Uniti Group Inc. and Windstream Holdings II, LLC last week announced an agreement to merge companies.

The merger combines Uniti's wholesale-owned fiber network with Windstream's Fiber-to-the-Home (FTTH) business, which the duo say will create a "premier insurgent fiber provider in the US," to compete in the Tier II and III markets across the country.

The agreement will see Uniti shareholders hold approximately 62 percent of the outstanding common equity of the combined company, with Windstream shareholders the remaining 38 percent.

As part of the agreement, Windstream shareholders will receive $425 million of cash, and $575m of preferred equity in the new combined company.

Uniti plans to fund the $425m of cash consideration to shareholders of Windstream from operations, revolver borrowings, and/or future capital markets transactions.

Uniti noted last week that the terms of the agreement have been "unanimously approved by both companies’ board of directors."

“As a combined company, we will continue our disciplined growth trajectory while expanding FTTH buildouts and significantly improving our overall financial profile," said Kenny Gunderman, president and CEO of Uniti.

"The demand for fiber broadband has never been greater, and Uniti is now expanding its reach into FTTH with an attractive scaled platform. The combination of Uniti and Windstream also removes several dis-synergies that exist in the current landlord/tenant relationship and greatly enhances Uniti’s optionality for strategic initiatives. We look forward to working with Windstream to create a national fiber powerhouse that will continue to bridge the digital divide for our customers."

The combined company will serve more than 1.1 million customers, with a strong presence in the Midwest and Southeast region.

So far, Windstream has built up its FTTH footprint to more than 1.5 million premises. Additional cash flow from the merger will expand this number by one million households.

It was reported back in February that tower owner Uniti had entered talks with Windstream to merge.

Uniti is a real estate investment trust based in Little Rock, Arkansas, and owns fiber and wireless towers, with around 138,000 fiber route miles, and 8.3 million fiber strand miles.

Windstream, also based in Little Rock, provides broadband services in rural areas and is one of Uniti's biggest customers.

Uniti was previously part of Windstream before the two split in 2015 when they renegotiated their lease agreement.

The merger isn't expected to be completed until the second half of 2025, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Uniti shareholders.