a eurodollar rate plus an applicable margin ranging from 3.75% to 4.50%, in each case, calculated in a customary manner and determined based on our consolidated secured leverage ~~ratio~~.ratio. We are required to pay a quarterly commitment fee under the Revolving Credit Facility equal to 0.50% of the average amount of unused commitments during the applicable quarter (subject to a step-down to 0.40% per annum of the average amount of unused commitments during the applicable quarter upon achievement of a consolidated secured leverage ratio not to exceed a certain level), as well as quarterly letter of credit fees equal to the product of (A) the applicable margin with respect to eurodollar borrowings and (B) the average amount available to be drawn under outstanding letters of credit during such quarter.

Deferred Financing Cost

Deferred financing costs were incurred in connection with the issuance of the Notes and the Revolving Credit Facility. These costs are amortized using the effective interest method over the term of the related indebtedness and are included in interest expense in our Condensed Consolidated Statements of ~~Income (Loss)~~. Income. For the three and nine months ended September 30, 2022, we recognized $4.4 million and $13.0 million, respectively, of non-cash interest expense related to the amortization of deferred financing costs. For the three and nine months ended September 30, 2021, we recognized $4.2 million and $12.4 million, respectively, of non-cash interest expense related to the amortization of deferred financing costs. For the three and nine months ended September 30, 2020, we recognized $3.9 million and $11.4 million, respectively, of non-cash interest expense related to the amortization of deferred financing costs.

Note ~~12.~~11. Earnings Per Share

Our time-based restricted stock awards are considered participating securities as they receive non-forfeitable rights to dividends at the same rate as common stock. As participating securities, we included these instruments in the computation of earnings per share under the two-class method described in FASB ASC 260, Earnings per Share (“ASC 260”).

We also have outstanding performance-based restricted stock units that contain forfeitable rights to receive dividends. Therefore, the awards are considered non-participating restrictive shares and are not dilutive under the two-class method until performance conditions are met.

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The dilutive effect of the Exchangeable Notes (~~see Note 11~~) is calculated by using the ~~��if-converted”~~“if-converted” method. This assumes an add-back of interest, net of income taxes, to net income attributable to shareholders as if the securities were converted at the beginning of the reporting period (or at time of issuance, if later) and the resulting common shares included in number of weighted average shares. The dilutive effect of the Warrants (see Note 98) is calculated using the treasury-stock method. During the three and nine months ended September 30, 2022 and 2021, ~~and 2020~~, the Warrants were excluded from diluted shares outstanding because the exercise price exceeded the average market price of our common stock for the reporting period.

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The following sets forth the computation of basic and diluted earnings per share under the two-class method:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands, except per share data)	2021			2020			2021			2020			(Thousands, except per share data)	2022		2021		2022		2021
Basic earnings per share:													Basic earnings per share:
Numerator:													Numerator:
Net income (loss) attributable to shareholders	$	43,366		$	7,265		$	87,835		$	(659,332	)
Net (loss) income attributable to shareholders													Net (loss) income attributable to shareholders	$	(155,679)	$	43,366	$	(49,252)	$	87,835
Less: Income allocated to participating securities		(283	)		(229	)		(864	)		(853	)	Less: Income allocated to participating securities	(226)		(283)		(897)		(864)
Dividends declared on convertible preferred stock		(3	)		(2	)		(8	)		(6	)	Dividends declared on convertible preferred stock	(5)		(3)		(15)		(8)
Net income (loss) attributable to common shares	$	43,080		$	7,034		$	86,963		$	(660,191	)
Net (loss) income attributable to common shares													Net (loss) income attributable to common shares	$	(155,910)	$	43,080	$	(50,164)	$	86,963
Denominator:													Denominator:
Basic weighted-average common shares outstanding		233,513			198,054			232,269			194,278		Basic weighted-average common shares outstanding	235,739		233,513		235,483		232,269
Basic earnings (loss) per common share	$	0.18		$	0.04		$	0.37		$	(3.40	)
Basic (loss) earnings per common share													Basic (loss) earnings per common share	$	(0.66)	$	0.18	$	(0.21)	$	0.37


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands, except per share data)	2021			2020			2021			2020			(Thousands, except per share data)	2022		2021		2022		2021
Diluted earnings per share:													Diluted earnings per share:
Numerator:													Numerator:
Net income (loss) attributable to shareholders	$	43,366		$	7,265		$	87,835		$	(659,332	)
Net (loss) income attributable to shareholders													Net (loss) income attributable to shareholders	$	(155,679)	$	43,366	$	(49,252)	$	87,835
Less: Income allocated to participating securities		(283	)		(229	)		(864	)		(853	)	Less: Income allocated to participating securities	(226)		(283)		(897)		(864)
Dividends declared on convertible preferred stock		(3	)		(2	)		(8	)		(6	)	Dividends declared on convertible preferred stock	(5)		(3)		(15)		(8)
Impact on if-converted dilutive securities		2,984			-			-			-		Impact on if-converted dilutive securities	—		2,984		—		—
Net income (loss) attributable to common shares	$	46,064		$	7,034		$	86,963		$	(660,191	)
Net (loss) income attributable to common shares													Net (loss) income attributable to common shares	$	(155,910)	$	46,064	$	(50,164)	$	86,963
Denominator:													Denominator:
Basic weighted-average common shares outstanding		233,513			198,054			232,269			194,278		Basic weighted-average common shares outstanding	235,739		233,513		235,483		232,269
Effect of dilutive non-participating securities		338			319			271			-		Effect of dilutive non-participating securities	—		338		—		271
Impact on if-converted dilutive securities		30,570			-			-			-		Impact on if-converted dilutive securities	—		30,570		—		—
Weighted-average shares for dilutive earnings per common share		264,421			198,373			232,540			194,278		Weighted-average shares for dilutive earnings per common share	235,739		264,421		235,483		232,540
Dilutive earnings (loss) per common share	$	0.17		$	0.04		$	0.37		$	(3.40	)
Dilutive (loss) earnings per common share													Dilutive (loss) earnings per common share	$	(0.66)	$	0.17	$	(0.21)	$	0.37

For the three and nine months ended September 30, 2022, 847,147 non-participating securities were excluded from the computation of earnings per share, as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2022, 31,691,390 potential common shares related to the Exchangeable Notes were excluded from the computation of earnings per share, as their effect would have been anti-dilutive. For the nine months ended September 30, 2021, 30,569,588 potential common shares related to the Exchangeable Notes were excluded from the computation of earnings per share, as their effect would have been anti-dilutive.For the three and nine months ended September 30, 2020, 29,504,780 potential common shares related to the Exchangeable Notes were excluded from the computation of earnings per share, as their effect would have been anti-dilutive. For the nine months ended September 30, 2020, 730,863 non-participating securities were excluded from the computation of earnings per share, as their effect would have been anti-dilutive.

Note ~~13.~~12. Segment Information

~~Historically our~~

Our management, including our chief executive officer, who is our chief operating decision maker, ~~managed~~manages our operations as ~~the 4~~two reportable segments, in addition to our corporate operations, ~~as described below. Due to the sale of our towers~~

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~~business and wind down of the Consumer CLEC business, effective January 1, 2021, we manage our operations focused on our 2 primary businesses, Leasing and Fiber Infrastructure.~~

which include:

Leasing: Represents the ~~results from~~operations of our leasing business, Uniti Leasing, which is engaged in the acquisition and construction of mission-critical communications assets and leasing them ~~back~~ to anchor customers on either an exclusive or shared-tenant ~~basis.~~basis, in addition to the leasing of dark fiber on our existing dark fiber network assets that we either constructed or acquired. While the Leasing segment represents our REIT operations, certain aspects of the Leasing segment are also operated through taxable REIT subsidiaries.

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Fiber Infrastructure: Represents the operations of our fiber business, Uniti Fiber, which is a leading provider of infrastructure solutions, including cell site backhaul and dark fiber, to the telecommunications industry.

~~Towers~~Corporate: ~~Represents the operations of our former towers business, Uniti Towers, through which we acquired and constructed tower and tower-related real estate~~ ~~and leased space on communications towers to wireless service providers and other tenants in the United States and Latin America. Starting in 2019, the Company completed a series of transactions to largely divest of its towers business: on~~ April 2, 2019, May 23, 2019 and June 1, 2020, the Company completed the sales of its Latin American business, substantially all of its U.S. ground lease business, and its U.S. tower business, respectively.

~~Consumer CLEC~~: Represents the operations of Talk America through which we operated the Consumer CLEC business, which prior to Uniti’s separation and spin-off from Windstream (the “Spin-Off”) was reported as an integrated operation within Windstream. Talk America provided local telephone, high-speed internet and long-distance services to customers in the eastern and central United States. As of the end of the second quarter of 2020, we substantially completed a wind down of our Consumer CLEC business.

~~Corporate~~: Represents our corporate office and ~~back office~~shared service functions. Certain costs and expenses, primarily related to headcount, insurance, professional fees and similar charges, that are directly attributable to operations of our business segments are allocated to the respective segments.

Management evaluates the performance of each segment using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense and the impact, which may be recurring in nature, of transaction and integration related costs, costs associated with Windstream’s bankruptcy, costs associated with litigation claims made against us, costs associated with the implementation of our enterprise resource planning system, executive severance costs, costs related to the settlement with Windstream, amortization of non-cash rights-of-use assets, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, including early tender and redemption premiums and costs associated with the termination of related hedging activities, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments, and other similar or infrequent items (although we may not have had such charges in the periods presented). Adjusted EBITDA includes adjustments to reflect the Company’s share of Adjusted EBITDA from unconsolidated entities. The Company believes that net income, as defined by GAAP, is the most appropriate earnings metric; however, we believe that Adjusted EBITDA serves as a useful supplement to net income because it allows investors, analysts and management to evaluate the performance of our segments in a manner that is comparable period over period. Adjusted EBITDA should not be considered as an alternative to net income as determined in accordance with ~~GAAP~~GAAP.

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Selected financial data related to our segments is presented below for the three and nine months ended September 30, ~~2021~~ 2022 and ~~2020~~:

2021:


	Three Months Ended September 30, 2022
(Thousands)	Leasing		Fiber Infrastructure	Corporate		Subtotal of Reportable Segments
Revenues	$	208,623	74,480	$	—	$	283,103

Adjusted EBITDA	$	203,209	28,586	(6,742)		$	225,053
Less:
Interest expense						97,731
Depreciation and amortization	43,121		30,370	25		73,516
Transaction related and other costs						2,375
Gain on sale of real estate						(94)
Gain on sale of operations						(176)
Goodwill impairment						216,000
Other, net						600
Stock-based compensation						3,151
Income tax benefit						(13,056)
Adjustments for equity in earnings from unconsolidated entities						755
Net loss						$	(155,749)


	Three Months Ended September 30, 2021
(Thousands)	Leasing		Fiber Infrastructure		Corporate		Subtotal of Reportable Segments
Revenues	$	199,485	$	67,262	$	—	$	266,747

Adjusted EBITDA	$	194,303	$	27,556	$	(4,632)	$	217,227
Less:
Interest expense							94,793
Depreciation and amortization	41,432		29,036		62		70,530
Transaction related and other costs							1,063
Gain on sale of real estate							—
Gain on sale of operations							—
Other, net							4,472
Stock-based compensation							4,166
Income tax benefit							(2,244)
Adjustments for equity in earnings from unconsolidated entities							765
Net income							$	43,682

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	Three Months Ended September 30, 2021															Nine Months Ended September 30, 2022
(Thousands)	Leasing		Fiber Infrastructure		Towers		Consumer CLEC		Corporate			Subtotal of Reportable Segments			(Thousands)	Leasing	Fiber Infrastructure	Corporate		Subtotal of Reportable Segments
Revenues	$	199,485	$	67,262	$	-	$	-	$	-		$	266,747		Revenues	618,878	226,234	$	—	$	845,112

Adjusted EBITDA	$	194,303	$	27,556	$	-	$	-	$	(4,632	)	$	217,227		Adjusted EBITDA	602,531	93,628	(19,153)		$	677,006
Less:															Less:
Interest expense													94,793		Interest expense					290,280
Depreciation and amortization		41,432		29,036		-		-		62			70,530		Depreciation and amortization	127,738	89,440	98		217,276
Other expense, net													4,472
Transaction related and other costs													1,063		Transaction related and other costs					7,324
Gain on sale of real estate															Gain on sale of real estate					(344)
Gain on sale of operations															Gain on sale of operations					(176)
Goodwill impairment															Goodwill impairment					216,000
Other, net															Other, net					(6,534)
Stock-based compensation													4,166		Stock-based compensation					9,664
Income tax benefit													(2,244	)	Income tax benefit					(10,183)
Adjustments for equity in earnings from unconsolidated entities													765		Adjustments for equity in earnings from unconsolidated entities					2,816
Net income												$	43,682
Net loss															Net loss					$	(49,117)


	Three Months Ended September 30, 2020																Nine Months Ended September 30, 2021
(Thousands)	Leasing		Fiber Infrastructure		Towers		Consumer CLEC			Corporate			Subtotal of Reportable Segments			(Thousands)	Leasing		Fiber Infrastructure		Corporate		Subtotal of Reportable Segments
Revenues	$	182,370	$	76,395	$	-		-		$	-		$	258,765		Revenues	$	590,478	$	217,035	$	—	$	807,513

Adjusted EBITDA	$	181,103	$	25,419	$	-	$	(186	)	$	(7,775	)	$	198,561		Adjusted EBITDA	$	577,937	$	86,716	$	(17,444)	$	647,209
Less:																Less:
Interest expense														102,791		Interest expense							341,762
Depreciation and amortization		48,189		31,617		-		-			74			79,880		Depreciation and amortization	124,132		86,838		195		211,165
Other expense, net														3,098
Transaction related and other costs														20,816		Transaction related and other costs							5,624
Gain on sale of real estate														(22,908	)	Gain on sale of real estate							(442)
Gain on sale of operations																Gain on sale of operations							(28,143)
Other, net																Other, net							14,569
Stock-based compensation														3,341		Stock-based compensation							10,963
Income tax expense														2,801		Income tax expense							283
Adjustments for equity in earnings from unconsolidated entities														1,287		Adjustments for equity in earnings from unconsolidated entities							2,609
Net income													$	7,455		Net income							$	88,819

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Nine Months Ended September 30, 2021

(Thousands)

Leasing

Fiber Infrastructure

Towers

Consumer CLEC

Corporate

Subtotal of Reportable Segments

Revenues

$
590,478

$
217,035

$
-

$
-

$
-

$
807,513

Adjusted EBITDA

$
577,937

$
86,716

$
-

$
-

$
(17,444
)

$
647,209

Less:

Interest expense

341,762

Depreciation and amortization

124,132

86,838

-

-

195

211,165

Other expense, net

14,569

Transaction related and other costs

5,624

Gain on sale of real estate

(442
)
Gain on sale of operations

(28,143
)
Stock-based compensation

10,963

Income tax expense

283

Adjustments for equity in earnings from unconsolidated entities

2,609

Net income

$
88,819

Nine Months Ended September 30, 2020

(Thousands)

Leasing

Fiber Infrastructure

Towers

Consumer CLEC

Corporate

Subtotal of Reportable Segments

Revenues

$
552,042

$
232,942

$
6,112

$
651

$
-

$
791,747

Adjusted EBITDA

$
545,792

$
81,453

$
77

$
(461
)

$
(23,717
)

$
603,144

Less:

Interest expense

388,427

Depreciation and amortization

155,216

93,957

783

791

223

250,970

Other expense, net

12,186

Settlement expense

650,000

Transaction related and other costs

55,344

Gain on sale of real estate

(86,726
)
Stock-based compensation

10,446

Income tax benefit

(7,650
)
Adjustments for equity in earnings from unconsolidated entities

1,287

Net loss

$
(671,140
)

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Note ~~14.~~13. Commitments and Contingencies

In the ordinary course of our business, we are subject to claims and administrative proceedings, none of which we believe are material or would be expected to have, individually or in the aggregate, a material adverse effect on our business, financial condition, cash flows or results of operations.

Windstream Commitments

Following the consummation of our settlement agreement with Windstream, including entry into the Windstream Leases, we are obligated to make $490.1 million of cash payments to Windstream in equal installments over 20 consecutive

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quarters beginning in October 2020, and Uniti may prepay any installments due on or after the first anniversary of the settlement agreement (discounted at a 9% rate). ~~As of the date of this Quarterly Report on Form 10-Q, the Company made the first five quarterly payments totaling $122.5 million.~~ On October 14, 2021, the Company prepaid four installments for a total of $92.9 ~~million, $78.0 million~~million. As of ~~which was funded from a portion of~~September 30, 2022, the ~~proceeds of the 2030 Notes (see Note 17~~).

Company has made payments totaling $215.4 million.

Further, we are obligated to reimburse Windstream for up to an aggregate of $1.75 billion for certain growth capital improvements in long-term fiber and related assets made by Windstream (“Growth Capital Improvements”) through 2029. Uniti’s reimbursement commitment for Growth Capital Improvements does not require Uniti to reimburse Windstream for maintenance or repair expenditures (except for costs incurred for fiber replacements to the property leased under the competitive local exchange carrier master lease agreement, up to $70 million during the term), and each such reimbursement is subject to underwriting standards. Uniti’s total annual reimbursement commitments for the Growth Capital Improvements under both Windstream Leases (and under separate equipment loan facilities) were limited to $125 million in 2020, $225 million in 2021, and are limited to $225 million per year in ~~2021~~2022 through 2024; $175 million per year in 2025 and 2026; and $125 million per year in 2027 through 2029. If the cost incurred by Windstream (or the successor tenant under a Windstream Lease) for Growth Capital Improvements in any calendar year exceeds the annual limit for such calendar year, Windstream (or such tenant, as the case may be) may submit such excess costs for reimbursement in any subsequent year and such excess costs shall be funded from the annual commitment amounts in such subsequent period. In addition, to the extent that reimbursements for Growth Capital Improvements funded in any calendar year during the term is less than the annual limit for such calendar year, the unfunded amount in any calendar year will carry-over and may be added to the annual limits for subsequent calendar years, subject to an annual limit of $250 million in any calendar year, except that, during calendar year 2021, our combined total obligation to fund Growth Capital Improvements may exceed $250 million to the extent of any unfunded excess amounts from calendar year 2020. Accordingly, because we funded $84.7 million of the $125 million limit in 2020, we are committed to fund up to $265.3 million of Growth Capital Improvements in 2021.year. During the nine months ended September 30, ~~2021,~~2022, Uniti reimbursed ~~$152.3~~$158.1 million of Growth Capital Improvements, of which ~~$28.5~~$30.6 million ~~as allowed under the Settlement,~~ represented the reimbursement of capital improvements completed in ~~2020~~2021 that were previously classified as tenant funded capital improvements. Upon reimbursement, the Company reduced the unamortized portion of deferred revenue related to these capital improvements and capitalized the difference between the cash provided to Windstream and the unamortized deferred revenue as a lease incentive. This lease incentive, which is ~~$0.9~~$0.8 million and reported within other assets on our Condensed Consolidated Balance ~~Sheet~~Sheets as of September 30, ~~2021,~~2022, will be amortized ~~against~~as a reduction to revenue over the initial term of the Windstream Leases.

Starting on the first anniversary of each installment of reimbursement for a Growth Capital Improvement, the rent payable by Windstream under the applicable Windstream Lease will increase by an amount equal to 8.0% (the “Rent Rate”) of such installment of reimbursement. The Rent Rate will thereafter increase to 100.5% of the prior Rent Rate on each anniversary of each reimbursement. In the event that the tenant’s interest in either Windstream Lease is transferred by Windstream under the terms thereof (unless transferred to the same transferee), or if Uniti transfers its interests as landlord under either Windstream Lease (unless to the same transferee), the reimbursement rights and obligations will be allocated between the ILEC MLA and the CLEC MLA by Windstream, provided that the maximum that may be allocated to the CLEC MLA following such transfer is $20 million per year. If Uniti fails to reimburse any Growth Capital Improvement reimbursement payment or equipment loan funding request as and when it is required to do so under the terms of the Windstream Leases, and such failure continues for thirty (30) days, then such unreimbursed amounts may be applied as an offset against the rent owed by Windstream under the Windstream Leases (and such amounts will thereafter be treated as if Uniti had reimbursed them).

Uniti and Windstream have entered into separate ILEC and CLEC Equipment Loan and Security Agreements (collectively “Equipment Loan Agreement”) in which Uniti will provide up to $125 million (limited to $25 million in any calendar year) of the $1.75 billion of Growth Capital Improvements commitments discussed above in the form of loans for Windstream to purchase equipment related to network upgrades or to be used in connection with the Windstream Leases. Interest on these loans will accrue at 8% from the date of the borrowing. All equipment financed through the Equipment Loan Agreement is the sole property of Windstream; however, Uniti will receive a first-lien security interest in the equipment purchased with the loans.

Other Litigation

On July 3, 2019, SLF Holdings, LLC (“SLF”) filed a complaint against the Company, Uniti Fiber, and certain current and former officers of the Company (collectively, the “Defendants”) in the United States District Court for the Southern District of Alabama, in connection with Uniti Fiber’s purchase of Southern Light, LLC from SLF in July 2017. The complaint asserted claims for fraud and conspiracy, as well as claims under federal and Alabama securities laws, alleging that Defendants improperly failed to disclose to SLF the risk that the Spin-Off and entry into the Master Lease violated certain debt covenants of Windstream. On September 26, 2019, the action was transferred to United States District Court for the District of Delaware. On November 18, 2019, SLF filed an amended complaint, adding allegations that Defendants also failed to fully disclose the risk that the Master Lease purportedly could be recharacterized as a financing instead of a ~~“true~~

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“true lease.” The amended complaint ~~seeks~~sought compensatory and punitive damages, as well as reformation of the purchase agreement for the sale. On December 18, 2019, Defendants moved to dismiss the amended complaint in its entirety. ~~That motion was fully briefed as of February 7, 2020, and a hearing on the motion was heard on May 12, 2020.~~ On November 4, 2020, the court granted the Defendants’ motion and dismissed SLF’s amended complaint, in its entirety, with prejudice. On December 1, 2020, SLF filed a notice of appeal to the United States Court of Appeals for the Third Circuit from the district court’s dismissal order. ~~The appeal was fully briefed on September 10, 2021. Oral argument is scheduled~~On August 17, 2022, the Court of Appeals for ~~December 31, 2021.~~the Third Circuit denied SLF's appeal. We have evaluated this matter under the guidance provided by ASC ~~450-20,~~450, Contingencies (“ASC 450”), and as of the date of this Quarterly Report on Form 10-Q, we consider a loss not to be probable and are unable to estimate a reasonably possible range of loss; therefore, we have not recorded any liabilities associated with these claims in our Condensed Consolidated Balance ~~Sheet.~~Sheets.

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Beginning on October 25, 2019, several purported shareholders filed separate putative class actions in the U.S. District Court for the Eastern District of Arkansas against the Company and certain of our officers, alleging violations of the federal securities laws ~~(the “Shareholder Actions”),~~ based on claims similar to those asserted in the SLF Action. On March 12, 2020, the U.S. District Court for the Eastern District of Arkansas consolidated the Shareholder Actions and appointed lead plaintiffs and lead counsel in the consolidated cases under the caption In re Uniti Group Inc. Securities ~~Litigation.~~Litigation (the “Class Action”). On May 11, 2020, lead plaintiffs filed a consolidated amended complaint in the ~~consolidated Shareholder Actions.~~Class Action. The consolidated amended complaint seeks to represent investors who acquired the Company’s securities between April 20, 2015 and February 15, 2019. The ~~Shareholder Actions assert~~Class Action asserts claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, alleging that the Company made materially false and misleading statements by allegedly failing to disclose, among other things, the risk that the Spin-Off and entry into the Master Lease violated certain debt covenants of Windstream and/or the risk that the Master Lease purportedly could be recharacterized as a financing instead of a “true lease.” The ~~Shareholder Actions seek~~Class Action seeks class certification, unspecified monetary damages, costs and attorneys’ fees and other relief. On July 10, 2020, defendants moved to dismiss the consolidated amended complaint. On April 1, 2021, the court issued an order denying defendants’ motion to dismiss. On April 15, 2021, defendants filed a motion for reconsideration of the order or, in the alternative, for certification of an appeal of the decision to the Eighth Circuit. ~~Plaintiffs formally~~On October 25, 2021, plaintiffs filed a motion for class certification, which defendants opposed ~~this~~. On December 22, 2021, the court issued an order denying defendants’ motion for reconsideration or, in the alternative, certification of an appeal. On March 25, 2022, the parties reached an agreement to settle the Class Action, on ~~April 29, 2021.~~behalf of a settlement class, for $38.9 million, to be funded entirely by the Company’s insurance carriers. On June 17, 2022, the parties signed a stipulation of settlement and plaintiffs moved for preliminary approval of the settlement. The ~~District Court has not yet ruled~~court granted preliminary approval on ~~the motion. Discovery is ongoing. We intend~~July 20, 2022. The settlement remains subject to defend this matter vigorously, and, because it is still in its preliminary stages, we have not yet determined what effect this lawsuit will have, if any, on our financial position or results of operations. We have evaluated this matter under the guidance provided byfinal court approval. In accordance with ASC 450, we recorded $38.9 million of settlement expense within general and asadministrative expense within our Condensed Consolidated Statements of Income during the ~~date~~first quarter of ~~this Quarterly Report on Form 10-Q, we consider a loss not to be probable~~2022 and ~~are unable to estimate a reasonably possible range of loss; therefore, we have not recorded any~~accounts payable, accrued expenses and other liabilities, ~~associated with these claims in~~net within our Condensed Consolidated Balance ~~Sheet.~~Sheets as of September 30, 2022. Additionally, we recorded the probable insurance recovery of $38.9 million as a reduction to general and administrative expense during the first quarter of 2022 within our Condensed Consolidated Statements of Income, and other assets within Condensed Consolidated Balance Sheets as of September 30, 2022.

On August 17, 2021, two purported shareholders filed a derivative action on behalf of Uniti in the Circuit Court for Baltimore City, Maryland, under the caption Mayer et al. v. Gunderman et al., 24-C-21-003488 (the ~~“Derivative Complaint”~~“Mayer Derivative Action”). The Mayer Derivative ~~Complaint~~Action names Kenneth Gunderman and Mark Wallace as defendants and the Company as a nominal defendant and asserts claims for breach of fiduciary duty and unjust enrichment. The complaint alleges that the individual defendants caused the Company to issue certain false and misleading statements relating to the Spin-Off and/or the Master Lease. In particular, as in the Shareholder Actions, the complaint alleges, among other things, that ~~Defendants~~defendants failed to disclose the risk that the Spin-Off and entry into the Master Lease violated certain debt covenants of Windstream and/or the risk that the Master Lease purportedly could be recharacterized as a financing instead of a “true lease.” The complaint seeks unspecified damages, unspecified equitable relief, and related costs and fees. ~~The parties are currently discussing~~On December 23, 2021, the court entered a ~~potential~~joint stipulation to stay of the ~~action pending the outcome of the Shareholder Actions. In the meantime, the plaintiffs have agreed to extend~~Mayer Derivative Action, including the time for the defendants to respond to the ~~complaint.~~complaint, pending the outcome of the Class Action. Because this matter is still in its preliminary stages, we have not yet determined what effect this lawsuit will have, if any, on our financial position or results of operations. We have evaluated this matter under the guidance provided by ASC 450, and as of the date of this Quarterly Report on Form 10-Q, we consider a loss not to be probable and are unable to estimate a reasonably possible range of loss; therefore, we have not recorded any liabilities associated with these claims in our Condensed Consolidated Balance ~~Sheet.~~Sheets.

On February 11, 2022, a purported shareholder filed a derivative action on behalf of Uniti in the federal District Court for the District of Maryland, under the caption Guzzo et al. v. Gunderman et al., 1:22-cv-00366-GLR (the “Guzzo Derivative Action”). The complaint names Kenneth Gunderman, Mark Wallace, Francis Frantz, David Solomon, Jennifer Banner, and Scott Bruce as defendants and the Company as a nominal defendant and asserts claims for contribution against Gunderman and Wallace if the Company is found to be liable for violations of the federal securities laws in the Class Action and claims against all the individual defendants for breaches of fiduciary duty, waste of corporate assets, and unjust enrichment. The allegations in the Guzzo Derivative Action are similar to those in the Mayer Derivative Action and the Class Action. The

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complaint seeks unspecified damages, equitable relief, and related costs and fees. On March 16, 2022, the court entered a joint stipulation to stay the Guzzo Derivative Action, including the time for the defendants to respond to the complaint, pending the outcome of the Class Action. We intend to defend this matter vigorously, and, because it is still in its relatively early stages, we have not yet determined what effect this lawsuit will have, if any, on our financial position or results of operations.

We maintain insurance policies that would provide coverage to various degrees for potential liabilities arising from the legal proceedings described above.

Under the terms of the tax matters agreement entered into on April 24, 2015 by the Company, Windstream Services, LLC and Windstream (the “Tax Matters Agreement”), in connection with the Spin-Off, we are generally responsible for any taxes imposed on Windstream that arise from the failure of the Spin-Off and the debt exchanges to qualify as tax-free for U.S. federal income tax purposes, within the meaning of Section 355 and Section 368(a)(1)(D) of the Code, as applicable, to the extent such failure to qualify is attributable to certain actions, events or transactions relating to our stock, indebtedness, assets or business, or a breach of the relevant representations or any covenants made by us in the Tax Matters Agreement, the materials submitted to the IRS in connection with the request for the private letter ruling or the representations provided in connection with the tax opinion. We believe that the probability of us incurring obligations under the Tax Matters Agreement are remote; and therefore, we have recorded 0no such liabilities in our Condensed Consolidated Balance ~~Sheet~~Sheets as of September 30, ~~2021.~~

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Note ~~15.~~14. Accumulated Other Comprehensive ~~(Loss) Income~~

Loss

Changes in accumulated other comprehensive ~~(loss) income~~loss by component is as follows for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~

2021:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2021			2020			2021			2020			(Thousands)	2022		2021		2022		2021
Cash flow hedge changes in fair value (loss) gain:
Balance at beginning of period attributable to common shareholders	$	(30,353	)	$	(30,353	)	$	(30,353	)	$	(23,442	)
Other comprehensive loss before reclassifications		-			-			-			(7,713	)
Amounts reclassified from accumulated other comprehensive income		-			-			-			677
Balance at end of period		(30,353	)		(30,353	)		(30,353	)		(30,478	)
Less: Other comprehensive loss attributable to noncontrolling interest		-			-			-			(125	)
Balance at end of period attributable to common shareholders		(30,353	)		(30,353	)		(30,353	)		(30,353	)
Cash flow hedge changes in fair value:													Cash flow hedge changes in fair value:
Balance at beginning of period attributable to shareholders													Balance at beginning of period attributable to shareholders	$	(30,353)	$	(30,353)	$	(30,353)	$	(30,353)
Balance at end of period attributable to shareholders													Balance at end of period attributable to shareholders	(30,353)		(30,353)		(30,353)		(30,353)
Interest rate swap termination:													Interest rate swap termination:
Balance at beginning of period attributable to common shareholders		15,561			4,416			9,986			-
Balance at beginning of period attributable to shareholders													Balance at beginning of period attributable to shareholders	26,837		15,561		21,189		9,986
Amounts reclassified from accumulated other comprehensive income		2,830			2,829			8,488			7,325		Amounts reclassified from accumulated other comprehensive income	2,829		2,830		8,488		8,488
Balance at end of period		18,391			7,245			18,474			7,325		Balance at end of period	29,666		18,391		29,677		18,474
Less: Other comprehensive income attributable to noncontrolling interest		22			47			105			127		Less: Other comprehensive income attributable to noncontrolling interest	$	1	22		12		105
Balance at end of period attributable to common shareholders		18,369			7,198			18,369			7,198
Balance at end of period attributable to shareholders													Balance at end of period attributable to shareholders	29,665		18,369		29,665		18,369
Accumulated other comprehensive loss at end of period	$	(11,984	)	$	(23,155	)	$	(11,984	)	$	(23,155	)	Accumulated other comprehensive loss at end of period	$	(688)	$	(11,984)	$	(688)	$	(11,984)

Note ~~16.~~15. Capital Stock

The limited partner equity interests in our operating partnership (commonly called “OP Units”), are exchangeable on a ~~1-for-one~~one-for-one basis for shares of our common stock or, at our election, cash of equivalent value. ~~On August 2, 2021, the Company exchanged 2,528,199~~No OP Units held by a third ~~party~~parties were exchanged during the three months ended September 30, 2022. During the nine months ended September 30, 2022, the Company exchanged 591,349 OP Units held by third parties, of which 244,683 OP Units were exchanged for an equal number of common shares of the ~~Company. The~~Company and 346,667 OP Units were exchanged ~~represented~~for cash consideration of $4.6 million, representing approximately ~~73%~~85% of the OP Units held by a third ~~party~~parties with a carrying value of ~~$50.4~~$11.9 million as of the exchange ~~date.~~

~~Note 17. Subsequent Events~~

dates.

~~2030 Notes~~

On October 13, 2021, the Issuers issued $700.0 million aggregate principal amount of 6.00% Senior Notes due 2030. The Issuers deposited a portion of the net proceeds from the offering with the trustee for the Issuers’ outstanding 2024 Notes sufficient to fund the redemption thereof on December 15, 2021, and to pay any related premiums, fees and expenses in connection with the foregoing. Upon such deposit, the Issuers’ obligations under the 2024 Notes and indenture were discharged. The Company used the remaining proceeds of $78.0 million to prepay a portion of the settlement obligations under the settlement agreement with Windstream. ~~See Note 14~~.

The 2030 Notes were issued at an issue price of 100% of their principal amount pursuant to an Indenture, dated as of October 13, 2021 (the “2030 Indenture”), among the Issuers, the guarantors named therein (collectively, the “Guarantors”) and Deutsche Bank Trust Company Americas, as trustee (in such capacity, the “Trustee”). The 2030 Notes mature on January 15, 2030 and bear interest at a rate of 6.000% per year. Interest on the 2030 Notes is payable on January 15 and July 15 of each year, beginning on July 15, 2022.

The Issuers may redeem the 2030 Notes, in whole or in part, at any time prior to January 15, 2025 at a redemption price equal to 100% of the principal amount of the 2030 Notes redeemed plus accrued and unpaid interest on the 2030 Notes, if any, to, but not including, the redemption date, plus an applicable “make whole” premium described in the 2030 Indenture. Thereafter, the Issuers may redeem

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the 2030 Notes in whole or in part, at the redemption prices set forth in the 2030 Indenture. Further, at any time on or prior to January 15, 2025, up to 40% of the aggregate principal amount of the 2030 Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price of 106.000% of the principal amount plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date; provided that at least 60% of aggregate principal amount of the originally issued 2030 Notes remains outstanding. If certain changes of control of Uniti Group LP occur, holders of the 2030 Notes will have the right to require the Issuers to offer to repurchase their 2030 Notes at 101% of their principal amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

The 2030 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and by each of Uniti Group LP’s existing and future domestic restricted subsidiaries (other than the Issuers and certain regulated subsidiaries) that guarantees indebtedness under the Company’s senior secured credit facilities and existing notes (collectively, the “Guarantors”). In addition, the Issuers will use commercially reasonable efforts to obtain necessary regulatory approval to allow such non-guarantor subsidiaries of the Company to guarantee the 2030 Notes, including by making filings to obtain such approval within 60 days of the issuance of the 2030 Notes. The guarantees are subject to release under specified circumstances, including certain circumstances in which such guarantees may be automatically released without the consent of the holders of the 2030 Notes.

The 2030 Notes and the related guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior unsecured indebtedness and senior in right of payment to any of the Issuers’ and the Guarantors’ subordinated indebtedness. The 2030 Notes and related guarantees are effectively subordinated to all of the Issuers’ and Guarantors’ secured indebtedness (including the senior secured credit facilities and secured notes) to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all existing and future liabilities (including trade payables) of the Issuers’ subsidiaries that do not guarantee the 2030 Notes.

The 2030 Indenture contains customary high yield covenants limiting the ability of Uniti Group LP and its restricted subsidiaries to: incur or guarantee additional indebtedness; incur or guarantee secured indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell assets; enter into transactions with affiliates; merge or consolidate or sell all or substantially all of their assets; and create restrictions on the ability of the Issuers and their restricted subsidiaries to pay dividends or other amounts to the Issuers. These covenants are subject to a number of important and significant limitations, qualifications and exceptions. The 2030 Indenture also contains customary events of default.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition, and changes in financial condition for the three and nine months ended September 30, ~~2021~~. 2022. This discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements, and the notes thereto set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on ~~March 5, 2021,~~February 25, 2022, as amended by Amendment No. 1 thereto filed on Form 10-K/A with the SEC on March ~~30, 2021~~22, 2022 (the “Annual Report”).

Overview

Company Description

Uniti Group Inc. (the “Company”, “Uniti”, “we”, “us” or “our”) is an independent, internally managed real estate investment trust (“REIT”) engaged in the acquisition ~~construction~~ and ~~leasing~~construction of mission critical infrastructure in the communications industry. We are principally focused on acquiring and constructing fiber optic, copper and coaxial broadband networks and data ~~centers~~.

centers.

On April 24, 2015, we were separated and spun-off (the “Spin-Off”) from Windstream Holdings, Inc. (“Windstream Holdings” and together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”) pursuant to which Windstream contributed certain telecommunications network assets, including fiber and copper networks and other real estate (the “Distribution Systems”) and a small consumer competitive local exchange carrier (“CLEC”) business (the “Consumer CLEC Business”) to Uniti and Uniti issued common stock and indebtedness and paid cash obtained from borrowings under Uniti’s senior credit facilities to Windstream. In connection with the Spin-Off, we entered into a long-term exclusive triple-net lease (the “Master Lease”) with Windstream, pursuant to which a substantial portion of our real property is leased to Windstream and from which a substantial portion of our leasing revenues are currently ~~derived~~.derived. In connection with Windstream’s emergence from bankruptcy,, Uniti and Windstream bifurcated the Master Lease and entered into two structurally similar master leases (collectively, the “Windstream Leases”), which amended and restated the Master Lease in its entirety. The Windstream Leases consist of (a) a master lease (the

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~~“ILEC~~ “ILEC MLA”) that governs Uniti owned assets used for Windstream’s incumbent local exchange carrier (“ILEC”) operations and (b) a master lease (the “CLEC MLA”) that governs Uniti owned assets used for Windstream’s CLEC operations.

Uniti operates as a REIT for U.S. federal income tax purposes. As a REIT, the Company is generally not subject to U.S. federal income taxes on income generated by its REIT operations, which includes income derived from the Windstream Leases. We have elected to treat the subsidiaries through which we operate our fiber business, Uniti Fiber, certain aspects of our leasing business, Uniti Leasing, certain aspects of our former towers business, and Talk America Services, LLC, which operated the Consumer CLEC Business (“Talk America”), as taxable REIT subsidiaries (“TRSs”). TRSs enable us to engage in activities that result in income that does not constitute qualifying income for a REIT. Our TRSs are subject to U.S. federal, state and local corporate income ~~taxes~~taxes..

The Company operates through a customary up-REIT structure, pursuant to which we hold substantially all of our assets through a partnership, Uniti Group LP, a Delaware limited partnership (the “Operating Partnership”), that we control as general partner. This structure is intended to facilitate future acquisition opportunities by providing the Company with the ability to use common units of the Operating Partnership as a tax-efficient acquisition currency. As of September 30, ~~2021,~~2022, we are the sole general partner of the Operating Partnership and own approximately ~~99.6%~~99.96% of the partnership interests in the Operating Partnership.

In addition, we have undertaken a series of transactions to permit us to hold certain assets through subsidiaries that are taxed as REITs, which may also facilitate future acquisition opportunities.

We aim to grow and diversify our portfolio and tenant base by pursuing a range of transaction structures with communication service providers, including (i) sale-leaseback transactions, whereby we acquire existing infrastructure assets from third parties, including communication service providers, and lease them back on a long-term triple-net basis; (ii) leasing of dark fiber and selling of lit services on our existing fiber network assets that we either constructed or acquired; (iii) whole company acquisitions, which may include the use of one or more TRSs that are permitted under the tax laws to acquire and operate non-REIT businesses and assets subject to certain limitations; (iv) capital investment financing, whereby we offer communication service providers a cost efficient method of raising funds for discrete capital investments to upgrade or expand their network; and (v) mergers and acquisitions financing, whereby we facilitate mergers

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and acquisition transactions as a capital partner, including through operating company-property company (“OpCo-PropCo”) ~~structures. Consistent with this strategy, we regularly evaluate and consider potential opportunities.~~

structures.

Segments

We ~~have historically managed~~manage our operations as the ~~four~~two reportable business segments, ~~listed below (in~~in addition to our corporate ~~operations), but due to the sale of our towers business and wind down of the Consumer CLEC Business, effective January 1, 2021, we manage our~~ operations, ~~focused on our two primary businesses, Leasing and Fiber Infrastructure:~~which include:

Leasing Segment: Represents the ~~results from~~operations of our leasing business, Uniti Leasing, which is engaged in the acquisition and construction of mission-critical communications assets and leasing them to anchor customers on either an exclusive or shared-tenant basis,~~. Uniti~~ in addition to the leasing of dark fiber on our existing fiber network assets that we either constructed or acquired. While the Leasing ~~is a component of~~segment represents our REIT ~~operations.~~operations, certain aspects of the Leasing segment are also operated through TRSs.

Fiber Infrastructure Segment: Represents the operations of our fiber business, Uniti Fiber, which is a leading provider of infrastructure solutions, including cell site backhaul and dark fiber, to the telecommunications ~~industry~~industry..

~~Towers Segment: Represents~~ the operations of our former towers business, Uniti Towers, through which we acquired and constructed tower and tower-related real estate and leased space on communications towers to wireless service providers and other tenants in the United States. Starting in 2019, the Company completed a series of transactions to largely divest of its towers business and on April 2, 2019, May 23, 2019 and June 1, 2020, the Company completed the sales of its Latin American business, substantially all of its U.S. ground lease business, and its U.S. tower business, respectively. Portions of our former towers business were a component of our REIT operations, while the remainder were owned and operated by our TRSs.

~~Consumer CLEC Segment: Represents~~ the operations of Talk America through which we operated the Consumer CLEC Business that, prior to the Spin-Off, was reported as an integrated operation within Windstream. Talk America provided local telephone, high-speed internet and long-distance services to customers in the eastern and central United States. As of the end of the second quarter of 2020, we substantially completed a wind down of our Consumer CLEC Business.

Corporate Operations: Represents our corporate office and shared service functions. Certain costs and expenses, primarily related to headcount, information technology systems, insurance, professional fees and similar charges, that are directly attributable to operations of our business segments are allocated to the respective ~~segments~~segments..

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We evaluate the performance of each segment based on Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense and the impact, which may be recurring in nature, of transaction and integration related costs, costs associated with Windstream’s bankruptcy, costs associated with litigation claims made against us, costs associated with the implementation of our enterprise resource planning system, executive severance costs, costs related to the settlement with Windstream, amortization of non-cash rights-of-use assets, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, including early tender and redemption premiums and costs associated with the termination of related hedging activities, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments, and other similar or infrequent items (although we may not have had such charges in the periods presented). Adjusted EBITDA includes adjustments to reflect the Company’s share of Adjusted EBITDA from unconsolidated ~~entities.~~entities. For more information on Adjusted EBITDA, see “Non-GAAP Financial Measures.” Detailed information about our segments can be found in Note 1312 to our accompanying Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~Significant Business Developments~~

~~Unsecured Notes Offering and Redemption~~.On October 13, 2021, the Operating Partnership, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC (the “Issuers”) issued $700 million aggregate principal amount of 6.00% Senior Unsecured Notes due 2030 (the “2030 Notes”) and used the proceeds to fund the redemption in full of their outstanding 7.125% Senior Notes due 2024 (the “2024 Notes”) on December 15, 2021. On October 13, 2021, the Issuers deposited amounts sufficient to fund the redemption of the 2024 Notes with the trustee of the 2024 Notes, and to pay any related premiums, fees and expenses in connection with the foregoing, and satisfied and discharged their respective obligations under the indenture governing the 2024 Notes. The Company used the remaining proceeds of $78.0 million to prepay a portion of the settlement obligations under the settlement agreement with Windstream. ~~See Notes 14~~ ~~and~~ 17~~to our accompanying Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~

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Results of Operations

Comparison of the three months ended September 30, ~~2021~~2022 and ~~2020~~

2021

The following table sets forth ~~for the periods indicated,~~ our results of operations expressed as dollars and as a percentage of total ~~revenues:~~

revenues for the periods indicated:


	Three Months Ended September 30,									Three Months Ended September 30,
	2021				2020					2022			2021
(Thousands)	Amount			% of Revenues	Amount			% of Revenues	(Thousands)	Amount		% of Revenues	Amount		% of Revenues
Revenues:									Revenues:
Leasing	$	199,485		74.8%	$	182,370		70.5%	Leasing	$	208,623	73.7%	$	199,485	74.8%
Fiber Infrastructure		67,262		25.2%		76,395		29.5%	Fiber Infrastructure	74,480		26.3%	67,262		25.2%
Tower		-		0.0%		-		0.0%
Consumer CLEC		-		0.0%		-		0.0%
Total revenues		266,747		100.0%		258,765		100.0%	Total revenues	283,103		100.0%	266,747		100.0%
Costs and Expenses:									Costs and Expenses:
Interest expense		94,793		35.6%		102,791		39.8%
Interest expense, net									Interest expense, net	97,731		34.5%	94,793		35.6%
Depreciation and amortization		70,530		26.4%		79,880		30.9%	Depreciation and amortization	73,516		26.1%	70,530		26.4%
General and administrative expense		25,077		9.4%		26,659		10.3%	General and administrative expense	26,863		9.5%	25,077		9.4%
Operating expense (exclusive of depreciation and amortization)		34,167		12.8%		37,831		14.6%	Operating expense (exclusive of depreciation and amortization)	36,291		12.8%	34,167		12.8%
Goodwill impairment									Goodwill impairment	216,000		76.3%	—		—%
Transaction related and other costs		1,063		0.4%		20,816		8.0%	Transaction related and other costs	2,375		0.8%	1,063		0.4%
Gain on sale of real estate		-		0.0%		(22,908	)	(8.9%)	Gain on sale of real estate	(94)		0.0%	—		—%
Other expense, net		283		0.1%		3,098		1.2%
Gain on sale of operations									Gain on sale of operations	(176)		(0.1%)	—		—%
Other (income) expense, net									Other (income) expense, net	74		0.0%	283		0.1%
Total costs and expenses		225,913		84.7%		248,167		95.9%	Total costs and expenses	452,580		159.9%	225,913		84.7%
Income before income taxes and equity in earnings from unconsolidated entities		40,834		15.3%		10,598		4.1%
(Loss) income before income taxes and equity in earnings from unconsolidated entities									(Loss) income before income taxes and equity in earnings from unconsolidated entities	(169,477)		(59.8)%	40,834		15.3%
Income tax (benefit) expense		(2,244	)	(0.9%)		2,801		1.1%	Income tax (benefit) expense	(13,056)		(4.6%)	(2,244)		(0.9%)
Equity in (earnings) loss from unconsolidated entities		(604	)	(0.2%)		342		0.1%
Net income		43,682		16.4%		7,455		2.9%
Net income attributable to noncontrolling interests		316		0.1%		190		0.1%
Net income attributable to shareholders		43,366		16.3%		7,265		2.8%
Equity in earnings from unconsolidated entities									Equity in earnings from unconsolidated entities	(672)		(0.2%)	(604)		(0.2%)
Net (loss) income									Net (loss) income	(155,749)		(55.0%)	43,682		16.4%
Net (loss) income attributable to noncontrolling interests									Net (loss) income attributable to noncontrolling interests	(70)		0.0%	316		0.1%
Net (loss) income attributable to shareholders									Net (loss) income attributable to shareholders	(155,679)		(55.0)%	43,366		16.3%
Participating securities' share in earnings		(283	)	(0.1%)		(229	)	(0.1%)	Participating securities' share in earnings	(226)		(0.1%)	(283)		(0.1%)
Dividends declared on convertible preferred stock		(3	)	(0.0%)		(2	)	(0.0%)	Dividends declared on convertible preferred stock	(5)		0.0%	(3)		0.0%
Net income attributable to common shareholders	$	43,080		16.2%	$	7,034		2.7%
Net (loss) income attributable to common shareholders									Net (loss) income attributable to common shareholders	$	(155,910)	(55.1)%	$	43,080	16.2%

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The following tables set forth revenues, Adjusted EBITDA and net income of our reportable segments for the three months ended September 30, ~~2021~~2022 and ~~2020, revenues, Adjusted EBITDA and net (loss) income of our reportable segments:~~

2021:


	Three Months Ended September 30, 2021															Three Months Ended September 30, 2022
(Thousands)	Leasing		Fiber Infrastructure		Towers		Consumer CLEC		Corporate			Subtotal of Reportable Segments			(Thousands)	Leasing		Fiber Infrastructure		Corporate		Subtotal of Reportable Segments
Revenues	$	199,485	$	67,262	$	-	$	-	$	-		$	266,747		Revenues	$	208,623	$	74,480	$	—	$	283,103

Adjusted EBITDA	$	194,303	$	27,556	$	-	$	-	$	(4,632	)	$	217,227		Adjusted EBITDA	$	203,209	$	28,586	$	(6,742)	$	225,053
Less:															Less:
Interest expense													94,793		Interest expense							97,731
Depreciation and amortization		41,432		29,036		-		-		62			70,530		Depreciation and amortization	43,121		30,370		25		73,516
Other expense, net													4,472
Gain on sale of real estate															Gain on sale of real estate							(94)
Gain on sale of operations															Gain on sale of operations							(176)
Goodwill impairment															Goodwill impairment							216,000
Other, net															Other, net							600
Transaction related and other costs													1,063		Transaction related and other costs							2,375
Stock-based compensation													4,166		Stock-based compensation							3,151
Income tax benefit													(2,244	)	Income tax benefit							(13,056)
Adjustments for equity in earnings from unconsolidated entities													765		Adjustments for equity in earnings from unconsolidated entities							755
Net income												$	43,682
Net loss															Net loss							$	(155,749)


	Three Months Ended September 30, 2020																Three Months Ended September 30, 2021
(Thousands)	Leasing		Fiber Infrastructure		Towers		Consumer CLEC			Corporate			Subtotal of Reportable Segments			(Thousands)	Leasing		Fiber Infrastructure		Corporate		Subtotal of Reportable Segments
Revenues	$	182,370	$	76,395	$	-		-		$	-		$	258,765		Revenues	$	199,485	$	67,262	$	—	$	266,747

Adjusted EBITDA	$	181,103	$	25,419	$	-	$	(186	)	$	(7,775	)	$	198,561		Adjusted EBITDA	$	194,303	$	27,556	$	(4,632)	$	217,227
Less:																Less:
Interest expense														102,791		Interest expense							94,793
Depreciation and amortization		48,189		31,617		-		-			74			79,880		Depreciation and amortization	41,432		29,036		62		70,530
Other expense, net														3,098
Other, net																Other, net							4,472
Transaction related and other costs														20,816		Transaction related and other costs							1,063
Gain on sale of real estate														(22,908	)	Gain on sale of real estate							—
Gain on sale of operations																Gain on sale of operations							—
Stock-based compensation														3,341		Stock-based compensation							4,166
Income tax expense														2,801
Income tax benefit																Income tax benefit							(2,244)
Adjustments for equity in earnings from unconsolidated entities														1,287		Adjustments for equity in earnings from unconsolidated entities							765
Net income													$	7,455		Net income							$	43,682

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Summary of Operating Metrics


	Operating Metrics						Operating Metrics
	As of September 30,						September 30,
	2021		2020		% Increase / (Decrease)		2022	2021	% Increase / (Decrease)
Operating metrics:						Operating metrics:
Leasing:						Leasing:
Fiber strand miles		4,890,000		4,500,000	8.7%	Fiber strand miles	5,140,000	4,890,000	5.1%
Copper strand miles		230,000		230,000	0.0%	Copper strand miles	230,000	230,000	0.0%
Fiber Infrastructure:						Fiber Infrastructure:
Fiber strand miles		2,590,000		2,200,000	17.7%	Fiber strand miles	2,840,000	2,590,000	9.7%
Customer connections		25,897		25,885	0.0%	Customer connections	27,615	25,897	6.6%

Revenues


	Three Months Ended September 30,								Three Months Ended September 30,
	2021				2020				2022			2021
(Thousands)	Amount		% of Consolidated Revenues	��	Amount		% of Consolidated Revenues	(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues
Revenues:								Revenues:
Leasing	$	199,485	74.8%		$	182,370	70.5%	Leasing	$	208,623	73.7%	$	199,485	74.8%
Fiber Infrastructure		67,262	25.2%			76,395	29.5%	Fiber Infrastructure	74,480		26.3%	67,262		25.2%
Towers		-	0.0%			-	0.0%
Consumer CLEC		-	0.0%			-	0.0%
Total revenues	$	266,747	100.0%		$	258,765	100.0%	Total revenues	$	283,103	100.0%	$	266,747	100.0%

Leasing – Leasing revenues are primarily attributable to rental revenue from leasing our Distribution Systems to Windstream pursuant to the Windstream Leases (and historically, the Master Lease). Under the Windstream Leases, Windstream is responsible for the costs related to operating the Distribution Systems, including property taxes, insurance, and maintenance and repair costs. As a result, we do not record an obligation related to the payment of property taxes, as Windstream makes direct payments to the taxing authorities. The initial term of the Windstream Leases expires on April 30, 2030. ~~The aggregate initial annual~~Annual rent under the Windstream Leases for the full year 2022 is ~~$663~~$668.9 million ~~equal to the annual rent under the Master Lease previously in effect,~~ and is subject to annual escalation at a rate of 0.5%. For a description of the Windstream Leases, see “Liquidity and Capital Resources—Windstream Master Lease and Windstream Leases” below.

The rent for the first year of each renewal term will be an amount agreed to by us and Windstream. While the agreement requires that the renewal rent be “Fair Market Rent,” if we are unable to agree, the renewal Fair Market Rent will be determined by an independent appraisal process. Commencing with the second year of each renewal term, the renewal rent will increase at an escalation rate of 0.5%.

Pursuant to the Windstream Leases, Windstream (or any successor tenant under a Windstream Lease) has the right to cause Uniti to reimburse up to an aggregate $1.75 billion for certain growth capital improvements in long-term value accretive fiber and related assets made by Windstream (or the applicable tenant under the Windstream Lease) to certain ILEC and CLEC properties (the “Growth Capital Improvements” or “GCIs”). Uniti’s reimbursement commitment for Growth Capital Improvements does not require Uniti to reimburse Windstream for maintenance or repair expenditures (except for costs incurred for fiber replacements to the CLEC MLA leased property, up to $70 million during the term), and each such reimbursement is subject to underwriting standards. Uniti’s total annual reimbursement commitments to Windstream for the Growth Capital Improvements ~~under both~~ is discussed below in “Liquidity and Capital Resources—Windstream ~~Leases (and under separate equipment loan facilities) are limited to $225 million per year in 2021 through 2024; $175 million per year in 2025~~Master Lease and ~~2026; and $125 million per year in 2027 through 2029. If the cost incurred by~~ Windstream (or the successor tenant under a Windstream Lease) for Growth Capital Improvements in any calendar year exceeds the annual limit for such calendar year, Windstream (or such tenant, as the case may be) may submit such excess costs for reimbursement in any subsequent year and such excess costs shall be funded from the annual commitment amounts in such subsequent period. In addition, to the extent that reimbursements for Growth Capital Improvements funded in any calendar year during the term is less than the annual limit for such calendar year, the unfunded amount in any calendar year will carry-over and may be added to the annual limits for subsequent calendar years, subject to an annual limit of $250 million in any calendar year, except that, during calendar year 2021, Uniti’s combined total obligation to fund Growth Capital Improvements may exceed $250 million to the extent of any unfunded excess amounts from calendar year 2020. ~~Accordingly,~~

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~~because we funded $84.7 million of the $125 million limit in 2020, we are committed to fund up to $265.3 million of Growth Capital Improvements in 2021.~~

Leases.”

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payment or equipment loan funding request as and when it is required to do so under the terms of the Windstream Leases, and such failure continues for thirty (30) days, then such unreimbursed amounts may be applied as an offset against the rent owed by Windstream under the Windstream Leases (and such amounts will thereafter be treated as if Uniti had reimbursed them).

The Windstream Leases provide that tenant funded capital improvements (“TCIs”), defined as maintenance, repair, overbuild, upgrade or replacement to the Distribution Systems, including without limitation, the replacement of copper distribution systems with fiber distribution systems, automatically become property of Uniti upon their construction by Windstream. We receive non-monetary consideration related to TCIs as they automatically become our property, and we recognize the cost basis of TCIs that are capital in nature as real estate investments and deferred revenue. We depreciate the real estate investments over their estimated useful lives and amortize the deferred revenue as additional leasing revenues over the same depreciable life of the TCI assets. TCIs exclude Growth Capital Improvements as and when reimbursed by Uniti.


	Three Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Segment Revenues	Amount		% of Segment Revenues
Leasing revenues:
Windstream Leases:
Cash revenue
Cash rent	$	167,500	80.3%	$	166,666	83.5%
GCI revenue	3,914		1.9%	—		—%
Total cash revenue	171,414		82.2%	166,666		83.5%
Non-cash revenue
TCI revenue	10,939		5.2%	9,929		5.0%
GCI revenue	3,624		1.7%	3,505		1.8%
Other straight-line revenue	2,241		1.1%	3,085		1.5%
Total non-cash revenue	16,804		8.0%	16,519		8.3%
Total Windstream revenue	188,218		90.2%	183,185		91.8%
Other services	20,405		9.8%	16,300		8.2%
Total Leasing revenues	$	208,623	100.0%	$	199,485	100.0%

The increase in TCI revenue is attributable to continued investment by Windstream. As of September 30, 2022 and 2021, the total amount invested in TCIs by Windstream since the inception of the Windstream Leases and Master Lease was $1.1 billion and $986.7 million, respectively.

The increase in GCI revenue is attributable to Uniti’s continued reimbursement of Growth Capital Improvements. During the three months ended September 30, ~~2021,~~2022, Uniti reimbursed ~~$60.2~~$66.4 million of Growth Capital ~~Improvements~~.Improvements. Subsequent to September 30, ~~2021,~~2022, Windstream requested, and we reimbursed ~~$16.5~~$27.4 million of qualifying Growth Capital Improvements. As of the date of this Quarterly Report on Form 10-Q, we have reimbursed a total of ~~$253.5~~$491.7 million of Growth Capital ~~Improvements~~.

Improvements.

Three Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Segment Revenues

Amount

% of Segment Revenues

Leasing revenues:

Windstream Leases:

Cash rent

$
166.7

83.5%

$
165.8

90.9%

Non-cash revenue

TCI revenue

10.0

5.0%

9.2

5.0%

Straight-line revenue

6.5

3.3%

0.5

0.3%

Total non-cash revenue

16.5

8.3%

9.7

5.3%

Total Windstream revenue

183.2

91.8%

175.5

96.2%

Other triple-net leasing and dark fiber IRU

16.3

8.2%

6.9

3.8%

Total Leasing revenues

$
199.5

100.0%

$
182.4

100.0%

~~The increase in TCI revenue is attributable to continued investment by Windstream, which invested $34.2~~We recognized $20.4 million ~~in TCIs during the three months ended September 30, 2021. The total amount invested in TCIs by Windstream since the inception of the Windstream Leases~~ and ~~Master Lease was $986.7 million as of September 30, 2021. For the three months ended September 30, 2021, we recognized~~ $16.3 million of ~~leasing~~ revenues from other services including non-Windstream triple-net leasing and dark fiber indefeasible rights of use (“IRU”)

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~~arrangements. For~~ arrangements for the three months ended September 30, ~~2020, we recognized $6.9 million from non-Windstream triple-net leasing~~2022 and ~~dark fiber IRU arrangements.~~

2021, respectively.

Because a substantial portion of our revenue and cash flows are derived from lease payments by Windstream pursuant to the Windstream Leases, there could be a material adverse impact on our consolidated results of operations, liquidity, financial condition and/or ability to maintain our status as a REIT and service debt if Windstream were to become unable to generate sufficient cash to make payments to us.

Prior to its emergence from bankruptcy on September 21, 2020, Windstream was a publicly traded company and was subject to the periodic filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Windstream’s historic filings through their quarter ended ~~September~~June 30, 2020 can be found at www.sec.gov. Additionally, the

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Windstream audited financial statements as of December 31, 2021, and for the year ended December 31, 2021, as of December 31, 2020 and for the period from September 22, 2020 to December 31, 2020 and ~~as of December 31, 2019 and~~ for the period from January 1, 2020 to September 21, 2020 and for ~~each of~~ the ~~two years in the period~~year ended December 31, 2019 are included as an exhibit to our Annual Report. On September 22, 2020, Windstream filed a Form 15 to terminate all filing obligations under Section 12(g) and 15(d) under the Exchange Act. Windstream filings are not incorporated by reference in this Quarterly Report on Form 10-Q.

Windstream.

Fiber Infrastructure – Fiber Infrastructure revenues for the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 consisted of the following:


	Three Months Ended September 30,							Three Months Ended September 30,
	2021			2020				2022			2021
(Thousands)	Amount		% of Segment Revenues	Amount		% of Segment Revenues	(Thousands)	Amount		% of Segment Revenues	Amount		% of Segment Revenues
Fiber Infrastructure revenues:							Fiber Infrastructure revenues:
Lit backhaul services	$	19,381	28.8%	$	25,160	33.0%	Lit backhaul services	$	19,969	26.8%	$	19,381	28.8%
Enterprise and wholesale		20,863	31.1%		19,875	26.0%	Enterprise and wholesale	21,423		28.8%	20,863		31.1%
E-Rate and government		13,505	20.1%		17,375	22.7%	E-Rate and government	15,245		20.5%	13,505		20.1%
Dark fiber and small cells		12,674	18.8%		11,640	15.2%	Dark fiber and small cells	17,140		23.0%	12,674		18.8%
Other services		839	1.2%		2,345	3.1%	Other services	703		0.9%	839		1.2%
Total Fiber Infrastructure revenues	$	67,262	100.0%	$	76,395	100.0%	Total Fiber Infrastructure revenues	$	74,480	100.0%	$	67,262	100.0%

For the three months ended September 30, ~~2021,~~2022, Fiber Infrastructure revenues totaled ~~$67.3~~$74.5 million as compared to ~~$76.4~~$67.3 million for the three months ended September 30, ~~2020. As of September 30, 2021, we had approximately 25,897 customer connections, up from 25,885 customer connections as of September 30, 2020. The $9.1 million decrease in~~2021. Fiber Infrastructure revenues isincreased $7.2 million, primarily ~~attributable~~due to ~~a $4.7~~an increase in one-time early termination revenues of $4.0 million ~~decrease in lit backhaul service~~within dark fiber and small cells revenues ~~related~~and an increase of $2.4 million within Enterprise and Wholesale revenues primarily due to the Uniti Fiber Northeast operations sold on May 28, 2021, a $1.9 million decrease related to the wind down of our construction activities, shown above within E-rate and government, and a $3.1 million decrease in equipment sales and installation revenue.

increased customer connections.

~~Towers~~ ~~– For the three months ended September 30, 2021, we recognized no revenue from the Towers business, as we~~ ~~completed the sale of our U.S. tower business on June 1, 2020.~~

Table of Contents

~~Consumer CLEC~~ – For the three months ended September 30, 2021, we recognized no revenue from the Consumer CLEC Business, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.

Interest Expense, net


	Three Months Ended September 30,										Three Months Ended September 30,
(Thousands)	2021			2020			Increase / (Decrease)			(Thousands)	2022		2021		% Increase / (Decrease)
Interest expense, net:										Interest expense, net:
Cash:										Cash:
Senior secured notes - 4.75%, 6.00% and 7.875%		49,691			52,547			(2,856	)
Senior unsecured notes - 4.00%, 6.50%. 7.125% and 8.25%		32,176			37,031			(4,855	)
Senior secured notes										Senior secured notes	$	51,066	$	49,691	1,375
Senior unsecured notes										Senior unsecured notes	31,988		32,176		(188)
Senior secured revolving credit facility - variable rate		2,210			710			1,500		Senior secured revolving credit facility - variable rate	3,539		2,210		1,329
Tender premium payment										Tender premium payment	—		—		—
Interest rate swap termination		2,829			2,829			-		Interest rate swap termination	2,829		2,829		—
Other		366			1,082			(716	)	Other	985		366		619
Total cash interest		87,272			94,199			(6,927	)	Total cash interest	90,407		87,272		3,135
Non-cash:										Non-cash:
Amortization of deferred financing costs and debt discount		4,352			9,037			(4,685	)	Amortization of deferred financing costs and debt discount	4,495		4,352		143
Write off of deferred financing costs and debt discount										Write off of deferred financing costs and debt discount	—		—		—
Accretion of settlement payable		4,117			-			4,117		Accretion of settlement payable	2,946		4,117		(1,171)
Capitalized Interest		(948	)		(445	)		(503	)
Capitalized interest										Capitalized interest	(117)		(948)		831
Total non-cash interest		7,521			8,592			(1,071	)	Total non-cash interest	7,324		7,521		(197)
Total interest expense, net	$	94,793		$	102,791		$	(7,998	)	Total interest expense, net	$	97,731	$	94,793	$	2,938
⁽¹⁾ Swapped to fixed rate. See Note 9

Interest expense for the three months ended September 30, ~~2021 decreased $8.0~~2022 increased $2.9 million compared to the three months ended September 30, ~~2020.~~2021. The ~~decrease~~increase is primarily ~~due~~attributable to ~~lower~~higher cash interest expense of ~~$6.9~~$3.1 million, ~~resulting from~~a $1.2 million decrease in accretion expense associated with the ~~extinguishment of~~settlement payable, and a $0.8 million decrease in capitalized interest during the ~~6.00% Senior Secured Notes due 2023 (the “2023 Secured Notes”) and 8.25% Senior Unsecured Notes due 2023 (the “2023 Notes”).~~

three months ended September 30, 2022.

Depreciation and Amortization Expense


	Three Months Ended September 30,									Three Months Ended September 30,
(Thousands)	2021			2020		Increase / (Decrease)			(Thousands)	2022		2021		% Increase / (Decrease)
Depreciation and amortization expense by segment:									Depreciation and amortization expense by segment:
Depreciation expense									Depreciation expense
Leasing	$	42,376		$	48,189	$	(5,813	)	Leasing	$	41,392	$	42,376	$	(984)
Fiber Infrastructure		23,318			25,105		(1,787	)	Fiber Infrastructure	24,653		23,318		1,335
Corporate		62			74		(12	)	Corporate	25		62		(37)
Towers		-			-		-
Consumer CLEC		-			-		-
Total depreciation expense		65,756			73,368		(7,612	)	Total depreciation expense	66,070		65,756		314
Amortization expense									Amortization expense
Leasing		(944	)		-		(944	)	Leasing	1,729		(944)		2,673
Fiber Infrastructure		5,718			6,512		(794	)	Fiber Infrastructure	5,717		5,718		(1)
Corporate		-			-		-
Towers		-			-		-
Consumer CLEC		-			-		-
Total amortization expense		4,774			6,512		(1,738	)	Total amortization expense	7,446		4,774		2,672
Total depreciation and amortization expense	$	70,530		$	79,880	$	(9,350	)	Total depreciation and amortization expense	$	73,516	$	70,530	$	2,986

~~Table of Contents~~

Leasing – Leasing depreciation expense decreased ~~$5.8~~$1.0 million for the ~~quarter~~three months ended September 30, 2022 compared to the three months ended September 30, 2021. The decrease is primarily attributable to an increase in fully depreciated Windstream Distribution System assets of $1.1 million, partially offset by a $0.2 million increase related to asset additions since September 30, 2021. During the three months ended September 30, 2021, $2.7 million was recorded as ~~compared~~a benefit to amortization expense, and subsequently reclassified to revenue during the quarter ended September 30, 2020. The decrease is attributable to a $7.6 million decrease related to the natural decrease in remaining useful life of the Windstream Distribution System assets which utilize the group composite depreciation method, partially offset by a $1.4 million increase in depreciation expense related to the asset purchase agreement the Company entered into with Windstream which was completed in the thirdfourth quarter of ~~2020 (the “Asset Purchase Agreement”), which is discussed in greater detail in Note 5 to our accompanying Condensed Consolidated Financial Statements in Part I, Item 1~~2021.

Table of ~~this Quarterly Report on Form 10-Q. The $0.9 million decrease in amortization expense relates to intangible liabilities assumed from Windstream under the Asset Purchase Agreement.~~Contents

Fiber Infrastructure – Fiber Infrastructure depreciation ~~and amortization~~ expense ~~decreased~~increased $1.3 million for the ~~quarter~~three months ended September 30, ~~2021 as~~2022 compared to the ~~quarter~~three months ended September 30, ~~2020.~~2021. The ~~$1.8 million decrease~~increase in depreciation expense is primarily attributable to ~~the Everstream transaction completed on May 28,~~asset additions since September 30, 2021.~~See Note 5. The $0.8 million decrease in amortization expense relates to a trademark intangible asset, associated with the wind down of the construction business, that became fully amortized in 2020.~~

General and Administrative Expense

Three Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Consolidated Revenues

Amount

% of Consolidated Revenues

General and administrative expense by segment:

Fiber Infrastructure

$
13,427

5.1%

$
14,538

5.6%

Leasing

2,254

0.8%

1,735

0.7%

Corporate

9,396

3.5%

10,304

4.0%

Towers

-

0.0%

-

0.0%

Consumer CLEC

-

0.0%

82

0.0%

Total general and administrative expenses

$
25,077

9.4%

$
26,659

10.3%

General and administrative expenses include compensation costs, including stock-based compensation awards, professional and legal services, corporate office costs and other costs associated with administrative ~~activities. For~~activities of our segments.


	Three Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues
General and administrative expense by segment:
Leasing	$	3,368	1.2%	$	2,254	0.8%
Fiber Infrastructure	14,820		5.2%	13,427		5.1%
Corporate	8,675		3.1%	9,396		3.5%
Total general and administrative expenses	$	26,863	9.5%	$	25,077	9.4%

Leasing – Leasing general and administrative expense increased $1.1 million for the three months ended September 30, ~~2021, general and administrative costs totaled $25.1 million.~~ ~~For~~2022 compared to the three months ended September 30, ~~2020, general and administrative costs totaled~~ ~~$26.7~~ ~~million.~~2021. The ~~decrease in general and administrative expenses~~increase is primarily attributable to a ~~decrease of approximately $1.0~~$0.7 million increase in ~~insurance~~personnel expenses driven by incremental customer growth, a $0.1 million increase in legal fees, and a $0.3 million increase in other operating expenses.

Fiber Infrastructure – Fiber Infrastructure general and administrative expense increased $1.4 million for the ~~period.~~three months ended September 30, 2022 compared to the three months ended September 30, 2021. This increase is primarily attributable to a $0.5 million increase in advertising expenses, a $0.4 million increase in regulatory and professional fees, a $0.2 million increase in personnel expenses driven by incremental customer growth, and a $0.3 million increase in other operating expenses.

Corporate – Corporate general and administrative expense decreased $0.7 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. The decrease is primarily attributable to a $1.2 million decrease in personnel expenses, partially offset by a $0.2 million increase in computer software and maintenance expenses and a $0.1 increase in facility expenses.

Operating Expense

Operating expense for the three months ended September 30, ~~2021 decreased~~2022 increased by ~~$3.7~~$2.1 million from the three months ended September 30, ~~2020, which was primarily attributable to decreases in Fiber Infrastructure, Towers and Consumer CLEC Business operating expenses offset by an increase in Leasing operating expenses discussed below.~~2021. Operating expense for our reportable segments for the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 consisted of the ~~following~~following:


	Three Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues
Operating expense by segment:
Leasing	$	4,679	1.7%	$	5,184	1.9%
Fiber Infrastructure	31,612		11.1%	28,983		10.9%
Total operating expenses	$	36,291	12.8%	$	34,167	12.8%

Three Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Consolidated Revenues

Amount

% of Consolidated Revenues

Operating expenses by segment:

Fiber Infrastructure

$
28,983

10.9%

$
37,122

14.4%

Leasing

5,184

1.9%

605

0.2%

Towers

-

0.0%

-

0.0%

CLEC

-

0.0%

104

0.0%

Total operating expenses

$
34,167

12.8%

$
37,831

14.6%

Table of Contents

~~Fiber Infrastructure~~Leasing – Leasing operating expense decreased $0.5 million for the ~~For~~three months ended September 30, 2022 and as compared to the three months ended September 30, ~~2021,~~ 2021. The decrease is primarily driven by lower network related expenses of $0.6 million.

Fiber Infrastructure – Fiber Infrastructure operating expenses ~~totaled $29.0 million as compared to $37.1~~increased $2.6 million for the three months ended September 30, ~~2020.~~2022 compared to the three months ended September 30, 2021. Operating expense consists of network related costs, such as dark fiber and tower rents, ~~and~~ lit service and maintenance ~~expense. In addition,~~expense and costs associated with our construction ~~activities are presented within operating expenses.~~activities. The ~~$8.1 million decrease~~increase in operating expenses is primarily attributable to ~~decreases~~increases in ~~construction related~~personnel expense of $1.2 million, dark fiber early termination fees of $0.6 million, property taxes of $0.4 million, and unsplicing expenses of ~~$2.8~~$0.4 million.

Goodwill Impairment

~~Leasing~~ ~~– Leasing operating expense was $5.2 million and $0.6 million for~~goodwill impairment in the Fiber Infrastructure reporting unit during the three months ended September 30, ~~2021 and 2020, respectively. The increase is primarily driven by a $4.1 million increase~~2022.See Note 2 of Notes to Condensed Consolidated Financial Statements in ~~network expenses due to the Asset Purchase Agreement the Company entered into with Windstream which was completed in the third quarter~~Part I Item 1 of ~~2020~~.

~~Towers~~ ~~– For the three months ended September 30, 2021, Towers operating expenses were not incurred as the U.S. tower business sale was completed~~this Quarterly Report on ~~June 1, 2020~~Form 10-Q..

~~Consumer CLEC~~ – For the three months ended September 30, 2021, Consumer CLEC Business operating expenses were not incurred, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.

Transaction Related and Other Costs

Transaction related and other costs included incremental acquisition, pursuit, transaction and integration costs (including unsuccessful acquisition pursuit costs), costs incurred as a result of Windstream’s bankruptcy filing, costs associated with Windstream’s claims against us and costs associated with the implementation of our ~~new~~ enterprise resource planning system. For the three months ended September 30, ~~2021~~,2022, we incurred ~~$1.1~~$2.4 million of transaction related and other costs, compared to ~~$20.8~~$1.1 million of such costs during the three months ended September 30, ~~2020~~2021. ~~The decrease is primarily related to incurring $16.4 million of total costs related to the Windstream bankruptcy for the three months ended September 30, 2020.~~

Income Tax ~~(Benefit) Expense~~

Benefit

The income tax ~~(benefit) expense~~benefit recorded for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, is related to the tax impact of the following:


	Three Months Ended September 30,							Three Months Ended September 30,
(Thousands)	2021			2020			(Thousands)	2022		2021
Income tax (benefit) expense							Income tax (benefit) expense
Pre-tax loss (Fiber Infrastructure)	$	(3,476	)	$	3,606		Pre-tax loss (Fiber Infrastructure)	$	(14,555)	$	(3,476)
Gain on sale of operations		-			-		Gain on sale of operations	—		—
Gain on sale of unconsolidated entity							Gain on sale of unconsolidated entity	—		—
Other undistributed REIT taxable income		778			-		Other undistributed REIT taxable income	963		778
REIT state and local taxes		352			-		REIT state and local taxes	516		352
Other		102			(805	)	Other	20		102
Total income tax (benefit) expense	$	(2,244	)	$	2,801		Total income tax (benefit) expense	$	(13,056)	$	(2,244)

~~Table of Contents~~

Comparison of the nine months ended September 30, ~~2021~~2022 and ~~2020~~

2021

The following table sets forth ~~for the periods indicated,~~ our results of operations expressed as dollars and as a percentage of total ~~revenues:~~

revenues for the periods indicated:

Nine Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Revenues

Amount

% of Revenues

Revenues:

Leasing

$
590,478

73.1%

$
552,042

69.7%

Fiber Infrastructure

217,035

26.9%

232,942

29.4%

Tower

-

0.0%

6,112

0.8%

Consumer CLEC

-

0.0%

651

0.1%

Total revenues

807,513

100.0%

791,747

100.0%

Costs and Expenses:

Interest expense

341,762

42.3%

388,427

49.2%

Depreciation and amortization

211,165

26.2%

250,970

31.7%

General and administrative expense

75,800

9.4%

81,686

10.3%

Operating expense (exclusive of depreciation and amortization)

105,436

13.1%

118,308

14.9%

Settlement expense

-

0.0%

650,000

82.1%

Transaction related and other costs

5,624

0.7%

55,344

7.0%

Gain on sale of real estate

(442
)

(0.1%)

(86,726
)

(11.0%)

Gain on sale of operations

(28,143
)

(3.5%)

-

0.0%

Other expense

8,758

1.1%

12,186

1.5%

Total costs and expenses

719,960

89.2%

1,470,195

185.7%

Income (loss) before income taxes and equity in earnings (loss) from unconsolidated entities

87,553

10.8%

(678,448
)

(85.7%)

Income tax expense (benefit)

283

0.0%

(7,650
)

(0.9%)

Equity in (earnings) loss from unconsolidated entities

(1,549
)

(0.2%)

342

0.0%

Net income (loss)

88,819

11.0%

(671,140
)

(84.8%)

Net income (loss) attributable to noncontrolling interests

984

0.1%

(11,808
)

(1.5%)

Net income (loss) attributable to shareholders

87,835

10.9%

(659,332
)

(83.3%)

Participating securities' share in earnings

(864
)

(0.1%)

(853
)

(0.1%)

Dividends declared on convertible preferred stock

(8
)

(0.0%)

(6
)

(0.0%)

Net income (loss) attributable to common shareholders

$
86,963

10.8%

$
(660,191
)

(83.4%)

Table of Contents


	Nine Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Revenues	Amount		% of Revenues
Revenues:
Leasing	$	618,878	73.2%	$	590,478	73.1%
Fiber Infrastructure	226,234		26.8%	217,035		26.9%
Total revenues	845,112		100.0%	807,513		100.0%
Costs and Expenses:
Interest expense, net	290,280		34.3%	341,762		42.3%
Depreciation and amortization	217,276		25.7%	211,165		26.2%
General and administrative expense	75,818		8.9%	75,800		9.4%
Operating expense (exclusive of depreciation and amortization)	108,184		12.8%	105,436		13.1%
Goodwill impairment	216,000		25.6%	—		—%
Transaction related and other costs	7,324		0.9%	5,624		0.7%
Gain on sale of real estate	(344)		0.0%	(442)		(0.1)%
Gain on sale of operations	(176)		0.0%	(28,143)		(3.5)%
Other (income) expense, net	(8,254)		(1.0%)	8,758		1.1%
Total costs and expenses	906,108		107.2%	719,960		89.2%
(Loss) income before income taxes and equity in earnings from unconsolidated entities	(60,996)		(7.2)%	87,553		10.8%
Income tax (benefit) expense	(10,183)		(1.2%)	283		0.0%
Equity in earnings from unconsolidated entities	(1,696)		(0.2%)	(1,549)		(0.2%)
Net (loss) income	(49,117)		(5.8%)	88,819		11.0%
Net (loss) income attributable to noncontrolling interests	135		0.0%	984		0.1%
Net (loss) income attributable to shareholders	(49,252)		(5.8)%	87,835		10.9%
Participating securities' share in earnings	(897)		(0.1%)	(864)		(0.1%)
Dividends declared on convertible preferred stock	(15)		0.0%	(8)		0.0%
Net (loss) income attributable to common shareholders	$	(50,164)	(5.9)%	$	86,963	10.8%

The following tables set forth revenues, Adjusted EBITDA and net income of our reportable segments for the nine months ended September 30, ~~2021~~ 2022 and ~~2020, revenues, Adjusted EBITDA and net (loss) income of our reportable segments:~~

2021:

Table of Contents


	Nine Months Ended September 30, 2022
(Thousands)	Leasing		Fiber Infrastructure		Corporate		Subtotal of Reportable Segments
Revenues	$	618,878	$	226,234	$	—	$	845,112

Adjusted EBITDA	$	602,531	$	93,628	$	(19,153)	$	677,006
Less:
Interest expense							290,280
Depreciation and amortization	127,738		89,440		98		217,276
Gain on sale of real estate							(344)
Gain on sale of operations							(176)
Goodwill impairment							216,000
Other, net							(6,534)
Transaction related and other costs							7,324
Stock-based compensation							9,664
Income tax benefit							(10,183)
Adjustments for equity in earnings from unconsolidated entities							2,816
Net loss							$	(49,117)


	Nine Months Ended September 30, 2021
(Thousands)	Leasing		Fiber Infrastructure		Corporate		Subtotal of Reportable Segments
Revenues	$	590,478	$	217,035	$	—	$	807,513

Adjusted EBITDA	$	577,937	$	86,716	$	(17,444)	$	647,209
Less:
Interest expense							341,762
Depreciation and amortization	124,132		86,838		195		211,165
Other, net							14,569
Transaction related and other costs							5,624
Gain on sale of real estate							(442)
Gain on sale of operations							(28,143)
Stock-based compensation							10,963
Income tax expense							283
Adjustments for equity in earnings from unconsolidated entities							2,609
Net income							$	88,819

Table of Contents

Revenues


	Nine Months Ended September 30,							Nine Months Ended September 30,
	2021			2020				2022			2021
(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues	(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues
Revenues:							Revenues:
Leasing	$	590,478	73.1%	$	552,042	69.7%	Leasing	$	618,878	73.2%	$	590,478	73.1%
Fiber Infrastructure		217,035	26.9%		232,942	29.4%	Fiber Infrastructure	226,234		26.8%	217,035		26.9%
Towers		-	0.0%		6,112	0.8%
Consumer CLEC		-	0.0%		651	0.1%
Total revenues	$	807,513	100.0%	$	791,747	100.0%	Total revenues	$	845,112	100.0%	$	807,513	100.0%

Leasing – Leasing revenues for the nine months ended September 30, 2022 and 2021 consisted of the following:


	Nine Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Segment Revenues	Amount		% of Segment Revenues
Leasing revenues:
Windstream Leases:
Cash revenue
Cash rent	$	501,390	81.0%	$	498,896	84.5%
GCI revenue	8,734		1.4%	—		—%
Total cash revenue	510,124		82.4%	498,896		84.5%
Non-cash revenue
TCI revenue	32,010		5.2%	28,761		4.8%
GCI revenue	11,073		1.7%	7,730		1.3%
Other straight-line revenue	7,851		1.3%	10,394		1.8%
Total non-cash revenue	50,934		8.2%	46,885		7.9%
Total Windstream revenue	561,057		90.7%	545,780		92.4%
Other services	57,821		9.3%	44,697		7.6%
Total Leasing revenues	$	618,878	100.0%	$	590,478	100.0%

The increase in GCI revenue is attributable to Uniti’s continued reimbursement of Growth Capital Improvements. During the nine months ended September 30, ~~2021,~~2022, Uniti reimbursed ~~$152.3~~$158.1 million of Growth Capital Improvements, of which $28.5 million, as allowed for under the Settlement, represented the reimbursement of capital improvements completed in 2020 that were previously classified as TCIs. Upon reimbursement, the Company reduced the unamortized portion of deferred revenue related to these capital improvements and capitalized the difference between the cash provided to Windstream and the unamortized deferred revenue as a ~~lease incentive. This~~ lease incentive, which is $0.9 million and reported within other assets on our Condensed Consolidated Balance Sheet as of September 30, 2021, will be amortized against revenue over the initial term of the Windstream Leases.Improvements. Subsequent to September 30, ~~2021,~~2022, Windstream requested, and we reimbursed ~~$16.5~~$27.4 million of qualifying Growth Capital Improvements. As of the date of this Quarterly Report on Form 10-Q, we have reimbursed a total of ~~$253.5~~$491.7 million of Growth Capital ~~Improvements~~.

Improvements.

Nine Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Segment Revenues

Amount

% of Segment Revenues

Leasing revenues:

Windstream leases:

Cash rent

$
498.9

84.5%

$
496.4

89.9%

Non-cash revenue

TCI revenue

28.8

4.8%

26.2

4.7%

Straight-line revenue

18.1

3.1%

0.4

0.1%

Total non-cash revenue

46.9

7.9%

26.6

4.8%

Total Windstream revenue

545.8

92.4%

523.0

94.7%

Other triple-net leasing and dark fiber IRU

44.7

7.6%

29.0

5.3%

Total Leasing revenues

$
590.5

100.0%

$
552.0

100.0%

~~The increase in TCI revenue is attributable to continued investment by Windstream, which invested $141.0~~We recognized $57.8 million ~~in TCIs during~~and $44.7 million of revenues from non-Windstream triple-net leasing, dark fiber IRU arrangements, and other services for the nine months ended September 30, ~~2021.~~2022 and 2021, respectively. The ~~total amount invested in TCIs by Windstream since the inception~~increase is primarily related to continued lease-up of ~~the Windstream Leases and Master Lease was $986.7 million as~~our network to new customers.

Table of September 30, 2021. For the nine months ended September 30, 2021, we recognized $44.7 million of leasing revenues from non-Windstream triple-net leasing and dark fiber IRU arrangements. For the nine months ended September 30, 2020, we recognized $29.0 million from non-Windstream triple-net leasing and dark fiber IRU arrangements.

Contents

Fiber Infrastructure – Fiber Infrastructure revenues for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 consisted of the following:


	Nine Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Segment Revenues	Amount		% of Segment Revenues
Fiber Infrastructure revenues:
Lit backhaul services	$	59,344	26.3%	$	67,404	31.0%
Enterprise and wholesale	63,359		28.0%	63,190		29.1%
E-Rate and government	48,026		21.2%	48,795		22.5%
Dark fiber and small cells	53,429		23.6%	35,167		16.2%
Other services	2,076		0.9%	2,479		1.1%
Total Fiber Infrastructure revenues	$	226,234	100.0%	$	217,035	100.0%

~~Table of Contents~~

Nine Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Segment Revenues

Amount

% of Segment Revenues

Fiber Infrastructure revenues:

Lit backhaul services

$
67,404

31.1%

$
80,568

34.6%

Enterprise and wholesale

63,190

29.1%

58,761

25.2%

E-Rate and government

48,795

22.5%

60,133

25.8%

Dark fiber and small cells

35,167

16.2%

29,832

12.8%

Other services

2,479

1.1%

3,648

1.6%

Total Fiber Infrastructure revenues

$
217,035

100.0%

$
232,942

100.0%

For the nine months ended September 30, ~~2021,~~2022, Fiber Infrastructure revenues totaled ~~$217.0~~$226.2 million as compared to ~~$232.9~~$217.0 million for the nine months ended September 30, ~~2020. The $15.9~~2021. Fiber Infrastructure revenues increased $9.2 million, primarily due to an increase in one-time early termination revenues of $16.3 million within dark fiber and small cells revenues, partially offset by an $8.1 million decrease in Fiber Infrastructure revenues is primarily attributable to a $10.0 million decrease related to the wind down of our construction activities, shown above within E-rate and government, and a decrease of $6.3 million in litLit backhaul service revenues, ~~related to~~primarily driven by the sale of our Uniti Fiber Northeast operations ~~sold~~ on May 28, ~~20201.~~

~~Towers~~ ~~– For the nine months ended September 30,~~ 2021 wand lit-to-dark fiber conversions.

~~e recognized no revenue from the Towers business, as we~~ ~~completed the sale~~Table of ~~our U.S. tower business on June 1, 2020.~~Contents

~~Consumer CLEC~~ – For the nine months ended September 30, 2021, we recognized no revenue from the Consumer CLEC Business, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.

Interest Expense, net


	Nine Months Ended September 30,										Nine Months Ended September 30,
(Thousands)	2021			2020			Increase / (Decrease)			(Thousands)	2022		2021		% Increase / (Decrease)
Interest expense, net:										Interest expense, net:
Cash:										Cash:
Senior secured term loan B - variable rate⁽¹⁾	$	-		$	15,709		$	(15,709	)
Senior secured notes - 4.75%, 6.00% and 7.875%		156,550			138,344			18,206
Senior unsecured notes - 4.00%, 6.50%. 7.125% and 8.25%		99,438			111,092			(11,654	)
Senior secured notes										Senior secured notes	$	153,198	$	156,550	(3,352)
Senior unsecured notes										Senior unsecured notes	95,963		99,438		(3,475)
Senior secured revolving credit facility - variable rate		7,095			12,942			(5,847	)	Senior secured revolving credit facility - variable rate	9,018		7,095		1,923
Tender premium and early redemption payments		20,541			-			20,541
Tender premium payment										Tender premium payment	—		20,541		(20,541)
Interest rate swap termination		8,488			7,325			1,163		Interest rate swap termination	8,488		8,488		—
Other		2,070			3,157			(1,087	)	Other	1,664		2,070		(406)
Total cash interest		294,182			288,569			5,613		Total cash interest	268,331		294,182		(25,851)
Non-cash:										Non-cash:
Amortization of deferred financing costs and debt discount		13,723			27,703			(13,980	)	Amortization of deferred financing costs and debt discount	13,510		13,723		(213)
Write off of deferred financing costs and debt discount		22,828			73,952			(51,124	)	Write off of deferred financing costs and debt discount	—		22,828		(22,828)
Accretion of settlement payable		13,006			-			13,006		Accretion of settlement payable	8,733		13,006		(4,273)
Capitalized Interest		(1,977	)		(1,797	)		(180	)
Capitalized interest										Capitalized interest	(294)		(1,977)		1,683
Total non-cash interest		47,580			99,858			(52,278	)	Total non-cash interest	21,949		47,580		(25,631)
Total interest expense, net	$	341,762		$	388,427		$	(46,665	)	Total interest expense, net	$	290,280	$	341,762	$	(51,482)
⁽¹⁾ Swapped to fixed rate. See Note 9

Interest expense for the nine months ended September 30, ~~2021~~2022 decreased ~~$46.7~~$51.5 million compared to the nine months ended September 30, ~~2020.~~2021. The decrease is primarily ~~due~~attributable to (i) the ~~decrease in debt extinguishment loss~~2021 issuance of ~~$30.6 million on~~the 2029 Notes used to fund the redemption of the 2023 Notes and the 2021 issuance of the 2028 Secured Notes used to fund the redemption of the 2023 Secured Notes, which collectively resulted in $20.5 million of tender premium payments and the ~~2023 Notes~~ ~~and lower cash interest expense~~write off of ~~$13.4~~$22.8 million ~~resulting from extinguishment~~ of ~~2023 Secured Notes and 2023 Notes~~deferred financing costs, during the nine months ended September 30, ~~2021.~~

2021 and (ii) lower cash interest expense of $5.3 million, primarily associated with the 2029 Notes and 2028 Notes financing transactions, and a $4.3 million decrease in accretion expense associated with the settlement payable during the nine months ended September 30, 2022.

Depreciation and Amortization Expense

~~Table of Contents~~


	Nine Months Ended September 30,									Nine Months Ended September 30,
(Thousands)	2021			2020		Increase / (Decrease)			(Thousands)	2022		2021		% Increase / (Decrease)
Depreciation and amortization expense by segment:									Depreciation and amortization expense by segment:
Depreciation expense									Depreciation expense
Leasing	$	126,965		$	151,845	$	(24,880	)	Leasing	$	122,550	$	126,965	$	(4,415)
Fiber Infrastructure		69,684			75,505		(5,821	)	Fiber Infrastructure	72,290		69,684		2,606
Corporate		195			223		(28	)	Corporate	98		195		(97)
Towers		-			783		(783	)
Consumer CLEC		-			-		-
Total depreciation expense		196,844			228,356		(31,512	)	Total depreciation expense	194,938		196,844		(1,906)
Amortization expense									Amortization expense
Leasing		(2,833	)		3,371		(6,204	)	Leasing	5,188		(2,833)		8,021
Fiber Infrastructure		17,154			18,452		(1,298	)	Fiber Infrastructure	17,150		17,154		(4)
Corporate		-			-		-
Towers		-			-		-
Consumer CLEC		-			791		(791	)
Total amortization expense		14,321			22,614		(8,293	)	Total amortization expense	22,338		14,321		8,017
Total depreciation and amortization expense	$	211,165		$	250,970	$	(39,805	)	Total depreciation and amortization expense	$	217,276	$	211,165	$	6,111

Leasing – Leasing depreciation expense decreased ~~$24.9~~$4.4 million for the nine months ended September 30, ~~2021~~2022 as compared to the nine months ended September 30, ~~2020.~~2021. The decrease is primarily attributable to ~~a $26.8 million decrease related to the natural decrease~~an increase in ~~remaining useful life of the~~fully depreciated Windstream Distribution System assets ~~which utilize the group composite depreciation method,~~of $5.2 million, partially offset by ~~$4.3~~a $0.9 million increase in depreciation ~~expense~~ related to asset additions since September 30, 2021. During the ~~assets acquired from Windstream under the Asset Purchase Agreement. The $6.2~~ nine months ended September 30, 2021, $8.0

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million ~~decrease in~~was recorded as a benefit to amortization expense, ~~relates~~and subsequently reclassified to ~~intangible liabilities assumed from Windstream under~~revenue during the ~~Asset Purchase Agreement.~~

fourth quarter of 2021.

Fiber Infrastructure – Fiber Infrastructure depreciation ~~and amortization~~ expense ~~decreased~~increased $2.6 million for the nine months ended September 30, ~~2021 as~~2022 compared to the nine months ended September 30, ~~2020.~~2021. The ~~$5.8 million decrease~~increase in depreciation expense is primarily attributable to ~~the Everstream transaction completed on May 28,~~asset additions since September 30, 2021.~~See Note 5. The $1.3 million decrease in amortization expense relates to a trademark intangible asset, associated with the wind down of the construction business, that became fully amortized in 2020.~~

General and Administrative Expense

Nine Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Consolidated Revenues

Amount

% of Consolidated Revenues

General and administrative expense by segment:

Fiber Infrastructure

$
41,190

5.1%

$
42,124

5.3%

Leasing

7,436

0.9%

5,242

0.7%

Corporate

27,174

3.4%

31,492

4.0%

Towers

-

0.0%

2,607

0.3%

Consumer CLEC

-

0.0%

221

0.0%

Total general and administrative expenses

$
75,800

9.4%

$
81,686

10.3%


	Nine Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues
General and administrative expense by segment:
Leasing	$	9,907	1.1%	$	7,436	0.9%
Fiber Infrastructure	40,603		4.9%	41,190		5.1%
Corporate	25,308		3.0%	27,174		3.4%
Total general and administrative expenses	$	75,818	9.0%	$	75,800	9.4%

Leasing – Leasing general and administrative expense increased $2.5 million for the nine months ended September 30, ~~2021, general and administrative costs totaled $75.8 million.~~ ~~For~~2022 compared to the nine months ended September 30, ~~2020, general and administrative costs totaled~~ ~~$81.7~~ ~~million.~~ 2021. The ~~decrease in general and administrative expenses~~increase is primarily attributable to a $1.7 million increase in personnel expenses and a $0.8 million increase in other operating expense.

Fiber Infrastructure – Fiber Infrastructure general and administrative expense decreased $0.6 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. This decrease is primarily attributable to a $0.2 million decrease in personnel expenses, a $0.2 million decrease in facility expenses, and a $0.1 million decrease in other operating expenses.

Corporate – Corporate general and administrative expense decreased $1.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The decrease is attributable to reductions in personnel expenses of ~~approximately $3.8~~$2.4 million and insurance expenses of $1.7 million, partially offset by increases in professional and legal expenses ~~for the period.~~of $1.5 million, computer software and maintenance of $0.4 million, and facility expense of $0.3 million.

Operating Expense

~~Table of Contents~~

Operating expense for the nine months ended September 30, ~~2021 decreased~~2022 increased by $2.7 million from the nine months ended September 30, ~~2020,~~2021, which was primarily attributable to ~~decreases~~a $2.3 million increase in Leasing operating expenses and a $0.4 million increase in Fiber Infrastructure ~~Towers and Consumer CLEC Business operating expenses offset by an increase in Leasing~~ operating expenses discussed below. Operating expense for our reportable segments for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 consisted of the ~~following~~following:


	Nine Months Ended September 30,
	2022			2021
(Thousands)	Amount		% of Consolidated Revenues	Amount		% of Consolidated Revenues
Operating expense by segment:
Leasing	$	14,385	1.7%	$	12,026	1.5%
Fiber Infrastructure	93,799		11.1%	93,410		11.6%
Total operating expenses	$	108,184	12.8%	$	105,436	13.1%

:Table of Contents

Nine Months Ended September 30,

2021

2020

(Thousands)

Amount

% of Consolidated Revenues

Amount

% of Consolidated Revenues

Operating expenses by segment:

Fiber Infrastructure

$
93,410

11.6%

$
111,405

14.0%

Leasing

12,026

1.5%

2,320

0.3%

Towers

-

0.0%

3,692

0.5%

CLEC

-

0.0%

891

0.1%

Total operating expenses

$
105,436

13.1%

$
118,308

14.9%

~~Fiber Infrastructure~~Leasing – Leasing operating expense increased $2.3 million for the ~~For~~nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increase is primarily driven by a $1.9 million increase in other operating expense resulting from incremental customer growth and increased network related expense of $0.5 million.

Fiber Infrastructure – Fiber Infrastructure operating expenses ~~totaled $93.4 million as compared to $111.4~~increased $0.4 million for the nine months ended September 30, ~~2020.~~2022 compared to the nine months ended September 30, 2021. Operating expense consists of network related costs, such as dark fiber and tower rents, lit service and maintenance expense, and costs associated with our construction activities. The ~~$18.0 million decrease~~increase in operating expenses is primarily attributable to to increases in dark fiber early termination fees of $2.4 million, property taxes of $1.6 million, personnel expense of $1.4 million, and unsplicing expenses of $1.4 million, partially offset by decreases in construction ~~related~~ expenses of ~~$12.7~~$2.0 million, non-recurring equipment and ~~$4.2~~installation expenses of $1.6 million, inand expenses related to the Uniti Fiber Northeast operations sold on May 28, ~~2021.~~

~~Leasing~~ ~~– Leasing operating~~2021 of $1.5 million, right of way expense ~~was $12.0~~of $0.9 million, and ~~$2.3~~network maintenance and repair expenses of $0.5 million ~~for~~reduction.

Goodwill Impairment

As a result of macroeconomic and financial market factors, specifically increased interest rates impacting our discount rate, we concluded that it was more likely than not that the fair value of the Fiber Infrastructure reporting unit, estimated using a combination of the income approach and market approach, is less that its carrying amount. Accordingly, we recorded a $216.0 million goodwill impairment in the Fiber Infrastructure reporting unit during the nine months ended September 30, ~~2021 and 2020, respectively. The increase is primarily driven by a $8.1 million increase~~2022.See Note 2 of Notes to Condensed Consolidated Financial Statements in ~~network expenses due to the Asset Purchase Agreement the Company entered into with Windstream which was completed in the third quarter~~Part I Item 1 of ~~2020~~.

~~Towers~~ ~~– For the nine months ended September 30, 2021, Towers operating expenses were not incurred as the U.S. tower business sale was completed~~this Quarterly Report on ~~June 1, 2020. Towers operating expense was $3.7 million for the nine months ended September 30, 2020~~Form 10-Q..

~~Consumer CLEC~~ – For the nine months ended September 30, 2021, Consumer CLEC Business operating expenses were not incurred, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.

Transaction Related and Other Costs

Transaction related and other costs included incremental acquisition, pursuit, transaction and integration costs (including unsuccessful acquisition pursuit costs), costs incurred as a result of Windstream’s bankruptcy filing, costs associated with Windstream’s claims against us and costs associated with the implementation of our ~~new~~ enterprise resource planning system. For the nine months ended September 30, ~~2021~~,2022, we incurred ~~$5.6~~$7.3 million of transaction related and other costs, compared to ~~$55.3~~$5.6 million of such costs ~~during the~~ ~~nine months ended September 30, 2020~~. The decrease is primarily related to incurring $40.2 million of total costs related to the Windstream bankruptcy for the nine months ended September 30, 2020, as compared to $1.3 million for the nine months ended September 30, 2021, and we incurred $5.2 million in costs related to the sale of our U.S. towers business during the nine months ended September 30, ~~2020~~.

2021.

Income Tax (Benefit) Expense ~~(Benefit)~~

The income tax (benefit) expense ~~(benefit)~~ recorded for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, is related to the tax impact of the following:


	Nine Months Ended September 30,							Nine Months Ended September 30,
(Thousands)	2021			2020			(Thousands)	2022		2021
Income tax expense (benefit)
Income tax (benefit) expense							Income tax (benefit) expense
Pre-tax loss (Fiber Infrastructure)	$	(9,484	)	$	(7,128	)	Pre-tax loss (Fiber Infrastructure)	$	(21,798)	$	(9,484)
Gain on sale of operations		7,041			-		Gain on sale of operations	—		7,041
Gain on sale of unconsolidated entity							Gain on sale of unconsolidated entity	6,711		—
Other undistributed REIT taxable income		1,310			-		Other undistributed REIT taxable income	3,229		1,310
REIT state and local taxes		1,291			-		REIT state and local taxes	1,594		1,291
Other		125			(522	)	Other	81		125
Total income tax expense (benefit)	$	283		$	(7,650	)
Total income tax (benefit) expense							Total income tax (benefit) expense	$	(10,183)	$	283

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Non-GAAP Financial Measures

We refer to EBITDA, Adjusted EBITDA, Funds From Operations (“FFO”) (as defined by the National Association of Real Estate Investment Trusts (“NAREIT”)) and Adjusted Funds From Operations (“AFFO”) in our analysis of our results of operations, which are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). While we believe that net income, as defined by GAAP, is the most appropriate earnings measure, we also believe that EBITDA, Adjusted EBITDA, FFO and AFFO are important non-GAAP supplemental measures of operating performance for a REIT.

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We define “EBITDA” as net income, as defined by GAAP, before interest expense, provision for income taxes and depreciation and amortization. We define “Adjusted EBITDA” as EBITDA before stock-based compensation expense and the impact, which may be recurring in nature, of transaction and integration related costs, costs associated with Windstream’s bankruptcy, costs associated with litigation claims made against us, and costs associated with the implementation of our enterprise resource planning system, (collectively, “Transaction Related and Other Costs”), costs related to the settlement with Windstream, goodwill impairment charges,, executive severance costs,, amortization of non-cash rights-of-use assets, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, including early tender and redemption premiums and costs associated with the termination of related hedging activities, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments, and other similar or infrequent items (although we may not have had such charges in the periods presented). Adjusted EBITDA includes adjustments to reflect the Company’s share of Adjusted EBITDA from unconsolidated entities. We believe EBITDA and Adjusted EBITDA are important supplemental measures to net income because they provide additional information to evaluate our operating performance on an unleveraged basis. In addition, Adjusted EBITDA is calculated similar to defined terms in our material debt agreements used to determine compliance with specific financial covenants. Since EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, they should not be considered as alternatives to net income determined in accordance with GAAP.

Because the historical cost accounting convention used for real estate assets requires the recognition of depreciation expense except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined by NAREIT as net income attributable to common shareholders computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges, and includes adjustments to reflect the Company’s share of FFO from unconsolidated entities. We compute FFO in accordance with NAREIT’s definition.

The Company defines AFFO, as FFO excluding (i) Transaction Related and Other Costs; (ii) costs related to the litigation settlement with Windstream, ~~and~~ accretion on our settlement obligation, and gains on prepayment of our settlement obligation as these items are not reflective of ongoing operating performance; (iii) goodwill impairment charges; (iv) certain non-cash revenues and expenses such as stock-based compensation expense, amortization of debt and equity discounts, amortization of deferred financing costs, depreciation and amortization of non-real estate assets, amortization of non-cash rights-of-use assets, straight line revenues, non-cash income taxes, and the amortization of other non-cash revenues to the extent that cash has not been received, such as revenue associated with the amortization of TCIs; and (v) the impact, which may be recurring in nature, of the write-off of unamortized deferred financing fees, additional costs incurred as a result of the early repayment of debt, including early tender and redemption premiums and costs associated with the termination of related hedging activities, executive severance costs, taxes associated with tax basis cancellation of debt, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments and similar or infrequent items less maintenance capital expenditures. AFFO includes adjustments to reflect the Company’s share of AFFO from unconsolidated entities. We believe that the use of FFO and AFFO, and their respective per share amounts, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and analysts, and makes comparisons of operating results among such companies more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating performance. In particular, we believe AFFO, by excluding certain revenue and expense items, can help investors compare our operating performance between periods and to other REITs on a consistent basis without having to account for differences caused by unanticipated items and events, such as transaction and integration related costs. The Company uses FFO and AFFO, and their respective per share amounts, only as performance measures, and FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance.

~~Table of Contents~~

Further, our computations of EBITDA, Adjusted EBITDA, FFO and AFFO may not be comparable to that reported by other REITs or companies that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define EBITDA, Adjusted EBITDA and AFFO differently than we do.

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The reconciliation of our net (loss) income to EBITDA and Adjusted EBITDA and of our net (loss) income attributable to common shareholders to FFO and AFFO for the three and nine months ended September 30, 2022 and 2021 ~~and 2020~~ is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

(Thousands)
2021

2020

2021

2020

Net income (loss)
$
43,682

$
7,455

$
88,819

$
(671,140
)
Depreciation and amortization

70,530

79,880

211,165

250,970

Interest expense, net

94,793

102,791

341,762

388,427

Income tax (benefit) expense

(2,244
)

2,801

283

(7,650
)
EBITDA
$
206,761

$
192,927

$
642,029

$
(39,393
)
Stock based compensation

4,166

3,341

10,963

10,446

Transaction related and other costs

1,063

20,816

5,624

55,344

Settlement expense

-

-

-

650,000

Gain on sale of operations

-

-

(28,143
)

-

Gain on sale of real estate

-

(22,908
)

(442
)

(86,726
)
Other expense

4,472

3,098

14,569

12,186

Adjustments for equity in earnings from unconsolidated entities

765

1,287

2,609

1,287

Adjusted EBITDA
$
217,227

$
198,561

$
647,209

$
603,144

Three Months Ended September 30,

Nine Months Ended September 30,

(Thousands)
2021

2020

2021

2020

Net income (loss) attributable to common shareholders
$
43,080

$
7,034

$
86,963

$
(660,191
)
Real estate depreciation and amortization

53,620

59,318

159,175

185,377

Gain on sale of real estate assets, net of tax

-

(22,501
)

(442
)

(86,319
)
Participating securities share in earnings

283

229

864

853

Participating securities share in FFO

(635
)

(331
)

(1,660
)

(937
)
Real estate depreciation and amortization from unconsolidated entities

646

366

1,876

366

Adjustments for noncontrolling interests

(412
)

(598
)

(1,979
)

(1,700
)
FFO attributable to common shareholders
$
96,582

$
43,517

$
244,797

$
(562,551
)
Transaction related and other costs

1,063

20,816

5,624

55,344

Change in fair value of contingent consideration

-

1,946

21

8,086

Amortization of deferred financing costs and debt discount

4,352

9,037

13,723

27,703

Write off of deferred financing costs and debt discount

-

-

22,828

73,952

Costs related to the early repayment of debt

-

-

28,485

-

Stock based compensation

4,166

3,341

10,963

10,446

Gain on sale of operations

-

-

(28,143
)

-

Non-real estate depreciation and amortization

16,910

20,562

51,990

65,593

Settlement expense

-

-

-

650,000

Straight-line revenues

(8,240
)

(1,747
)

(22,455
)

(1,036
)
Maintenance capital expenditures

(1,938
)

(1,617
)

(6,322
)

(4,978
)
Other, net

(2,949
)

(3,461
)

(4,958
)

(25,271
)
Adjustments for equity in earnings from unconsolidated entities

119

921

733

921

Adjustments for noncontrolling interests

(120
)

(775
)

(990
)

(15,114
)
AFFO attributable to common shareholders
$
109,945

$
92,540

$
316,296

$
283,095


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2022		2021		2022		2021
Net (loss) income	$	(155,749)	$	43,682	$	(49,117)	$	88,819
Depreciation and amortization	73,516		70,530		217,276		211,165
Interest expense, net	97,731		94,793		290,280		341,762
Income tax (benefit) expense	(13,056)		(2,244)		(10,183)		283
EBITDA	$	2,442	$	206,761	$	448,256	$	642,029
Stock based compensation	3,151		4,166		9,664		10,963
Transaction related and other costs	2,375		1,063		7,324		5,624
Gain on sale of operations	(176)		—		(176)		(28,143)
Gain on sale of real estate	(94)		—		(344)		(442)
Goodwill impairment	216,000		—		216,000		—
Other, net	600		4,472		(6,534)		14,569
Adjustments for equity in earnings from unconsolidated entities	755		765		2,816		2,609
Adjusted EBITDA	$	225,053	$	217,227	$	677,006	$	647,209

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	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2022		2021		2022		2021
Net (loss) income attributable to common shareholders	$	(155,910)	$	43,080	$	(50,164)	$	86,963
Real estate depreciation and amortization	53,118		53,620		157,436		159,175
Gain on sale of real estate assets, net of tax	(94)		—		(344)		(442)
Participating securities share in earnings	226		283		897		864
Participating securities share in FFO	(226)		(635)		(1,788)		(1,660)
Real estate depreciation and amortization from unconsolidated entities	436		646		1,931		1,876
Adjustments for noncontrolling interests	(24)		(412)		(235)		(1,979)
FFO attributable to common shareholders	$	(102,474)	$	96,582	$	107,733	$	244,797
Transaction related and other costs	2,375		1,063		7,324		5,624
Change in fair value of contingent consideration	—		—		—		21
Amortization of deferred financing costs and debt discount	4,495		4,352		13,510		13,723
Write off of deferred financing costs and debt discount	—		—		—		22,828
Costs related to the early repayment of debt	—		—		—		28,485
Stock based compensation	3,151		4,166		9,664		10,963
Gain on sale of unconsolidated entity, net of tax	—		—		(1,212)		—
Gain on sale of operations	(176)		—		(176)		(28,143)
Non-real estate depreciation and amortization	20,398		16,910		59,840		51,990
Goodwill impairment	216,000		—		216,000		—
Straight-line revenues and amortization of below-market lease intangibles	(9,918)		(8,240)		(31,066)		(22,455)
Maintenance capital expenditures	(2,314)		(1,938)		(7,136)		(6,322)
Other, net	(19,182)		(2,949)		(35,412)		(4,958)
Adjustments for equity in earnings from unconsolidated entities	319		119		887		733
Adjustments for noncontrolling interests	(96)		(120)		(137)		(990)
AFFO attributable to common shareholders	$	112,578	$	109,945	$	339,819	$	316,296

Liquidity and Capital Resources

Our principal liquidity needs are to fund operating expenses, meet debt service obligations, fund investment activities, including capital expenditures, and make dividend distributions. Furthermore, following consummation of our settlement agreement with Windstream, including entry into the Windstream Leases, we are obligated (i) to make $490.1 million of cash payments to Windstream in equal installments over 20 consecutive quarters beginning in October 2020 and (ii) to reimburse Windstream for up to an aggregate of $1.75 billion for Growth Capital Improvements in long-term value accretive fiber and related assets made by Windstream through 2029. To date, we have paid $215.4 million of the $490.1 million due to Windstream under the settlement agreement, including $92.9 million that we pre-paid on October 14, 2021, $78.0 million of which was funded from a portion of the proceeds of the 2030 Notes. Uniti’s reimbursement commitment for Growth Capital Improvements does not require Uniti to reimburse Windstream for maintenance or repair expenditures (except for costs incurred for fiber replacements to the CLEC MLA leased property, up to $70 million during the term), and each such reimbursement is subject to underwriting standards. Uniti’s total annual reimbursement commitments for the Growth Capital Improvements under both Windstream Leases (and under separate equipment loan facilities) were limited to $125 million in 2020 and $225 million in 2021, and are limited to $225 million per year in ~~2021~~2022 through 2024; $175 million per year in 2025 and 2026; and $125 million per year in 2027 through 2029.

Our If the cost incurred by Windstream (or the successor tenant under a Windstream Lease) for Growth Capital Improvements in any calendar year exceeds the annual limit for such calendar year, Windstream (or such tenant, as the case may be) may submit such excess costs for reimbursement in any subsequent year and such excess costs shall be funded from the annual commitment amounts in such subsequent period. In addition, to the extent that reimbursements for Growth Capital Improvements funded in any calendar year during the term is less than the annual limit for such calendar year, the unfunded amount in any calendar year will carry-over and may be added to the annual limits for subsequent calendar years, subject to an annual limit of $250 million in any calendar year, except that, during calendar year 2021, our combined total obligation to fund Growth Capital Improvements may exceed $250 million to the extent of any unfunded excess amounts from calendar year 2020. Accordingly, because we funded $84.7 million of the $125 million limit in 2020, we are committed to fund up to $265.3 million of Growth Capital Improvements in 2021.

~~Our~~ primary sources of liquidity and capital resources are cash on hand, cash provided by operating activities (primarily from the Windstream Leases), available borrowings under our credit agreement by and among the Operating Partnership, CSL Capital, LLC and Uniti Group Finance 2019 Inc., the guarantors and lenders party thereto and Bank of America, N.A.,

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as administrative agent and collateral agent (the “Credit Agreement”), and proceeds from the issuance of debt and equity securities.

As of September 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$69.8~~$43.4 million and approximately ~~$380.5~~$225.0 million of borrowing availability under our Revolving Credit ~~Facility.~~Facility under the Credit Agreement. Subsequent to September 30, ~~2021,~~2022, other than ~~the redemption of the 2024 Notes as described below, and~~ ~~$16.5~~$27.4 million of Growth Capital Improvements (see “Result of Operations—Revenues” above), there have been no material outlays of funds outside of our scheduled interest and dividend payments. Availability under our Revolving Credit Facility is subject to various conditions, including a maximum secured leverage ratio of 5.0:1. In addition, if we incur debt under our Revolving Credit Facility or otherwise such that our total leverage ratio exceeds 6.5:1, our Revolving Credit Facility would impose significant restrictions on our ability to pay dividends. See “—Dividends.”


	Nine Months Ended September 30,					Nine Months Ended September 30,
(Thousands)	2021		2020		(Thousands)	2022		2021
Cash flow from operating activities:					Cash flow from operating activities:
Net cash provided by operating activities	$	353,353	$	112,815	Net cash provided by operating activities	$	285,107	$	353,353

~~Cash provided by operating activities was~~ ~~$353.4~~ ~~million and $112.8 million for the nine months ended September 30,~~ ~~2021 and 2020, respectively.~~

Cash provided by operating activities is primarily attributable to our leasing ~~activities.~~

Nine Months Ended September 30,

(Thousands)

2021

2020

Cash flow from investing activities:

Windstream asset acquisition

$
-

$
(73,127
)
Proceeds from sale of real estate, net of cash

1,034

392,011

Proceeds from sale of operations (Note 5)

62,113

-

Proceeds from sale of other equipment

1,143

-

Other capital expenditures

(276,010
)

(214,150
)
Net cash (used in) provided by investing activities

$
(211,720
)

$
104,734

~~Table~~activities, which includes the leasing of ~~Contents~~

mission-critical communications assets to anchor customers on either an exclusive or shared-tenant basis, in addition to the leasing of dark fiber network assets to the telecommunications industry. Cash used in ~~investing~~operating activities includes compensation and related costs, interest payments, and other changes in working capital. Net cash provided by operating activities was ~~$211.7~~$285.1 million and $353.4 million for the nine months ended September 30, 2022 and 2021, ~~and~~respectively. The decrease in net cash provided by operating activities during the nine months ended September 30, 2022 is ~~driven by capital expenditures,~~ primarily ~~related~~attributable to ~~our Uniti Fiber and Uniti Leasing business for deployment~~the timing of ~~network assets, partially offset by proceeds from~~the upfront IRU payments received in connection with the sale of the Uniti Fiber Northeast operations ~~to Everstream ($62.1 million)~~. ~~Cash provided by~~on May 28, 2021.


	Nine Months Ended September 30,
(Thousands)	2022		2021
Cash flow from investing activities:
Capital expenditures	$	(292,666)	$	(276,010)
Proceeds from sale of unconsolidated entity (see Note 5)	32,527		—
Proceeds from sale of real estate, net of cash	575		1,034
Proceeds from sale of operations	541		62,113
Proceeds from sale of other equipment	338		1,143
Net cash used in investing activities	$	(258,685)	$	(211,720)

Net cash used in investing activities was $258.7 million for the nine months ended September 30, ~~2020~~2022, primarily driven by capital expenditures ($292.7 million), partially offset by proceeds received from the sale of the Harmoni investment ($32.5 million). Net cash used in investing activities was ~~$104.7~~$211.7 million ~~which was~~for the nine months ended September 30, 2021, primarily driven by capital expenditures ($276.0 million), partially offset by proceeds from the May 28, 2021 sale of ~~our U.S. tower business~~the Uniti Fiber Northeast operations ($~~225.1~~62.1 million)~~, proceeds from the sale of our Midwest fiber network ($166.9 million), partially offset by capital~~. Capital expenditures ~~($214.2 million), which~~are primarily related to our Uniti Fiber and Uniti Leasing businesses for ~~the~~ deployment of network assets, ~~but also includes $29.1 million~~as described under “—Capital Expenditures.”

Table of ~~Growth Capital Improvements and expenditures of $73.1 million in connection with the Asset Purchase Agreement.~~Contents


	Nine Months Ended September 30,							Nine Months Ended September 30,
(Thousands)	2021			2020			(Thousands)	2022		2021
Cash flow from financing activities:							Cash flow from financing activities:
Repayment of debt	$	(1,660,000	)	$	(2,044,728	)	Repayment of debt	$	—	$	(1,660,000)
Proceeds from issuance of notes		1,680,000			2,250,000		Proceeds from issuance of notes	—		1,680,000
Dividends paid		(105,941	)		(100,759	)	Dividends paid	(107,362)		(105,941)
Payment of settlement obligation		(73,516	)		-
Payments of settlement payable							Payments of settlement payable	—		(73,516)
Payments of contingent consideration		(2,979	)		(15,713	)	Payments of contingent consideration	—		(2,979)
Distributions paid to noncontrolling interest		(1,700	)		(1,802	)	Distributions paid to noncontrolling interest	(217)		(1,700)
Payment for exchange of noncontrolling interest							Payment for exchange of noncontrolling interest	(4,620)		—
Borrowings under revolving credit facility		290,000			140,000		Borrowings under revolving credit facility	180,000		290,000
Payments under revolving credit facility		(220,000	)		(585,019	)	Payments under revolving credit facility	(105,000)		(220,000)
Finance lease payments		(1,745	)		(2,890	)	Finance lease payments	(887)		(1,745)
Payments for financing costs		(25,755	)		(47,775	)	Payments for financing costs	—		(25,755)
Settlement Common Stock issuance		-			244,550
Costs related to the early repayment of debt		(25,800	)		-
Payment of tender premium							Payment of tender premium	—		(25,800)
Employee stock purchase program		672			306		Employee stock purchase program	589		672
Payments related to tax withholding for stock-based compensation		(2,652	)		(962	)	Payments related to tax withholding for stock-based compensation	(4,434)		(2,652)
Net cash used in financing activities	$	(149,416	)	$	(164,792	)	Net cash used in financing activities	$	(41,931)	$	(149,416)

~~Cash~~

Net cash used in financing activities was $41.9 million for the nine months ended September 30, 2022, which was primarily related to ~~$149.4~~dividend payments of $107.4 million, net borrowings under the Revolving Credit Facility of $75.0 million, payment for an exchange of noncontrolling interest of $4.6 million, and payments related to tax withholding for stock-based compensation of $4.4 million. Net cash used in financing activities was $149.4 million for the nine months ended September 30, 2021, which was primarily driven by the repayment of the 2023 Notes and 2023 Secured Notes ($($1.66 billion), net ~~borrowings~~payments under the Revolving Credit Facility ($($70.0 million), dividend payments ($($105.9 million), payments for financing costs ($($25.8 million), payment of settlement obligation ($($73.5 million), 2023 Notes tender premium payment ($($17.6 million), 2023 Secured Notes early redemption payment ($8.3 million) and contingent consideration payments ($($3.0 million), partially offset by proceeds from the issuance of the 2029 Notes and 2028 Secured Notes (($1.68 billion)~~$1.68~~. ~~billion).~~ ~~Cash used~~

Windstream Master Lease and Windstream Leases

On September 18, 2020, in ~~financing activities was $164.8 million for the nine months ended September 30, 2020, which was~~ primarily driven by the repayment of senior secured term loan B ($2.04 billion), net payments under the Revolving Credit Facility ($445.0 million), dividend payments ($100.8 million) and payments for financing costs ($47.8 million)~~, contingent consideration payments ($15.7 million), partially offset by~~ ~~the proceeds~~connection with Windstream’s emergence from ~~the issuance of the 2025 Secured Notes ($2.25 billion)~~bankruptcy and the ~~issuance~~implementation of the Settlement, ~~Common Stock ($244.6 million).~~

~~Senior Notes~~

~~On October 13, 2021,~~ Uniti ~~Group LP, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc.~~ and ~~CSL Capital, LLC (together,~~Windstream bifurcated the ~~“Issuers”) issued $700 million~~Master Lease and entered into the Windstream Leases that each expires on April 30, 2030. The aggregate ~~principal amount of 6.00% Senior Notes due 2030~~initial annual rent under the Windstream Leases is equal to the annual rent under the Master Lease previously in effect. The Windstream Leases contain cross-guarantees and cross-default provisions, which will ~~use~~remain effective as long as Windstream or an affiliate is the ~~proceeds to fund the redemption~~tenant under both of the ~~Issuer’s 2024 Notes~~Windstream Leases and unless and until the landlords under the ILEC MLA are different from the landlords under the CLEC MLA. The Windstream Leases permit Uniti to transfer its rights and obligations and otherwise monetize or encumber the Windstream Leases, together or separately, so long as Uniti does not transfer interests in either Windstream Lease to a Windstream competitor.

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subsequent period. In addition, to the extent that reimbursements for Growth Capital Improvements funded in any calendar year during the term is less than the annual limit for such calendar year, the unfunded amount in any calendar year will carry-over and may be added to the annual limits for subsequent calendar years, subject to an annual limit of $250.0 million in any calendar year.

Starting on ~~December 15, 2021. On October 13, 2021,~~ the ~~Issuers deposited amounts with~~first anniversary of each installment of reimbursement for a Growth Capital Improvement, the ~~trustee~~rent payable by Windstream under the applicable Windstream Lease will increase by an amount equal to 8.0% (the “Rent Rate”) of such installment of reimbursement. The Rent Rate will thereafter increase to 100.5% of the ~~2024 Notes sufficient~~prior Rent Rate on each anniversary of each reimbursement. In the event that the tenant’s interest in either Windstream Lease is transferred by Windstream under the terms thereof (unless transferred to ~~fund~~ the ~~redemption~~same transferee), or if Uniti transfers its interests as landlord under either Windstream Lease (unless to the same transferee), the reimbursement rights and obligations will be allocated between the ILEC MLA and the CLEC MLA by Windstream, provided that the maximum that may be allocated to the CLEC MLA following such transfer is $20 million per year. If Uniti fails to reimburse any Growth Capital Improvement reimbursement payment or equipment loan funding request as and when it is required to do so under the terms of the ~~2024 Notes on December 15, 2021,~~Windstream Leases, and such failure continues for thirty (30) days, then such unreimbursed amounts may be applied as an offset against the rent owed by Windstream under the Windstream Leases (and such amounts will thereafter be treated as if Uniti had reimbursed them).

Uniti and Windstream have entered into separate ILEC and CLEC Equipment Loan and Security Agreements (collectively “Equipment Loan Agreement”) in which Uniti will provide up to ~~pay~~$125 million (limited to $25 million in any calendar year) of the $1.75 billion of Growth Capital Improvements commitments discussed above in the form of loans for Windstream to purchase equipment related ~~premiums, fees and expenses~~to network upgrades or to be used in connection with the ~~foregoing, and therefore satisfied and discharged their respective obligations under the indenture governing the 2024 Notes.~~

The 2030 Notes were issued at an issue price of 100% of their principal amount pursuant to an indenture, dated as of October 13, 2021, among the Issuers, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee. The 2030 Notes mature on January 15, 2030 and bear interest at a rate of 6.000% per year.Windstream Leases. Interest on these loans will accrue at 8% from the ~~2030 Notes~~date of the borrowing. All equipment financed through the Equipment Loan Agreement is ~~payable on January 15 and July 15~~the sole property of ~~each year, beginning on July 15, 2022.~~

~~For additional information,~~ ~~see Note 11~~ ~~to our accompanying Condensed Consolidated Financial Statements contained~~Windstream; however, Uniti will receive a first-lien security interest in ~~Part 1, Item 1 of this Quarterly Report on Form 10-Q.~~

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the equipment purchased with the loans.

At-the-Market Common Stock Offering Program

We have an effective shelf registration statement on file with the SEC (the “Registration Statement”) to offer and sell various securities from time to time. Under the registration statement, we have established an at-the-market common stock offering program (the “ATM Program”) to sell shares of common stock having an aggregate offering price of up to ~~$250~~$250.0 million. During the three and nine months ended September 30, ~~2021,~~2022, we did not make any sales under the ATM Program. This program is intended to provide additional financial flexibility and an alternative mechanism to access the capital markets at an efficient cost as and when we need financing, including for acquisitions. In addition, our UPREIT structure enables us to acquire properties by issuing to sellers, as a form of consideration, limited partnership interests in our operating partnership, (commonly called “OP Units”). We believe that this structure will facilitate our ability to acquire individual properties and portfolios of properties by enabling us to structure transactions which will defer taxes payable by a seller while preserving our available cash for other purposes, including the possible payment of dividends.

Outlook

We anticipate continuing to invest in our network infrastructure across our Uniti Leasing and Uniti Fiber portfolios. We anticipate that we will partially finance these needs, as well as operating expenses (including our debt service obligations), from our cash on hand and cash flows provided by operating activities. As of September 30, ~~2021,~~2022, we had ~~$380.5~~$225.0 million in borrowing availability under our Revolving Credit Facility (subject to customary borrowing conditions), however, we may need to access the capital markets to generate additional funds in an amount sufficient to fund our business operations, announced investment activities, capital expenditures, including reimbursement commitments for Growth Capital Improvements, debt service and distributions to our shareholders. We ~~may also issue equity securities to repay debt and reduce our leverage ratio to be below~~ ~~5.75 to 1.0~~ ~~to obtain additional flexibility under our debt covenants, as described under “—Dividends.” In light of the COVID-19 pandemic and its effects on the global economy and capital markets, we~~ are closely monitoring the equity and debt markets and may seek to access them promptly if and when we determine market conditions are appropriate. ~~Our debt covenants currently do not permit us to incur material additional debt.~~

The amount, nature and timing of any capital markets transactions will depend on: ~~the impact the COVID-19 pandemic has on the global economy and capital markets,~~ our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; ~~and~~ any limitations imposed by our current credit ~~arrangements.~~arrangements; and overall market conditions. These expectations are forward-looking and subject to a number of uncertainties and assumptions. If our expectations about our liquidity prove to be incorrect or we are unable to access the capital markets as we anticipate, we would be subject to a shortfall in liquidity in the future which could lead to a reduction in our capital expenditures and/or dividends and, in an extreme case, our ability to pay our debt service obligations. If this shortfall occurs rapidly and with little or no notice, it could limit our ability to address the shortfall on a timely basis.

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In addition to exploring potential capital markets transactions, the Company regularly evaluates market conditions, its liquidity profile, and various financing alternatives for opportunities to enhance its capital structure. If opportunities are favorable, the Company may refinance or repurchase existing debt. However, there can be no assurances that any debt refinancing would be on similar or more favorable terms than our existing arrangements. This would include the risk that interest rates could increase and/or there may be changes to our existing covenants.

If circumstances warrant, we may take measures to conserve cash as we anticipate that it will be more difficult for us to access the capital markets at attractive rates until such uncertainty is clarified.

Capital Expenditures


	Nine Months Ended September 30, 2021											Nine Months Ended September 30, 2022
(Thousands)	Success Based		Maintenance		Integration		Non-Network		Total		(Thousands)	Success Based		Maintenance		Integration		Non-Network		Total
Capital expenditures:											Capital expenditures:
Leasing	$	2,551	$	-	$	-	$	-	$	2,551	Leasing	$	19,645	$	—	$	—	$	—	$	19,645
Growth capital improvements		152,254		-		-		-		152,254	Growth capital improvements	158,086		—		—		—		158,086
Fiber Infrastructure		113,388		6,322		485		1,010		121,205	Fiber Infrastructure	106,072		7,136		931		460		114,599
Corporate											Corporate	—		—		—		336		336
Total capital expenditures	$	268,193	$	6,322	$	485	$	1,010	$	276,010	Total capital expenditures	$	283,803	$	7,136	$	931	$	796	$	292,666

We categorize our capital expenditures as either (i) success-based, (ii) maintenance, (iii) integration or (iv) corporate and non-network. We define success-based capital expenditures as those related to installing existing or anticipated contractual customer service orders. Maintenance capital expenditures are those necessary to keep existing network elements fully operational. Integration capital expenditures are those made specifically with respect to recent acquisitions that are essential to integrating acquired companies in our business. We anticipate continuing to invest in our network infrastructure across our Uniti Leasing and Uniti Fiber businesses

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and expect that cash on hand and cash flows provided by operating activities will be sufficient to support these investments. We have the right, but not the obligation (except for Growth Capital Improvements), to reimburse growth capital expenditures in certain of our lease arrangements where we are the lessor.

Uniti’s total annual reimbursement commitments to Windstream for the Growth Capital Improvements ~~under the~~ is discussed above in this Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in “Liquidity and Capital Resources—Windstream ~~Leases (and under separate equipment loan facilities) are limited to $225 million per year in 2021 through 2024; $175 million per year in 2025~~Master Lease and ~~2026; and $125 million per year in 2027 through 2029.~~ ~~If the cost incurred by~~ Windstream ~~(or the successor tenant under a Windstream Lease) for~~Leases.” Growth Capital Improvements ~~in any calendar year exceeds~~are treated as success-based capital improvements based on the ~~annual limit for~~rents paid with respect to such calendar year, Windstream (or such tenant, as the case may be) may submit such excess costs for reimbursement in any subsequent year and such excess costs shall be funded from the annual commitment amounts in such subsequent period. In addition, to the extent that reimbursements for Growth Capital Improvements funded in any calendar year during the term is less than the annual limit for such calendar year, the unfunded amount in any calendar year will carry-over and may be added to the annual limits for subsequent calendar years, subject to an annual limit of $250 million in any calendar year, except that, during calendar year 2021, our combined total obligation to fund Growth Capital Improvements may exceed $250 million to the extent of any unfunded excess amounts from calendar year 2020. Accordingly, because we funded $84.7 million of the $125 million limit in 2020, we are committed to fund up to $265.3 million of Growth Capital Improvements in 2021.

amounts.

If circumstances warrant, we may need to take measures to conserve cash, which may include a suspension, delay or reduction in success-based capital expenditures.

Dividends

We ~~continually assess our capital expenditure plans in light of developments the impact COVID-19 has on our business and that of our tenants and customers.~~

~~Dividends~~

We have elected to be taxed as a REIT for U.S. federal income tax purposes. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. ~~Subject to the restrictions imposed by our 7.875% senior secured notes due 2025 (the “2025 Secured Notes”), in~~In order to maintain our REIT status, we intend to make dividend payments of all or substantially all of our taxable income to holders of our common stock out of assets legally available for this purpose, if and to the extent authorized by our board of directors. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service obligations. If our cash available for distribution is less than our taxable income, we could be required to sell assets or borrow funds to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

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The following table below sets out details regarding our cash dividends on our common stock:

Period

Payment Date

Cash Dividend Per Share

Record Date
October 1, 2020 - December 31, 2020

January 4, 2021

$
0.15

December 15, 2020
January 1, 2021 - March 31, 2021

April 16, 2021

$
0.15

April 1, 2021
April 1, 2021 - June 30, 2021

July 2, 2021

$
0.15

June 18, 2021
July 1, 2021 - September 30, 2021

October 1, 2021

$
0.15

September 17, 2021

Period

Payment Date

Cash Dividend Per Share

Record Date

October 1, 2021 - December 31, 2021

January 3, 2022

0.15

December 17, 2021

January 1, 2022 - March 31, 2022

April 15, 2022

0.15

April 1, 2022

April 1, 2022 - June 30, 2022

July 1, 2022

0.15

June 17, 2022

July 1, 2022 - September 30, 2022

September 23, 2022

0.15

September 9, 2022

Any dividends must be declared by our Board of Directors, which will take into account various factors including our current and anticipated operating results, our financial position, REIT requirements, conditions prevailing in the market, restrictions in our debt documents and additional factors they deem appropriate. Dividend payments are not guaranteed, and our Board of Directors may decide, in its absolute discretion, at any time and for any reason, not to pay dividends or to change the amount paid as dividends. In light of the ongoing COVID-19 pandemic, we may take further measures to conserve cash, which may include a suspension, delay or reduction in our dividend. In addition, until such time our consolidated net leverage ratio (as defined in the indenture governing the 2025 Secured Notes) is no greater than 5.75 to 1.0, our 2025 Secured Notes generally limit our ability to pay cash dividends in excess of 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.

Critical Accounting Policies and Estimates

We make certain judgments and use certain estimates and assumptions when applying accounting principles in the preparation of our Condensed Consolidated Financial Statements. The nature of the estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. We have identified the accounting for income taxes, revenue recognition, the impairment of property, plant and equipment, goodwill

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impairment and business combinations as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments.

We believe the current assumptions and other considerations used to estimate amounts reflected in our accompanying Condensed Consolidated Financial Statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our Condensed Consolidated Financial Statements, the resulting changes could have a material adverse effect on our consolidated results of operations and, in certain situations, could have a material adverse effect on our financial condition.

Goodwill—As of September 30, 2022 and December 31, 2021, all of our goodwill is included in our Fiber Infrastructure segment. Goodwill is recognized for the excess of purchase price over the fair value of net assets of businesses acquired. Goodwill is reviewed for impairment on an annual basis during the fourth quarter. Application of the goodwill impairment test requires significant judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; and assignment of goodwill to reporting units. In accordance with ASC 350-20, Intangibles-Goodwill and Other, we evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount (a “Triggering Event”).On the occurrence of a Triggering Event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If it is more likely than not that goodwill is impaired, the fair value of the reporting unit must be compared with its carrying value.

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expenditures as a percentage of revenue change, we may experience future impairment to goodwill (while other assumptions remain constant). Furthermore, a deterioration in market factors such as stock prices or increased interest rates and/or declines in acquisition multiples utilized in the market approach could affect the likelihood and amount of potential impairment. We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each methodology in the determination of the concluded fair value. If the carrying amount of a reporting unit's net assets is less than its fair value, no impairment exists. If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be recognized for the excess and recorded in the Consolidated Statements of (Loss) Income not to exceed the carrying amount of goodwill.

In connection with the preparation of the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022, the Company identified a Triggering Event and, therefore, performed a qualitative and quantitative goodwill impairment test. The Triggering Event was a result of macroeconomic and financial market factors, specifically increased interest rates, impacting our discount rate.As a result of this interim assessment of goodwill, we concluded that the fair value of the Fiber Infrastructure reporting unit, estimated using a combination of the income approach and market approach, is less than its carrying amount. Accordingly, we recorded a $216.0 million goodwill impairment charge in the Fiber Infrastructure reporting unit during the three months ended September 30, 2022.

For further information on our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our audited financial statements included in our Annual Report. As of September 30, ~~2021,~~2022, there has been no material change to these ~~estimates.~~

estimates other than discussion above on goodwill.

Recent Accounting Guidance

New accounting rules and disclosures can impact our reported results and comparability of our financial statements. ~~These matters are described~~See Note 2 of Notes to Condensed Consolidated Financial Statements in ~~our Annual Report.~~

~~In August 2020, the FASB issued ASU 2020-06,~~ Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method.

In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt the guidance ASU 2020-06 as of JanuaryPart I Item 1 ~~2021 using the modified retrospective transition method.~~ Pursuant to the transition guidance, the Company is required to apply the guidance to all impacted financial instruments that were outstanding as of January 1, 2021 with the cumulative effect recognized as an adjustment to the opening balance of retained earnings.

~~As a result of early adopting ASU 2020-06, the Company made certain adjustments to its accounting for the outstanding exchangeable senior unsecured notes.~~ The adoption of ASU 2020-06 resulted in the re-combination of the liability and equity components of these notes into a single liability instrument. The carrying value as of December 31, 2020, totaled approximately $275.4 million and as a result of the adoption increased by $61.1 million to $336.5 million as of January 1, 2021. Because of this adoption, the effective interest rate on the exchangeable senior unsecured notes went from 11.1% to 4.8%. Additional paid-in-capital was reduced by $59.9 million and deferred tax liabilities were reduced by $15.8 million. Approximately $14.6 million of cumulative effect of adoption was recognized to the opening balance of retained earnings as of January 1, 2021.

~~Off-Balance Sheet Arrangements~~

~~As of the date~~ of this Quarterly Report on Form ~~10-Q, we do not have any off-balance sheet arrangements.~~

10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes from the information reported under Item 7A of our Annual Report.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the ~~Securities~~ Exchange Act, ~~of 1934 (the “Exchange Act”),~~ that are designed to ensure that information required to be disclosed by us in the reports that we file or

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submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, ~~2021,~~2022, and based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ~~not~~ effective as of September 30, ~~2021, due to the material weakness in our internal control over financial reporting that was disclosed in our Annual Report~~2022..

~~Internal Control over Financial Reporting~~

As ~~disclosed in “Part II. Item 9A. Controls and Procedures” in our Annual Report, during the fourth quarter of 2020, we identified a material weakness in our internal control over financial reporting due to~~ ineffective controls over the annual goodwill impairment assessment, specifically, the control activities over the determination of the carrying value to be used in the assessment of goodwill impairment did not operate effectively due to an insufficient complement of qualified personnel.~~As of September 30, 2021, management~~ ~~is continuing to implement the remediation plan as disclosed in “Part II. Item 9A. Controls and Procedures” in our Annual Report, which is described below.~~

Management believes that our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with U.S. GAAP. Our principal executive officer and principal financial officer have certified that, based on such officer’s knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act, that occurred during the quarter ended September 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~Remediation Plan~~

~~Management is continuing to implement the remediation plan as disclosed in “Part II. Item 9A. Controls and Procedures~~” in our Annual Report, to ensure that the deficiency contributing to the material weakness is remediated such that this control will operate effectively. We believe that these actions, and the improvements we expect to achieve as a result, will effectively remediate the material weakness. However, the material weakness in our internal control over financial reporting will not be considered remediated until management has concluded, through testing, that this control is designed effectively. We expect that the remediation of this material weakness will be completed later in fiscal 2021.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

A description of legal proceedings can be found in Note 14 13 - Commitments and Contingencies to our Condensed Consolidated Financial Statements, included in this report at Part I, Item 1-Financial Statements, and is incorporated by reference into this Item 1.

Item 1A. Risk Factors.

There have been no material changes to the risk factors affecting our business that were discussed in Part I, “Item 1A. Risk Factors” in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The table below provides information regarding shares withheld from Uniti employees to satisfy minimum statutory tax withholding obligations arising from the vesting of restricted stock granted under the Uniti Group Inc. 2015 Equity Incentive Plan. The shares of common stock withheld to satisfy tax withholding obligations may be deemed purchases of such shares required to be disclosed pursuant to this Item 2.

Period

Total Number of Shares Purchased

Average Price Paid per Share⁽¹⁾

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

July 1, 2021 to July 31, 2021

957

$
11.10

—

—

August 1, 2021 to August 31, 2021

—

—

—

—

September 1, 2021 to September 30, 2021

89,513

12.94

—

—

Total

90,470

$
12.92

—

—


Period	Total Number of Shares Purchased	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2022 to July 31, 2022	616	$	9.88	—	—
August 1, 2022 to August 31, 2022	—	—		—	—
September 1, 2022 to September 30, 2022	—	—		—	—
Total	616	$	9.88	—	—

⁽¹⁾ The average price paid per share is the weighted average of the fair market prices at which we calculated the number of shares withheld to cover tax withholdings for the employees.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

None

~~None~~Table of Contents

Item 6. Exhibits.

~~Exhibit~~ ~~Number~~	~~Description~~
Exhibit Number		Description
~~4.1~~		Indenture, dated October 13, 2021, by and among Uniti Group LP, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC, as Issuers, the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, governing the 6.000% Senior Notes due 2030 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated and filed with the SEC as of October 13, 2021 (File No. 001-36708))

~~4.2~~	Form of 6.000% Senior Notes due 2030 (included in Exhibit 4.1) ((incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K dated and filed with the SEC as of October 13, 2021 (File No. 001-36708))

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31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith.

~~Filed herewith.~~

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITI GROUP INC.

Date:

November ~~4, 2021~~

7, 2022

/s/ Paul E. Bullington

Paul E. Bullington

Senior Vice President – Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date:

November ~~4, 2021~~

7, 2022

/s/ Travis T. Black

Travis T. Black

~~Interim~~
Vice President – Chief Accounting Officer

(Principal Accounting Officer)

(Thousands, except par value)	(Unaudited) September 30, 2021			December 31, 2020
Assets:
Property, plant and equipment, net	$	3,472,642		$	3,273,353
Cash and cash equivalents		69,751			77,534
Accounts receivable, net		39,014			62,952
Goodwill		601,878			601,878
Intangible assets, net		372,076			390,725
Straight-line revenue receivable		33,839			13,107
Other assets, net		122,901			152,883
Investment in unconsolidated entities		64,659			66,043
Deferred income tax assets, net		7,524			-
Assets held for sale		-			93,343
Total Assets	$	4,784,284		$	4,731,818
Liabilities and Shareholders' Deficit:
Liabilities:
Accounts payable, accrued expenses and other liabilities, net	$	156,428		$	146,144
Settlement payable (Note 14)		358,329			418,840
Intangible liabilities, net		180,459			187,886
Accrued interest payable		60,726			95,338
Deferred revenue		1,143,301			995,123
Derivative liability, net		13,606			22,897
Dividends payable		964			36,725
Deferred income tax liabilities, net		-			10,540
Finance lease obligations		15,538			15,468
Contingent consideration		-			2,957
Notes and other debt, net		4,973,174			4,816,524
Liabilities held for sale		-			55,752
Total liabilities		6,902,525			6,804,194

Commitments and contingencies (Note 14)

Shareholders' Deficit:
Preferred stock, $0.0001 par value, 50,000 shares authorized, 0 shares issued and outstanding		-			-
Common stock, $0.0001 par value, 500,000 shares authorized, issued and outstanding: 234,495 shares at September 30, 2021 and 231,262 at December 31, 2020		23			23
Additional paid-in capital		1,208,611			1,209,141
Accumulated other comprehensive loss		(11,984	)		(20,367	)
Distributions in excess of accumulated earnings		(3,333,686	)		(3,330,455	)
Total Uniti shareholders' deficit		(2,137,036	)		(2,141,658	)
Noncontrolling interests:
Operating partnership units		18,670			69,157
Cumulative non-voting convertible preferred stock, $0.01 par value, 3 shares authorized, 1 issued and outstanding		125			125
Total shareholders' deficit		(2,118,241	)		(2,072,376	)
Total Liabilities and Shareholders' Deficit	$	4,784,284		$	4,731,818

(Thousands)	Location on Condensed Consolidated Balance Sheets	September 30, 2021			December 31, 2020
Operating leases
ROU assets, net	Other assets, net	$	72,965		$	97,850
Lease liabilities	Accounts payable, accrued expenses and other liabilities, net		49,902			71,483

Finance leases
ROU asset, gross	Property, plant and equipment, net	$	72,254		$	128,098
Lease liabilities	Finance lease obligations		15,538			48,724

Weighted-average remaining lease term
Operating leases		8.9 years			12.2 years
Finance leases		13.0 years			13.3 years

Weighted-average discount rate
Operating leases			9.2	%		9.9	%
Finance leases			9.8	%		8.0	%

(Thousands)	Sublease Rentals
2021	$	2,896
2022		9,175
2023		9,252
2024		9,331
2025		9,411
Thereafter		136,554
Total	$	176,619

(Thousands)
Assets and liabilities sold:
Assets:
Property, plant and equipment, net	$	44,685
Goodwill		17,794
Intangible assets, net		7,264
Right of use assets, net		19,841
Total assets	$	89,584

Liabilities:
Lease liabilities	$	18,779
Intangible liabilities, net		4,492
Finance lease obligations		32,343
Total liabilities	$	55,614

Cash consideration	$	62,113
Less: total assets and liabilities sold, net		(33,970	)
Gain on sale of operations	$	28,143

(Thousands)
Consideration:
Asset Purchase Agreement	$	284,550
Fair value of settlement obligation		438,577
Total consideration	$	723,127

Fair values of the assets acquired and liabilities assumed as of the acquisition date:
Property, plant and equipment	$	170,754
Intangible assets, net		69,832
Other assets		27,632
Intangible liabilities, net		(195,091	)
Total assets acquired, net		73,127
Settlement expense		650,000
Total	$	723,127

(Thousands)		December 31, 2020				Transfers into Level 3				(Gain)/Loss included in earnings				Settlements				September 30, 2021
Contingent consideration		$	2,957			$	-			$	22			$	(2,979	)		$	-

	Nine Months Ended September 30, 2020
(Thousands)	Leasing		Fiber Infrastructure		Towers		Consumer CLEC			Corporate			Subtotal of Reportable Segments
Revenues	$	552,042	$	232,942	$	6,112	$	651		$	-		$	791,747


Adjusted EBITDA	$	545,792	$	81,453	$	77	$	(461	)	$	(23,717	)	$	603,144
Less:
Interest expense														388,427
Depreciation and amortization		155,216		93,957		783		791			223			250,970
Other expense, net														12,186
Settlement expense														650,000
Transaction related and other costs														55,344
Gain on sale of real estate														(86,726	)
Stock-based compensation														10,446
Income tax benefit														(7,650	)
Adjustments for equity in earnings from unconsolidated entities														1,287
Net loss													$	(671,140	)

Period	Total Number of Shares Purchased		Average Price Paid per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2021 to July 31, 2021		957	$	11.10		—		—
August 1, 2021 to August 31, 2021		—		—		—		—
September 1, 2021 to September 30, 2021		89,513		12.94		—		—
Total		90,470	$	12.92		—		—