The Uniti Group Ltd (ASX: UWL) share price is on fire this Wednesday following the release of its latest update. Specifically, the telecommunications company provided information on its proposed share buyback program, capital management, and an operational update for good measure.
At the time of writing, Uniti shares are up 8.03% to $4.17. However, the share price had been as high as $4.26 earlier in trade. In contrast, the S&P/ASX 200 Index (ASX: XJO) is 0.71% in the red.
Positive trifecta picks up the Uniti share price
It's a happy hump day for Uniti Group shareholders today as the share price steams ahead today. Despite not being a price-sensitive announcement, the optimism appears to be centred around the company's update from this morning.
The positive news was broken down into 3 key takeaways. Firstly, the company noted the notification period for its share buyback program had come to an end. This means the buyback proposed by Uniti on 27 October 2021 can now progress.
As such, Uniti informed shareholders that it intends to commence the share buyback on 10 November. Although subject to market conditions, the telecommunications company has set out its plan to buy back up to 10% of shares on issue. This equates to a maximum of approximately 68.7 million shares over a 12-month period.
Secondly, the update shone a light on the company's recent capital management. According to the release, strong free cash flow has continued in the first 4 months of FY22. Thanks to this, Uniti has been able to reduce its net debt from $208 million at the end of June 2021 to $183 million. All of this is good news for the Uniti share price.
The improved capital position gives Uniti confidence in proceeding with the share buyback. In turn, it expects to improve earnings per share (EPS) based on the following:
- Low and further capacity to reduce net leverage
- Ability to fund growth capital expenditure and deliver free cash flow
- Continued strong growth in earnings
- Continued strong growth in the fibre-to-the-premises contracted order book
- Long term forecasts of strong organic growth and expanding free cash flow
- Improved access to debt capital on favourable terms
Performance update
The final positive point concerned the company's FY22 year-to-date operational performance. Uniti mentioned its indicators are ahead of internal budgets. These include group revenue, underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), free cash flow, and net leverage.
For these reasons, the company confirmed it's on track to meet or exceed broker consensus forecasts for $144.5 million in underlying EBITDA for the full FY22 year.
The Uniti Group share price is now up 143% since the beginning of 2021.
