Uniti Group (ASX:UWL) share price soars on record revenue in FY21

It was a record financial year for the telecommunications company…

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The Uniti Group Ltd (ASX: UWL) share price is flying higher in early trade on Tuesday. This follows the telecommunications company reporting its full-year results for FY21 this morning.

At the time of writing, Uniti shares are up 5.85% to $4.16. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is 0.3% in the green.

Uniti share price jumps on record results

  • Record revenue, up 175% to $159.9 million
  • Underlying earnings before interest, tax, depreciation, and amoritisation (EBITDA) of $93.7 million, up 254%.
  • Record operating free cash flow of $64.2 million
  • Record earnings of $29.2 million, reflecting an increase of 83% from FY20
  • Completed the acquisitions of HabourISP, OptiComm, and Velocity during FY21
  • 501,198 secured premises (excluding Velocity) as at June 2021, representing an increase of 15% in the past 6 months

What happened in FY21 for Uniti Group

The Uniti Group share price is rallying on Tuesday after reporting its full-year results. The market is bidding the telecommunications company’s shares higher after a record result on numerous fronts.

According to the release, Uniti achieved revenue of $159.9 million for FY21 representing an increase of 175% from the previous year. The stellar revenue increase has been the result of the company’s various acquisitions and increased number of secured premises.

Likewise, Uniti’s contracted order book has grown to 250,460 construction premises. The company’s national digital infrastructure footprint now spans 1,199 sites across Australia. This expansion has been met with optimism, pushing up the Uniti share price.

Furthermore, many investors will know that Uniti Group has been busily acquiring and integrating additional companies over the past year.

The combination of OptiComm and Telstra Velocity has enabled the company to create a substantial core telecommunications and technology infrastructure business during the year.

This push means Uniti now considers itself as the largest competitor to NBN Co in the fibre to the premise (FTTP) market.

However, as mentioned earlier in the year, Uniti’s board has advised it is unlikely to proceed with additional acquisitions in the short term.

Instead, the board is now moving to the next phase of driving organic growth in the consolidated business group. Although, management said it would not completely rule out asset acquisitions if they were to be complementary.

What did management say?

Commenting on the record result, Uniti Group Managing Director and CEO Michael Simmons said:

Uniti is a core digital infrastructure business with high earnings growth and high free cash after funding the infrastructure to generate the earnings.

In two and a half years, Uniti has transitioned from a loss making entity with market capitalisation of approximately $30M to an ASX200 business with an enterprise value fast approaching $3B. This has been achieved by investing in the right markets. And today we have a very low market share in these markets.

Additionally, in the letter to shareholders, Mr Simmons said:

For the reasons outlined in this letter, we believe the core infrastructure platform that we have established, and the simplified strategy to win new business in market, coupled with our already secured contract order book, is poised to deliver substantial organic growth.

What’s next for Uniti Group?

No specific guidance was supplied by Uniti Group in its full-year results. Though the mission is fairly clear — the company intends on driving organic growth through winning greater market share in greenfield markets.

Uniti’s market share in its core operating segments remains low. As such, this is still considered a sizeable opportunity for telecom challengers.

Uniti Group share price snapshot

The Uniti Group share price has delivered exceptional returns to shareholders over the past 12 months. While the S&P/ASX 200 Index (ASX: XJO) provided a solid return of 22%, Uniti shares climbed 174% during the same period.

These returns have continued in strength during the past month with the Uniti share price appreciating 21% in 1 month.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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