Uniti Group speeds up growth to challenge NBN monopoly

Uniti Group speeds up growth to challenge NBN monopoly

Date of Report: 16th November 2021
ASX: UWLPrice A$3.86

52 Week Range: A$1.42 - A$4.390

Market Cap: A$2.71 billion

Sector: Telecommunication Services

Every second week we invite a leading fund manager to present at The Insider: Meet the Fund Manager. Ed Prendergast, from Pengana Capital Group, selected Uniti Group as one of his three favourite stocks as the company moves from acquisitions to focus on organic growth.

June 4, 2021

September 29, 2021

The Insider: Meet the Fund Manager sessions are a great way to hear directly from leading fund managers. They share their approach to investing, favourite companies and their market view for the year ahead.

The Insider: Meet the CEO sessions feature a selection of company leaders who provide a succinct overview of big things their companies are doing. 

Since listing on the ASX in February 2019, Uniti Group has grown its value to $3 billion, acquiring seven telco businesses along the way and building a platform for consistent, long-term growth with its strategy to invest in fibre infrastructure companies.

“Fibre is an amazing business,” Pengana Capital Group fund manager Ed Prendergast told Reach Markets recently. “You build something, it pays itself off reasonably quickly and it earns cash over a long period of time.”

Spotting a big opportunity in telco, Mr Prendergast selected Uniti Group as one of his favourite stocks during his Meet the Fund Manager session, quoting its 30% market share in new suburban developments where, he thinks, developers are looking for alternatives to the NBN.

Uniti Group CEO Michael Simmons said the company went from a loss-incurring, sub-$30 million market cap business to an ASX 200 company with an enterprise value of $3 billion and a run rate EBITDA of more than $135 million.

A halt in acquisitions during the second half of FY21 saw Uniti Group considerably increase its earnings and reduce debt by $47 million with the biggest callout being cash generation.

“We are now in a significant cash surplus position and considering capital management options such as buybacks and dividends,” said Mr Simmons, who believes the company has secured its growth with a compound annual growth rate of more than 20% over the next five years. Mr Prendergast adds in from a macro standpoint: “It doesn’t matter what happens with interest rates or economic situations; Uniti Group’s growth is locked in for over seven years.”

Click here to view more videos from Ed Prendergast’s ‘Meet the Fund Manager’ session, or click here to view the full ‘The Insider: Meet the CEOs’ session.

The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.

The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.

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Joseph ConstableNon Executive Director and Portfolio ManagerHGL Limited (Hancock & Gore)

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The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.
Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.
The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.