Uniti Group Inc.

Note 15. Segments:

Following the completion of the Merger, we updated our segment structure to include new operating segments for the acquired Windstream businesses, combined the legacy fiber and leasing businesses into a new segment and no longer reported corporate separately. Prior period segment information has been recast to reflect these changes for all periods presented.

The Company’s segments are determined based on the current organizational and management structure in place and the internal financial information regularly reviewed and used by the chief operating decision maker (“CODM”) for making operating decisions and assessing performance. Our Chief Executive Officer, as CODM, uses segment contribution margin, which is computed as segment revenues and sales less segment expenses, to evaluate performance and allocate operating and capital resources, primarily in the annual budgeting and forecasting process and to establish performance targets for purposes of management incentive compensation. The CODM considers budget-to-actual variances when making decisions about allocating operating and capital resources to the segments.

For financial reporting purposes, our operating and reportable segments consist of:

Kinetic – We manage asone business our residential, business and wholesale operations in our ILEC markets due to the similarities with respect to service offerings and marketing strategies. Residential customers can bundle voice, high-speed internet and video services, to provide one convenient billing solution and receive bundle discounts. We offer a wide range of advanced internet services, local and long-distance voice services, integrated voice and data services, and web conferencing products to our business customers. These services are equipped to deliver high-speed internet with competitive speeds, value added services to enhance business productivity and options to bundle services to meet our business customers’ needs. Products and services offered to business customers also include managed cloud communications and security services. Our Kinetic wholesale operations provide network bandwidth to other telecommunications carriers, network operators, governmental entities, content providers, and large cloud computing and storage service providers. These services include network transport services to end users, Ethernet and Wave transport of up to 400 Gbps, and dark fiber and colocation services. Wholesale services also include fiber-to-the-tower connections to support the wireless backhaul market. In addition, we offer voice and data carrier services to other communications providers and to larger-scale purchasers of network capacity.

Kinetic service revenues also include revenue from federal and state USF programs, amounts received from RDOF, and certain surcharges assessed to our customers, including billings for our required contributions to federal and state USF programs. Kinetic sales revenues include sales of various types of communications equipment and products to customers, including selling network equipment to contractors on a wholesale basis.

Uniti Solutions – We manage asone business our mid-market and large business customers located within our CLEC markets and provide services over network facilities primarily leased from other carriers. Products and services consist of software solutions and network connectivity offerings. Software solutions include SASE, UCaaS, OfficeSuite UC®, SD-WAN and associated network access products and services. Network connectivity offerings consist of dynamic internet protocol, dedicated internet access, multi-protocol label switching services, integrated voice and data, long distance and other managed services, including TDM voice and data services and certain surcharges assessed to customers. Uniti Solutions’ sales revenues include sales of high-end data and communications equipment which facilitate the delivery of advanced data and voice services to business customers.

Fiber Infrastructure – We manage asone business our legacy fiber and leasing businesses combined with the CLEC portion of Windstream's acquired wholesale business. Our Fiber Infrastructure operations are focused on providing network bandwidth to other telecommunications carriers, network operators, content providers, and large cloud computing and storage service providers. Services provided include network transport services to end users, Ethernet and Wave transport of up to 400 Gbps, and dark fiber and colocation services. Services also include fiber-to-the-tower connections to support the wireless backhaul market. In addition, we offer voice and data carrier services to other communications providers and to larger-scale purchasers of network capacity. We are also 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, in addition to the leasing of dark fiber on our existing dark fiber network assets that we either constructed or acquired. Fiber Infrastructure sales revenues primarily represent amounts recognized from sales-type leases for fiber where control of the fiber has transferred to the customer.

Segment revenues are based upon each customer’s classification to an individual segment and include all services provided to that customer. Segment expenses include direct expenses incurred in providing services and products to segment customers and selling, general and administrative expenses that are directly associated with specific segment customers or activities. These direct expenses include network access and facilities, network operations and engineering, customer specific access costs, cost of sales, field operations, service delivery, sales and marketing, product development, licensing fees, provision for estimated credit losses, and compensation and benefit costs for employees directly assigned to the segments.

Costs related to centrally-managed administrative functions, including information technology, accounting and finance, legal, human resources, and other corporate management activities are not monitored by or reported to the CODM by segment. We also do not assign to the segments depreciation and amortization expense, goodwill impairment, gain on sale of operating assets, gain on settlement of preexisting relationships in connection with the Merger or transaction-related and other costs, because these items are not monitored by or reported to the CODM at a segment level.

Interest expense, net and loss on extinguishment of debt have been excluded from segment operating results because we manage our financing activities on a total company basis and have not assigned any debt or finance lease obligations to the segments. Other income (expense), net, and income tax benefit are not monitored as a part of our segment operations and, therefore, these items also have been excluded from our segment operating results.

Capital expenditures for network enhancements and information technology-related projects benefiting the Company as a whole are not assigned to the segments and are presented as corporate/shared capital expenditures. Asset information by segment is not monitored or reported to the CODM and therefore has not been presented. Substantially all of our customers, operations and assets are located in the U.S. Following the Merger, we do not have any single customer that provides more than 10% of our total consolidated revenues and sales.

The following table summarizes our segment results for the years ended December 31:

(a)Consists of intercompany charges to Uniti Solutions and Fiber Infrastructure for resale access services.

(b)Includes advertising, contract services and fees, fleet-related expenses (e.g., leasing costs, fuel, maintenance and repair costs), and employee-related travel costs.

(c)Includes federal and state USF fees, provision for credit losses, equipment-related shipping and refurbishment costs, and cost of sales.

(d)Customer access expense represents the portion of interconnect costs directly assigned to the segment.

(e)Reflects the offsetting expense effects of the intercompany billing agreements between segments.

(f)Consists of intercompany charges to Kinetic for licensing fees related to the usage of the OfficeSuite UC© product.

(g)Includes support agreements, contract services and fees, and employee-related travel costs.

(h)Includes federal and state USF fees, provision for credit losses, third-party commissions, staff augmentation for professional services, product licensing fees, and cost of sales.

(i)Consists of intercompany charges to Kinetic and Uniti Solutions primarily for usage of network and colocation facilities owned or operated by Fiber Infrastructure.

(j)Includes advertising, contract services and fees, and employee-related travel costs.

(k)Includes federal and state USF fees, provision for credit losses, early termination fees, and cost of fiber sales.

Capital expenditures by segment were as follows for the years ended December 31:

(a)Represents capital expenditures not directly assigned to the segments and primarily consists of capital outlays for network enhancements and information technology-related projects benefiting Uniti as a whole.

The following table reconciles total segment revenues and sales to total consolidated revenues and sales for the years ended December 31:

The following table reconciles total segment contribution margin to consolidated net income (loss) for the years ended December 31:

Note 16. Income Taxes:

Following the Merger, the Company is subject to U.S. federal and state income taxes as a corporation. We are subject to the statutory requirements of the locations in which we conduct business, and state and local income taxes are accrued as deemed required in the best judgment of management based on analysis and interpretation of respective tax laws.

As previously discussed in Note 3, the Company adopted the required expanded presentation and disclosure requirements of ASU 2023-09 for the 2025 annual reporting period on a prospective basis. Information for income taxes paid, net of refunded amounts for the year ended December 31, 2025 is presented in Note 20.

The U.S. and non-U.S. components of income before income tax expense for the year ended December 31, 2025 were as follows:

Income tax benefit as reported in the accompanying consolidated statements of income (loss) was comprised of the following for the years ended December 31:

An income tax expense reconciliation between the U.S. statutory tax rate and the effective tax rate for the year ended December 31, 2025 was as follows:

(a)State taxes in Alabama, California, Georgia, Pennsylvania, and local municipalities comprise greater than 50% of the tax effect in this category.

An income tax expense reconciliation between the U.S. statutory tax rate and the effective tax rate was as follows for the years ended December 31:

The effective tax rate on income from continuing operations for the years ended December 31, 2024 and 2023 differs from tax at the statutory rate primarily due to our former status as a REIT.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

The Company holds all of its assets and conducts all of its activities through an entity that is taxed as a partnership for U.S. income tax purposes, New Uniti Holdco, LP (“NUH”), which is wholly owned by the Company. In addition, the corporate subsidiary through which we operate Uniti Fiber, Uniti Fiber Holdings remains a separately taxable entity owned by NUH and issubject to U.S. federal, state and local corporate income taxes. The Company has elected to look through the partnership for purposes of determining deferred income tax assets and liabilities and as a result has not provided for deferred taxes on the portion of the basis difference in its investment in NUH that relates to nondeductible goodwill resulting from the Merger as well as outside basis differences in certain corporate subsidiaries.

The Company has a book-tax basis difference in its investment in NUH. As of December 31, 2025, the outside book-tax basis difference, excluding the nondeductible goodwill resulting from the Merger as well as outside basis differences in certain corporate subsidiaries, is$447.0 million of tax basis in excess of carrying value, which is equal to the aggregate of the book-tax basis differences of the assets and liabilities inside NUH. The below table reflects the significant components of the inside basis differences in the assets and liabilities of NUH and all other deferred tax balances not included within NUH:

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets.

The Company has evaluated the positive and negative evidence, including reversal of existing temporary differences and projected future income. The Company believes that it is more likely than not that the benefit from its deferred income tax assets in excess of the reversal of existing deferred income tax liabilities will not be realized. In addition, certain tax planning strategies which were considered in the Company’s evaluation of the need for a valuation allowance in previous years are no longer available post-Merger. Therefore, as of December 31, 2025, the Company recorded a total valuation allowance of approximately $638.3 million to reduce our deferred income tax assets to amounts expected to be realized.

In connection with the Merger, the Company recorded an opening net deferred income tax liability through purchase price accounting (see Note 4) of $290.2 million related to the difference between carrying values and tax bases of the assets and liabilities of Windstream that were acquired, as well as tax attribute carryforwards. Additionally, the Company has recorded net deferred income tax assets, net of valuation allowance, through income tax expense of $283.4 million related to the historical Uniti leasing operations that formerly benefited from status as a REIT, and through other comprehensive income of $0.6 million. Finally, due to the effects of the Merger, the Company re-evaluated the realizability of the deferred income tax assets of Uniti Fiber Holdings and recorded valuation allowance against the deferred income tax assets, resulting in a net deferred income tax liability of $11.5 million. These components result in the net deferred income tax liability of $17.7 million in the table above.

On July 4, 2025, H.R.1, also known as the One Big Beautiful Bill Act (the “Act”), was signed into law in the U.S. and contains a broad range of tax reform provisions affecting businesses. We evaluated the Act during the year ended December 31, 2025. The change in law, specifically to IRC Sec. 163(j), will reduce the amount of interest expense that is disallowed annually and is factored into the Company’s assessment of the realizability of its deferred income tax assets, including disallowed interest expense carryforward. We expect the Act will change the timing of our cash tax payments in future periods.

The Company and its subsidiaries have federal net operating loss (“NOL”) carryforwards as of December 31, 2025 of approximately $179.7 million, which will expire between 2030 and 2037, and approximately $1,134.2 million, which will not expire but the utilization of which will be limited to 80% of taxable income annually under provisions enacted in the Tax Cut and Jobs Act. As of December 31, 2025, tax effected state NOL carryforwards were approximately $45.9 million and expire annually in varying amounts from 2026 through 2045.

As of December 31, 2025, the Company and its subsidiaries have federal IRC Sec. 163(j) interest expense carryforwards of approximately $1,053.1 million which can be carried forward indefinitely and utilized in future years. The Company also has tax effected state interest expense carryforwards of $30.3 million in states that conform to the limitations of IRC Sec. 163(j).

As a result of the Merger, Uniti Fiber Holdings experienced a change of ownership as defined by the Internal Revenue Code Section 382, which results in an annual limitation on the future utilization of certain tax attributes. The Merger did not result in a change of ownership for Windstream as defined by Internal Revenue Code Section 382. Certain Windstream tax attributes acquired in the Merger remain subject to historical limitations on usage from previous transactions.

With the few exceptions due to NOL carryforward availability, our 2022 returns forward remain open to examination. Certain entities and tax periods with NOLs available to carry forward will generally remain open to examination several years after the applicable loss carryforwards have been utilized or expire.

The Company or its subsidiaries file tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and certain foreign jurisdictions. A reconciliation of the Company’s beginning and ending liability for unrecognized tax benefits is as follows:

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as additional tax expense. The Company recorded $1.3 million reversal of interest expense and penalties due to the expiration of statute for the period ending December 31, 2025. There wereno amounts accrued for interest and penalties related to unrecognized tax benefits as of December 31, 2025.