This month we highlight Uniti Group Ltd. (UWL.ASX) as a shariah-compliant investment.

UWL is a leading provider of optical fibre technology and infrastructure networks with over 250,000 connections to Australian residential premises.  Through strong organic growth in rolling out fibre networks to new housing estates and apartments, and a number of strategic acquisitions, it is now the second largest fibre network provider in an effective duopoly with the government-owned National Broadband Network (NBN).  Importantly, it is also the only vertically integrated operator able to sell in both the wholesale channel to developers and directly to retail customers.  This provides a strategic competitive advantage in growing its network and building scale.

We view fibre telecommunication networks as critical social infrastructure and utility type assets like toll roads, airports and power transmission.  This has only been reinforced through the Covid pandemic and lockdowns as digital connectivity has become essential and we have pivoted to working, schooling, shopping and being entertained online. This has seen a step change in the demand for higher speed internet and fibre connectivity.  It is expected this represents a structural shift with the pandemic accelerating digital transformation and more permanent changes in how we live our lives.

In addition to highlighting the social infrastructure importance of fibre networks, Covid has shown how high-speed broadband can help in improving work-life balance through increased flexibility in working and schooling from home, reducing travel time and increasing the options in terms of where we live. In the 12 months to 30 June 2021 wholesale broadband network usage increased by 34% during the hours of 10am to 6pm, as Australians increasingly moved online.  In some instances,  it  also provides the option to consider living more regionally, helping address housing affordability as well as lifestyle.

 

UWL’s optical fibre technology has the benefit of offering faster and less disruptive connectivity, but also creating lower carbon emissions and waste. The technology uses substantially less power than traditional (copper) networks. For example, a 50Mbps service on an optical fibre network consumes up to ~35% less power than an equivalent traditional network service and these benefits are greater at faster speeds (i.e. 1 Gbps). In addition optical fibre networks are largely constructed from fibres of glass and sand and last 10-20 years longer than traditional technologies that use copper and metal.

 

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Chief Investment Officer

Strategic leader with 19 years of industry experience and over 7 years in executive and senior management positions leading small to medium sized multi-functional operations in the funds management and superannuation industry. A record of delivering outstanding investment outcomes for members and a proven track record in driving member engagement through investment education and insights.

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