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UTAH INFRASTRUCTURE AGENCY (UIA)
$48,350,000* Telecommunications Revenue Bonds, Series 2019
CREDIT SUMMARY OCTOBER 2019
_______________________ *Preliminary, subject to change.
UTAH INFRASTRUCTURE AGENCY (UIA) $48,350,000* Telecommunications - - PowerPoint PPT Presentation
UTAH INFRASTRUCTURE AGENCY (UIA) $48,350,000* Telecommunications - - PowerPoint PPT Presentation
UTAH INFRASTRUCTURE AGENCY (UIA) $48,350,000* Telecommunications Revenue Bonds, Series 2019 CREDIT SUMMARY O CTOBER 2019 _______________________ *Preliminary, subject to change. UIA T ELECOMMUNICATIONS R EVENUE B ONDS , S ERIES 2019 TABLE OF
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
PLANNED MAINTENANCE SCHEDULE .................................................................................................................................................................................................... 27 SECTION VII: DATA USAGE STATISTICS .................................................................................................................................................................................................... 28 CONTINUED EXPANSION IN DATA USE ............................................................................................................................................................................................... 28 BARRIERS TO ENTRY REMAIN HIGH FOR OTHER FTTH ENTITIES ..................................................................................................................................................... 28 SECTION VIII: RESIDENTIAL AND COMMERCIAL COMPETITIVE LANDSCAPE........................................................................................................................................ 29 COMPETITION ........................................................................................................................................................................................................................................... 29 SECTION IX: RESIDENTIAL AND COMMERCIAL MARKETING PLANS ..................................................................................................................................................... 31 BUDGET ...................................................................................................................................................................................................................................................... 31 STAFFING .................................................................................................................................................................................................................................................... 31 APPROACH ................................................................................................................................................................................................................................................. 32 SUCCESS MEASURES .................................................................................................................................................................................................................................. 33 SERVICE PROVIDERS .................................................................................................................................................................................................................................. 33 LOW CHURN ............................................................................................................................................................................................................................................. 34 SECTION X: FINANCIAL MATTERS ............................................................................................................................................................................................................. 35 UIA FINANCIAL INFORMATION .............................................................................................................................................................................................................. 35 MEMBER CITY FRANCHISE FEE INFORMATION ...................................................................................................................................................................................... 39 SECTION XI: ONGOING NETWORK EXPANSION ................................................................................................................................................................................... 40 EXPANSION WITHIN MEMBER CITIES .................................................................................................................................................................................................... 40 EXPANSION BEYOND MEMBER CITIES.................................................................................................................................................................................................... 40 SECTION XII: FUTURE PLANS FOR UTOPIA/UIA .................................................................................................................................................................................... 41 SUMMARY BUILDOUT FOR EXISTING MEMBER CITIES .......................................................................................................................................................................... 41 ADDITIONAL UTOPIA/UIA DEBT ......................................................................................................................................................................................................... 41
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
DISCLAIMER
This electronic investor presentation that you are about to view is provided as of October 8, 2019 for a proposed offering of Telecommunications Revenue Bonds, Series 2019 (the “Bonds”). This presentation has been prepared for information purposes only and for your sole and exclusive use in connection with the proposed transaction. The information contained herein is subject to completion and amendment. Any offer or solicitation with respect to the Bonds will be made by means of a preliminary official statement or a final official statement. If you are viewing this investor presentation after the date stated above, events may have occurred that have a material adverse effect on the financial information presented and neither the issuer nor the underwriter have undertaken any obligation to update this electronic presentation. This investor presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, including the Bonds, or to adopt any investment strategy. You will be responsible for consulting your own advisors and making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the issuer nor the underwriter is making any recommendation (personal or otherwise)
- r giving any investment advice and will have no liability with respect thereto.
Neither the issuer nor the underwriter makes a representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this investor presentation or (ii) legal, tax, credit or accounting treatment of any purchase of Bonds by you or any other effects such purchase may have on you and your affiliates or any other parties to such transactions and their respective affiliates. The information contained herein has been compiled from sources believed to be reliable, however neither the issuer nor the underwriter shall have any liability whatsoever (in negligence or otherwise) to any person for any loss arising from this investor presentation or any information supplied in connection therewith. This investor presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward-looking
- statements. Accordingly, we caution you not to place undue reliance on these statements. All statements other than the statements of historical
fact could be deemed forward-looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances. No assurance can be given that any transaction mentioned herein could in fact be executed. Past performance is not indicative of future returns, which will vary. Prospective investors should contact their salesperson at, and execute the transactions through an entity of the underwriter qualified in their home jurisdiction unless governing law permits otherwise. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the provisions of this page.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
INTRODUCTION
MEETING ATTENDEES UTAH INFRASTRUCTURE AGENCY Roger Timmerman, Chief Executive Officer (801) 613-3800 rtimmerman@utopiafiber.com Laurie Harvey, Chief Financial Officer (801) 613-3800 lharvey@utopiafiber.com Kim McKinley, Chief Marketing Officer (801) 613-3800 kmckinley@utopiafiber.com LEWIS YOUNG ROBERTSON & BURNINGHAM, INC. (FINANCIAL ADVISOR) Laura Lewis, Principal (801) 596-0700 laura@lewisyoung.com KEYBANC CAPITAL MARKETS INC. (SENIOR MANAGING UNDERWRITER) Thomas Coverick, Managing Director (312) 730-2715 thomas.coverick@key.com Jerry Nowlin, Director (801) 297-5894 jerry.l.nowlin@key.com Eric Rex, Associate (216) 689-6492 eric.rex@key.com CHAPMAN AND CUTLER (UNDERWRITER’S COUNSEL) Larry White, Partner (312) 845-3426 white@chapman.com
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EXECUTIVE STAFF BIOGRAPHICAL INFORMATION ROGER TIMMERMAN, CHIEF EXECUTIVE OFFICER, UIA Roger has been serving as UTOPIA Fiber’s Executive Director since 2016 and has been a technology management professional in telecommunications and information technology for over 15 years. Roger has been designing and building networks throughout his career in various roles including Vice President of Engineering for Vivint Wireless, CTO for UTOPIA Fiber, Network Engineer for iProvo, and Network Product Manager for Brigham Young University. Roger earned his Bachelor of Science and Master of Science degrees in Information Technology from Brigham Young University. LAURIE HARVEY, CHIEF FINANCIAL OFFICER / SECRETARY TREASURER, UIA Laurie has been with UTOPIA/UIA since January of 2019. Prior to joining the Agency, she was an Assistant City Manager for Midvale City, one of the Agency’s member cities. She was employed by Midvale City for twenty years. Laurie also has served in the Utah Governor’s Office of Planning and Budget, and has over ten years of experience in Public Accounting. She is a Certified Public Accountant and a Certified Public Finance Officer. She holds a B.S. degree in Accounting from the University of Utah. KIM MCKINLEY, CHIEF MARKETING OFFICER, UIA
- Ms. McKinley is UTOPIA Fiber’s Chief Marketing Officer and joined the company in 2010. In her role as the Marketing Director,
she oversees marketing, residential sales, and installation coordination. Before coming to UTOPIA Fiber, she worked in the Hospitality marketing industry on the east coast. Ms. McKinley has a bachelor’s Degree in Business Administration from the College of Charleston in Charleston, SC.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION I: SERIES 2019 BONDS
SERIES 2019 BONDS USES
Series 2019 Bond proceeds will be used as follows:
- $34.8M Construction.
▪ 31 new fiber footprints (neighborhoods of 800-1,500 homes) ▪ Business builds ▪ MDU/HOA growth costs ▪ Fill in of existing footprints ▪ Expansion outside of network
- $7.8M Installations (assumes 10,000 residential and 1,000 business connections in new and existing areas over a 1.5-year period).
- $2.5M for a building purchase – this component is expected to improve access to electronics inventory and better facilitate field
services and utility locating (blue stakes).
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION II: UTOPIA/UIA
OPEN-ACCESS FIBER
Industry term that means that the operator of the network and the service provider are separate entities. Sometimes referred to as a “wholesale model” or “infrastructure model”. Unlike closed systems is pro-private sector and pro-competition. Utah code refers to it as “leases, sells capacity in, or grants under similar rights to a private provider”.
OPEN-ACCESS ROADS
Municipalities provide street infrastructure that can be shared by competing private shipping companies.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
OPEN-ACCESS TRANSPORTATION INFRASTRUCTURE
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Municipal Airport
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
MUNICIPAL OPEN-ACCESS FIBER
Municipalities provide fiber infrastructure that can be shared by competing telecommunications companies.
Open Access Fiber
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UTOPIA/UIA
Although legally separate entities, UTOPIA/UIA functionally operate as one integrated system. UTOPIA is a strong partner to UIA given the 100% sales tax backstop of UTOPIA’s debt, the proceeds of which were used on core fiber
construction that supports UIA’s operations.
UIA has two employees that it also shares with UTOPIA (Roger Timmerman and Laurie Harvey) and contracts with UTOPIA for management
and operations of the network. The management service fees from UIA to UTOPIA, combined with UTOPIA system revenues, covers all of UTOPIA’s operational costs.
A broad portion of the State’s population can access
UTOPIA/UIA services.
If they choose to do so, Internet Service Providers can
provide their services across UTOPIA / UIA lines.
UTOPIA/UIA Fiber’s economics for future growth benefits
from the following:
- New build within the existing UTOPIA/UIA
footprint is only incremental with no new major crossings, backbone routes, and major construction
- bstacles.
- Has the largest established ecosystem of competitive
service provider partners in the country.
- Established economy of scale that is already covering
all startup costs.
- Existing backbone routes, core electronics and core
facilities are already capable of supporting additional 100k+ subscribers.
- Successful track record of building new areas within
budget and achieving successful revenue targets.
- UTOPIA/UIA superior deployment architecture vs.
competitors is shown below. OPEN INFRASTRUCTURE
Fuels competition among service providers and helps keep
costs competitive.
Pro private sector. Eleven residential providers. Twenty-five business providers.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
GROWTH IN FIBER UNDERSTANDING
The benefits of fiber continue to grow in public awareness. As a result, more and more households are making the switch to fiber. Subscriber growth is very strong in all cities.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION III: UTAH DEMOGRAPHICS AND ECONOMY
DEMOGRAPHICS
Utah has a young population with a median age of 30.5 which is seven
years younger than the median age in the United States (37.8).
- 33% of Utah population is under the age of 20.
Median Housing value statewide ~ $238,300 compared to $193,500
nationally1.
Compared to the nation, Utah has a higher high school graduation
rate as well as higher percentage of its population with bachelor’s degrees.
Median Household income is also higher in Utah at ~$65,325
compared with $57,652 nationally. ECONOMY
Utah’s stellar economy is largely attributable to affordable taxes,
relatively low real estate prices, educated workforce and great quality
- f life.
Job growth in Utah is still strong. Utah has one of the highest job
growth rates in the nation.
Consumer confidence is running high in Utah. The inflation rate in Utah is approximately 2.4%2.
UTOPIA/UIA FIBER BACKBONE
Shown in the picture to the right is UTOPIA/UIA’s fiber backbone
which depicts areas that are capable of being served by the network.
1 U.S. Census Quick Facts. 2 Utah Department of Workforce Services.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
CITIES SERVED BY UTOPIA
Provided below is a table of cities, sorted by population with a
UTOPIA/UIA presence. Currently, 50 Utah cities have some UTOPIA/UIA presence, representing approximately 21% of cities.
Of the cities in Utah that have a population in excess of 10,000
UTOPIA/UIA has fiber in some portion of 59% of those cities.
CITIES SERVED BY UTOPIA Population CITIES SERVED BY UTOPIA Population Salt Lake City 193,744 American Fork 28,770 West Valley* 136,574 Syracuse 28,407 Provo 116,868 Saratoga Springs 26,887 West Jordan 113,699 South Salt Lake 24,630 Orem* 97,499 Farmington 23,140 Sandy 95,836 North Salt Lake 20,301 Ogden 86,701 Payson 19,810
- St. George
82,318 Brigham City* 18,975 Layton* 75,655 Centerville* 17,286 South Jordan 69,034 Heber 14,969 Lehi 61,130 Bluffdale 11,809 Taylorsville 60,436 Lindon* 10,939 Millcreek 59,737 West Point 10,548 Logan 50,676 Pleasant View 9,716 Murray* 49,230 Tremonton 8,426 Draper 47,328 Park City 8,299 Bountiful 44,078 Farr West 6,755 Spanish Fork 38,861 Fruit Heights 6,161 Pleasant Grove 38,756 Perry 4,846 Herriman 35,385 Morgan 4,154 Cottonwood Height 34,285 Vineyard 3,953 Springville 33,044 Garland 2,492 Midvale* 33,035 Woodland Hills 1,527 Kaysville 31,243 Mendon 1,386 Clearfield 30,855 Milford 1,357 Represents cities where fiber to the home is being built. * Original UIA pledging members.
UTOPIA/UIA fiber has a broad reach beyond the boundaries of the member cities. UIA has a contract in place with Idaho Falls to build and manage its FTTH network.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
Shown in the table to the right is a map of the State of Utah showing
the many cities served by UTOPIA/UIA.
Green dots represent UTOPIA/UIA cities and red dots represent
cities with a UTOPIA presence.
Additionally, shown are networks Idaho Falls and Las Vegas which
UIA manages.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION IV: UIA INFRASTRUCTURE CONSTRUCTION
INFRASTRUCTURE BUILD
The entire UTOPIA/UIA network consists of 167 planned “footprints” of various sizes. Approximately 120 of those footprints have been
completed (72% completion) and each footprint has approximately 800-1,500 passable addresses. UIA’s goal is to build out the remaining 47 footprints within the next three years.
There are approximately 162,500 addresses within the 11 pledging UTOPIA cities; however, about 12,500 of those addresses are in areas
where access is restricted (HOAs or MDUs, for example).
Upon completion of the Layton and Payson projects (separately funded) by summer of 2020, UTOPIA/UIA will have passed 115,000 of
150,000 accessible addresses, 77% of UIA’s goal.
Proceeds of the Series 2019 Bonds will be used to pass approximately 20,000 addresses, resulting in 90% completion. UIA intends to issue additional bonds in 2021 to complete the remaining 10% of the network.
LOCATIONS DEPLOYED (ROUNDED TO NEAREST 100)
CITY TOTAL ADDRESSES (INCLUDING INACCESSIBLE) ADDRESSES PASSED PROGRESS COMPLETED PLEDGING CITIES Brigham City 6,600 6,500 Complete Centerville 5,600 5,500 Complete Layton 25,900 22,600 87%1 Lindon 5,000 4,900 Complete Midvale 14,700 9,000 61% Murray 22,400 16,200 72% Orem 29,800 17,400 58% Payson 6,100 3,300 54% Perry 1,800 1,800 Complete Tremonton 3,300 3,000 Complete West Valley City 41,300 18,700 45% Total Pledging Cities 162,500 108,900 67% NON-PLEDGING CITIES Woodland Hills 500 500 Complete Morgan2 1,400
- West Point2
3,500
- Total Non-Pledging Cities
5,400 500 9% Total Pledging & Non-Pledging 167,900 109,400 65%
- 1. Projected to be complete by end of CY 2019.
- 2. Completed bond transactions in 2019. Buildout is ongoing. Planned completion by end of 2020.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION V: TAKE RATE STATISTICS
RESIDENTIAL TAKE RATES
Provided below is a table view of residential take rates in completed footprints throughout the UTOPIA/UIA Network.
CITY RESIDENCES PASSED RESIDENCES SUBSCRIBED “TAKE RATE” Brigham City 5,100 2,100 41% Centerville 4,500 1,800 40% Layton 18,100 4,400 24% Lindon 2,700 1,500 56% Midvale 3,500 700 20% Murray 7,700 2,400 31% Orem 11,800 3,300 28% Payson 2,700 900 33% Perry 1,700 600 35% Tremonton 2,600 800 31% West Valley City 14,100 2,200 16% Woodland Hills 500 200 41% Total 75,000 20,900 28% * Note: Not all areas have been available for subscription for the 36- month maturation period.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
Provided below is a graph view of residential take rates in completed footprints throughout the UTOPIA/UIA Network, exclusive of 3.4%
churn rate.
- UTOPIA/UIA churn rate is below the industry standard.
27.23% 26.90% 27.45% 27.31% 27.79% 28.19% 28.81% 28.56% 29.34% 29.40% 29.92% 30.04% 0.25 0.26 0.27 0.28 0.29 0.3 0.31 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 2018-Q4 2019-Q1 2019-Q2 2019-Q3 2019-Q4
Residential Take Rate
Take Rate Average for 3 Years Trendline
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
As shown below, cities are seeing growth in residential connections, even cities whose infrastructure has been built out for many years.
UTOPIA/UIA expects to see this trend continue.
Key drivers for continued take rate increases include growing need for bandwidth to support home automation, schoolwork, work-from-
home, and supporting multiple devices within the home.
Additionally, dissatisfaction with current incumbent providers adds to the demand for UTOPIA/UIA open access services. UIA’s excellent reputation and that fact that it is a local, reliable fiber provider also contribute to the growing subscriber base.
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% LA001 LA006 LA011 LA013 LA020 LA021 LA022 LA026 OR033 OR038 PE001 WV001 WV002 WV007 WV015 WV034 WV042
Take Rate Growth (Maturity toward 30%)
2016 2017 2018 2019 Year 1 Take Growth Year 2 Take Growth Year 3 Take Growth Year 4 Take Growth
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
It takes approximately 36 months for a neighborhood to mature (30% take rate). As shown in the table to the right, take rates continue to
increase well beyond the 36-month mark. YEARS SPENT AS SERVICEABLE AVERAGE TAKE RATE 1 19% 2 28% 3 33% 4 38% 5 42% 6 46% 7 46% 8 51% 9 51% 10 51%
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
STRONG DEMAND STRONG ONGOING SUCCESS
Monthly comparisons, year over year, show consistent growth as seen in the graph shown below. Residential connections are up about 29% from this time last year. Both the UTOPIA and UIA Boards are supportive of continued expansion to maintain cost synergies and capture positive momentum.
- 200,000
400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19
Recurring Revenue Combined (UTOPIA and UIA)
UTOPIA UIA Total
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
As shown in the following two graphs, cities are seeing connection growth, even cities whose infrastructure has been built out for many years.
UTOPIA/UIA expects to see this trend continue.
Shown below are graphs of city subscribers from November 2014 through August 2019. Total subscribers have increased from approximately
11,800 to 25,000, a 108% increase, in this time period.
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Total Subscribers by City
Brigham City Centerville Layton Lindon Midvale Murray Orem Payson Perry Tremonton West Valley City Woodland Hills Other
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
5,000 10,000 15,000 20,000 25,000 30,000
Total Subscribers
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
NON-RESIDENTIAL TAKE RATES
Non-residential data is best viewed by showing the increase in business revenues, as revenue per business subscriber has wider variability than
does residential revenue.
Growth trends are strong in the non-residential sector as well as in residential. UTOPIA/UIA has over 4,000 non-residential customers. Business customers pay service fees. The cost of service for the smallest business is below $100. By contrast, Utah Education Network
(UEN), our largest customer, pays $7,500 per month for 100 gbs service in one location, and $3,200 for 10 gbs service in another.
The graph below includes the diverse non-residential revenues including wireless, 5G backhaul, fixed wireless ISP, governmental, business, and
education.
$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19
UIA Monthly Revenue by Source
Business Residential (Service Provider) Residential (Connection) Other
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
The graph below is another illustration of the growth in revenues and compares that to existing and planned 2019 Bond debt service. Current revenues are sufficient to pay Series 2019 Bonds without any new connections/revenues. The revenues in the chart above exclude revenues pledged toward separate, city-backed debt.
$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19
UIA Revenue v. Bond Obligation (Monthly Recurring Gross Revenue)
Revenue Prior Bond Issues 2019 Bonds
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION VI: RECENT CONSTRUCTION AND COST INFORMATION
INFRASTRUCTURE BUILT
Many of the completed projects are underground infrastructure. Some of the completed projects include overhead construction.
LOCATIONS DEPLOYED
Listed below are recently completed projects:
FOOTPRINTS BUILT ADDRESSES PASSED CONSTRUCTION COST OPENED Midvale 13 570 $ 510,400 Aug-18 Layton 6 1,045 1,700,000 Aug-18 Orem 38 868 1,404,100 Aug-18 Layton 24 273 356,800 Oct-18 Layton 22 962 1,180,800 Nov-18 Layton 3 696 759,300 Nov-18
- W. Valley 34
794 1,365,200 Dec-18 Woodland Hills 511 1,955,600 Mar-19
- W. Valley 33
793 683,600 Apr-19 Layton 1 1,742 2,238,100 May-19 Layton 14 517 642,918 May-19 Layton 7 702 991,623 Aug-19 Orem 3 405 94,267 Aug-19 Orem 7 300 349,682 Aug-19 Orem 18 486 666,500 Sep-19 Total 10,664 $ 14,898,890
The construction costs noted above are for the mainline construction cost only.
GROWTH FROM CONTINUED DEPLOYMENT
UTOPIA/UIA has kept, or exceeded, its estimates for new customers. After a neighborhood is able to receive services, new customers start to come online within about 10 days.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
COST CONTAINMENT
UTOPIA/UIA has not seen any significant increases in its construction cost as its most recent deployments have moved forward. Following an RFP process, UTOPIA/UIA entered into a two-year fixed price contract in December 2017 for main line construction and installation
components of its network with minimal cost increases.
- UTOPIA/UIA has the option to renew its contract after the initial two-year contract yearly for up to five years with renegotiated costs.
UIA has an excellent relationship with its main contractor, B. Jackson Construction and is currently reviewing their proposed increases. UTOPIA/UIA expects to successfully renegotiate the contract with cost increases of less than 10%, which is within the anticipated range of UTOPIA/UIA management.
- Electronics costs for fiber-to-the-home are becoming increasingly commoditized, especially for Ethernet-based deployments like
UTOPIA/UIA Fiber. ▪ Transceiver Cost Example – used in every UTOPIA/UIA Fiber installation
- 100 Mbps transceiver in 2004 – ~$145
- 1 Gbps transceiver in 2019 – $12
- 10 Gbps transceiver in 2019 – $36
▪ Core-alignment fusion splicer example – tool used by installation and maintenance technician
- 2004 – ~$50,000
- 2018 – $1,500
- 2019 – $1,000
- Improvements in materials such as micro-cables and micro-ducts not previously available allow for lower cost of deployment.
- Technology is rapidly improving in electronics. Costs have decreased and efficiency and power has improved.
Construction providers include B. Jackson Construction (main line) and TCB (Installation). Core materials providers include Corning and Nokia. Huawei is the preferred provider for aggregation switches, but suitable alternatives are available if needed.
PLANNED MAINTENANCE SCHEDULE
UTOPIA budgets $500,000 – $600,000 annually for replacement and upgrades to core electronics. Expected life cycle of core electronics is 5-10 years. Replacing equipment is less expensive than upgrading current equipment. Equipment that supported 200 gig ports 5-7 years ago now supports 600 gig ports. UTOPIA is currently expanding capacity on the central ring from 100 gig to 400 gig. Customer premises equipment (CPE) is replaced with service upgrades or when necessary. Average cost of CPE is about $110 per location.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION VII: DATA USAGE STATISTICS
CONTINUED EXPANSION IN DATA USE
89% of Americans use the internet daily. The table below shows Utah’s population classifications and the
percentage in those classes that have residential internet nationally.
AGE RANGE STATE POPULATION
IN AGE RANGE
HAVE RESIDENTIAL INTERNET 18-29 23.40% 98.00% 30-49 25.90% 97.00% 50-64 14.60% 87.00% 65+ 10.00% 66.00%
As shown in the graph to the right, internet usage is also increasing among
lower income brackets.
“As smartphones and other mobile devices have become more
widespread, 26% of American adults now report that they go online “almost constantly,” up from 21% in 2015, according to a Pew Research Center survey conducted in January 20183.
Customers are increasingly opting for 1 Gig connections. Approximately 4,700 residential and business customers (19%) have subscribed for
1 Gig or higher speeds. This represents a 231% increase from 2015. The graph below shows the increase in 1 Gig + connections since 2015. BARRIERS TO ENTRY REMAIN HIGH FOR OTHER FTTH ENTITIES
Startup of FTTH is very expensive and fraught with third-party caused
delays including the following:
- Permitting for major crossings (I.e. railroads, canals, freeways).
- Fiber backbone construction is expensive and slow to deploy.
- Core electronics procurement, configuration, and testing.
- Core facilities procurement and construction.
- Network Operations Center setup, training, staffing.
- IT Systems and billing procurement, configuration.
- Internet service startup costs (IP Address acquisition, data center
co-location, upstream Internet transit).
3 (Source: Morningstar Stock Analyst Notes 1-24-2018) “Comcast posted its third straight quarterly decline in television customers, losing 38,000 residential video subscribers in the
fourth quarter of 2017” and “The traditional pay-TV ecosystem is at risk as viewership shifts from linear to digital.” 500 1,000 1,500 2,000 2,500 2015 2016 2017 2018 2019
Growth in 1 Gb+ Services (Business and Residential)
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION VIII: RESIDENTIAL AND COMMERCIAL COMPETITIVE LANDSCAPE
COMPETITION MAIN COMPETITORS
Century Link (direct competitor in UTOPIA/UIA markets). Comcast (direct competitor in UTOPIA/UIA markets). Google Fiber (currently in two markets in Utah, Salt Lake City and Provo, but are not located in UTOPIA/UIA cities).
COMPETITORS’ SERVICES
Below is a sample table of providers’ services and rates. All speed offerings are not directly comparable since UTOPIA/UIA fiber is direct to the household and others are not.
COMCAST CENTURY LINK UTOPIA/UIA FIBER GOOGLE FIBER 15 Mbps – $29.99 20 Mbps - $45.00 250 Mbps for $65.00 100 Mbps for $50 60 Mbps - $39.99 40 Mbps - $55.00 1 Gbps for $78.00 1 Gbps for $70 150 Mbps – $54.99 10 Gbps for $229.00 250 Mbps – $69.99 400 Mbps - $84.99 1 Gbps for $89.99 (min. 2-year requirement plus mandatory equipment rental *All prices are introductory and increase by $30 after the first year
- f service
The repeal of net neutrality was effective in June 2019 and created an even better story for UTOPIA/UIA as it remains a net neutral provider
unlike its competition. THE “GOOGLE FACTOR”
Google’s foray into the Utah market has helped UTOPIA/UIA as it greatly increased fiber awareness. Google has drastically slowed its fiber deployment in the State. Generally, Google’s service areas do not overlap with UTOPIA/UIA. Where some overlap exists UTOPIA/UIA and Google market to different segments (business v residential). Google only does ‘fiber to the door’ making UTOPIA/UIA more competitive for multifamily projects.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
UTOPIA/UIA SUSTAINABLE COMPETITIVE ADVANTAGES
Bi-directional speed offering Price competitiveness Multiple consumer service provider choices Strongest Net Promoter Score among its competitors Gains made in awareness and acceptance of service Net Neutrality which is supported by the FCC
COMPETITIVE RISKS – WHAT THEY ARE AND HOW THEY ARE
MITIGATED
TV offerings by Comcast because they own content and their
interface is intuitive and user friendly.
- Mitigated by the OTT offerings that are currently on
the market and our ability to market these to our customers.
- Most TV content consolidation has already occurred
leaving the big three. ▪ AT&T / Direct TV ▪ Disney ▪ Comcast (Regional Sports Networks)
- Any further mergers would likely violate antitrust regulations.
- With the loss of net neutrality ‘bad players’ will likely face anti-trust suits brought by other big providers in the OTT platform.
- Trend has been away from single sourcing content.
Perceived risk – 5G wireless. While this is a perceived risk to UTOPIA/UIA services, the following statements provide reason why it is not
an actual risk to UTOPIA/UIA.
- 5G deployments are heavily dependent on fiber.
- Many of the wireless providers in Utah utilize UTOPIA/UIA Fiber infrastructure and are a source of revenue.
- Increased use of wireless increases demand for fiber and increased revenue for UTOPIA/UIA Fiber without taking from primary line
service for homes and businesses.
- 5G is not a replacement for primary service at homes.
- According to a leading 5G equipment vendor, 5G is only incrementally better than 4G and is expected to have minimal change on
the market.
Perceived risk – Satellite Broadband (Next-Gen)
- Good for cruise ships, military, extremely rural areas.
- Much higher latency than fiber.
- One desk-sized satellite covers 92,200 square miles. Utah alone covers 84,900 square miles.
The incumbent telecoms outspend UTO PIA/UIA on marketing and public relations efforts. Mitigated by the fact that their offerings are not as good as UTOPIA/UIA and they have negative market perception.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION IX: RESIDENTIAL AND COMMERCIAL MARKETING PLANS
BUDGET
$925k for 2020 fiscal year (UTOPIA/UIA combined). The pie chart below illustrates monthly marketing budget allocations. Spending marketing dollars efficiently to acquire new customers at a low customer acquisition cost.
STAFFING
UTOPIA/UIA has two full-time marketing coordinators and utilizes a full-service ad agency to help with marketing needs.
Facebook 11% Pandora 12% Search 5% Truview 10% Display 6% Retargeting 5% Reputation Management 3% New Area Mailers 16% Quarterly Mailers 24% Welcome Packets 4% Other 4%
UTOPIA Fiber Marketing Monthly Spend
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
APPROACH
Targeted marketing vs. Mass Marketing. Market to make sure customers know of Open Access – easy to switch. UTOPIA/UIA Fiber takes many approaches towards the marketing challenges of a municipal network in 11 cities, including:
MARKETING STRATEGIES Digital ads Referral campaigns Social media Reputation management Pandora/TruView (YouTube products) Grass roots marketing Mass marketing – select markets City specific marketing – select markets SEO/SEM PR campaigns
UTOPIA has a Google rating of 4.5.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SUCCESS MEASURES
As shown in the table below, UIA residential and business connections increased from 40.6% from 11,005 in August 2018 to 15,470 in August
2019.
AUGUST 2018 AUGUST 2019 CITY RESIDENTIAL BUSINESS TOTAL CITY RESIDENTIAL BUSINESS TOTAL CHANGE PERCENT GROWTH Brigham City 608 81 689 Brigham City 789 96 885 196 28.4% Centerville 1,665 111 1,776 Centerville 1,790 120 1,910 134 7.5% Layton 1,301 189 1,490 Layton 3,094 259 3,353 1,863 125.0% Lindon 850 132 982 Lindon 976 149 1,125 143 14.6% Midvale 363 150 513 Midvale 501 157 658 145 28.3% Murray 1,152 366 1,518 Murray 1,356 397 1,753 235 20.4% Orem 1,704 375 2,079 Orem 2,194 422 2,616 537 25.8% Payson
- 10
10 Payson
- 9
9
- 1
- 10.0%
Perry
- 3
3 Perry
- 1
1
- 2
- 66.7%
Salt Lake
- 126
126 Salt Lake
- 159
159 33 26.2% Tremonton
- 7
7 Tremonton
- 6
6
- 1
- 50.0%
West Valley 1,305 351 1,656 West Valley 1,988 407 2,395 739 44.6% Misc.
- 156
156 Misc. 349 251 600 444 284.6% Total 8,948 2,057 11,005 Total 13,037 2,433 15,470 4,465 40.6%
Other notable data center type customers include: Data Bank, Level 3, Viawest, Ace Data Centers, Voonami, Tonaquint, and the University
- f Utah.
SERVICE PROVIDERS
The following table shows the five largest service providers (based on revenue) on the UIA/UTOPIA Network for the past four fiscal years.
SERVICE PROVIDER FISCAL YEAR 2019 FISCAL YEAR 2018 FISCAL YEAR 2017 FISCAL YEAR 2016 Xmission 29.8% 26.2% 22.7% 20.7% Veracity 20.6% 20.1% 18.9% 18.4% Windstream 5.3% 8.8% 11.4% 13.1% Sumo 8.1% 7.6% 7.8% 8.6% First Digital 4.9% 6.7% 7.4% 7.1% Total 68.7% 69.4% 68.1% 67.9%
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
LOW CHURN
The typical churn rate for most residential telecom providers is 10%. UTOPIA/UIA’s residential churn rate is well below this average at 3.5%.
For non-residential customers, UTOPIA/UIA’s churn rate is similar to industry standards. Provided below is a 15-year churn rate history.
FISCAL YEAR YEAR BEGINNING ACTIVE USERS NEW USERS ADDED CANCELLED YEAR ENDING ACTIVE USERS ANNUAL CHURN RATE 2005
- 346
346 0.0% 2006 346 4,382 96 4,632 2.0% 2007 4,632 2,153 378 6,407 5.6% 2008 6,407 1,992 388 8,011 4.6% 2009 8,011 1,635 433 9,213 4.5% 2010 9,213 1,684 475 10,422 4.4% 2011 10,422 489 401 10,510 3.7% 2012 10,510 1,582 341 11,751 2.8% 2013 11,751 1,362 385 12,728 2.9% 2014 12,728 1,142 613 13,257 4.4% 2015 13,257 1,111 484 13,884 3.4% 2016 13,884 1,971 578 15,277 3.6% 2017 15,277 2,616 584 17,309 3.3% 2018 17,309 3,497 632 20,174 3.0% 2019 20,174 5,186 867 24,493 3.4% 2020 24,493 1,284 347 25,430 1.3%
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION X: FINANCIAL MATTERS
UIA FINANCIAL INFORMATION FINANCIAL UPDATE
Shown below are preliminary cash basis revenues and expenses as compared to the Amended FY 2019 Budget. Also included is the FY 2020
Budget.
FY 2019 BUDGET FY 2019 ACTUALS (PRELIMINARY) PROJECTED % OF BUDGET FY 2020 BUDGET Operating Revenues $ 12,920,600 $13,907,000 107.6% $ 16,806,600 Operating Expenses Marketing and other services 843,800 634,700 75.2 850,200 Network management 3,322,200 2,307,600 69.5 4,480,000 Total Operating Expenses 4,166,000 2,942,300 70.6 5,330,200 Operating profit 8,754,600 10,964,700 125.2 11,476,400 Other revenues/expenses Interest revenue 1,037,500 1,186,500 114.4 1,100,000 Contribution from cities 1,709,500 1,709,500 100.0
- Bond proceeds
54,596,500 54,596,500 100.0
- Contribution from restricted funds
- 14,300,000
Transfer to CapI/DSR (4,077,300) (4,077,300) 100.0
- Bond issuance costs
(1,122,500) (1,161,000) 103.4
- Debt service (P&I)
(8,353,100) (8,353,100) 100.0 (7,476,500) Repayment of Op/Ex (610,400) (505,600) 82.8 (830,000) Network expansion/capital (50,061,000) (31,162,800) 62.2 (15,200,000) Transfer to Construction Fund
- (18,300,000)
Total other rev/exp (6,880,800) (6,067,300) 88.2 (8,106,500) Net Revenue (Expenses) $ 1,873,800 $4,897,400 261.4% $ 3,369,900
UIA has $6M in reserves and estimates $5.3M in operational expenses in FY 2020. UIA has one full year of operating expenses in cash reserves. We note that the expected increase in FY 2020 operating expenses is due to the following:
- Re-evaluation and reimbursement to UTOPIA of executive staff time spent on UIA matters.
- An increase in contracted service costs payable to UTOPIA based on network addresses passed and number of subscribers.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SUMMARY FINANCIAL DATA
Below are two summary tables, including and excluding depreciation, of net operating revenues, operating income as a percentage of operating
revenue, unrestricted cash balances, and unrestricted cash balances as a percentage of operating revenue.
INCLUDING DEPRECIATION
ACTUAL
PRELIMINARY BUDGETED
FY16 FY17 FY18 FY19
FY 2020 Operating Revenue 7,689,314 9,055,560 10,641,815 13,907,000 16,806,600 Operating Expense (1) 3,751,076 4,716,168 7,100,740 6,971,500 10,330,200(2) Operating Income 3,938,238 4,339,392 3,541,075 6,935,500 6,476,400 Operating Income (%) 51.3% 48.0% 33.3% 49.9% 38.5% Net Income 1,579,484 2,433,466 172,596 1,447,100 189,900 Net Income (%) 20.6% 26.9% 1.7% 10.4% 1.1% Unrestricted Cash 3,146,791 6,185,494 5,447,838 8,777,600 10,000,000 Unrestricted Cash (%) 41.0% 68.3% 51.2% 63.1% 59.5% (1) Includes Depreciation (2) Depreciation is estimated at $5 million for FY 2020. UIA no longer formally budgets for depreciation. EXCLUDING DEPRECIATION
ACTUAL
PRELIMINARY BUDGETED
FY16 FY17 FY18 FY19
FY 20 Operating Revenue 7,689,314 9,055,560 10,641,815 13,907,000 16,806,600 Operating Expense (1) 749,021 1,166,283 2,631,424 2,942,300 5,330,200 Operating Income 6,940,293 7,889,277 8,010,391 10,964,700 11,476,400 Operating Income (%) 90.3% 87.2% 75.3% 78.9% 68.3% Net Income 4,581,539 5,983,351 4,641,912 5,476,300 5,189,900 Net Income (%) 59.6% 66.1% 43.6% 39.3% 30.9% Unrestricted Cash 3,146,791 6,185,494 5,447,838 8,777,600 10,000,000 Unrestricted Cash (%) 41.0% 68.3% 51.2% 63.1% 59.5% (1) Excludes Depreciation
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
HISTORICAL FINANCIAL FORECAST AND ESTIMATED DEBT SERVICE COVERAGE – ASSUMING NO GROWTH IN REVENUES FROM NEW
AREAS TO BE BUILT HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE FISCAL YEAR 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 UIA Network Revenues(1) Service Contract (Lease Agreements) 702,769 940,608 1,312,274 1,705,427 2,539,356 2,844,079 3,185,368 3,185,368 3,185,368 3,185,368 3,185,368 Service Contract (CUE Agreements) 418,315 519,787 563,978 693,302 710,944 746,491 783,816 783,816 783,816 783,816 783,816 Service Provider Agreements 4,329,738 5,450,373 6,382,197 7,706,863 9,729,606 10,751,215 11,880,092 11,880,092 11,880,092 11,880,092 11,880,092 Installation 410,402 176,741 167,615 110,353 99,100 104,055 109,258 109,258 109,258 109,258 109,258 Miscellaneous 466,116 601,806 629,496 425,869 827,994 867,650 904,379 904,379 904,379 904,379 904,379 Total UIA Network Revenues: (1) 6,327,340 7,689,315 9,055,560 10,641,814 13,907,000 15,313,489 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 Plus: Franchise Tax Revenues(2) 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 5,151,152 Total Available Revenues 11,478,492 12,840,467 14,206,712 15,792,966 19,058,152 20,464,641 22,014,065 22,014,065 22,014,065 22,014,065 22,014,065 Less: O&M Expenses(1)(3) 528,463 749,021 1,166,283 2,631,424 3,489,200 5,330,200 5,383,500 5,437,300 5,491,700 5,546,600 5,602,100 Less: IRU Annual Payment(4) 655,000 655,000 655,000 655,000 982,500 Net Revenues 10,295,029 11,436,446 12,385,429 12,506,542 14,586,452 15,134,441 16,630,565 16,576,765 16,522,365 16,467,465 16,411,965 Debt Service Series 2011A Bonds 1,117,680 1,117,680 1,117,680 1,117,680 Series 2011B Bonds 1,007,923 1,004,883 1,006,123 897,521 Series 2013 Bonds 782,100 780,275 781,875 541,300 Series 2015 Bonds 1,597,098 1,113,024 Series 2017 Bonds 1,172,824 6,237,125 5,781,575 5,775,125 5,751,600 5,752,400 5,743,125 5,533,750 Series 2018 Bonds 867,543 1,676,088 1,677,838 1,678,088 1,676,838 1,674,088 1,674,713 Series 2019 Bonds(5) 978,225 3,228,825 3,226,950 3,231,575 3,227,575 Total Debt Service 2,907,703 2,902,838 4,502,775 4,842,349 7,104,668 7,457,663 8,431,188 10,658,513 10,656,188 10,648,788 10,436,038 Debt Service Coverage(5) (6) 3.54 3.94 2.75 2.58 2.05 2.03 1.97 1.56 1.55 1.55 1.57 Source: The Agency and the Municipal Advisor, based on the Agency’s audited financial statement for the fiscal year ended June 30, 2018. (1) Projected based on the Agency’s preliminary financial statements for the fiscal year ended June 30, 2019. Does not include Available Franchise Tax Revenues. (2) Pledged by the Contracting Members pursuant to the Service Contract. (3) Excludes depreciation. The Agency’s Operation and Maintenance Expenses primarily consist of the monthly fees it pays to UTOPIA pursuant to the UTOPIA Service Agreement. (4) Pursuant to the IRU Agreement, which provides long-term rights to the Agency to connect the UIA Network to the UTOPIA Network. The IRU payments to UTOPIA were accelerated, and were paid in full in FY 2019. (5) Preliminary, subject to change. (6) Net Revenues divided by Debt Service on the Series 2017, 2018, and 2019 Bonds.
Additional bonds test is 1.50X comparing the last historical audit figures to debt including the new debt payment. This table shows the
inclusion of the Series 2019 Bonds without the resulting revenues/expenses.
UIA has paid its bond payments to the Trustee 6 months in advance. This is a result of better than expected revenues.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
HISTORICAL FINANCIAL FORECAST AND ESTIMATED DEBT SERVICE COVERAGE WITHOUT FRANCHISE TAX REVENUES – ASSUMING NO
GROWTH IN REVENUES FROM NEW AREAS TO BE BUILT HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE FISCAL YEAR 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 UIA Network Revenues(1) Service Contract (Lease Agreements) 702,769 940,608 1,312,274 1,705,427 2,539,356 2,844,079 3,185,368 3,185,368 3,185,368 3,185,368 3,185,368 Service Contract (CUE Agreements) 418,315 519,787 563,978 693,302 710,944 746,491 783,816 783,816 783,816 783,816 783,816 Service Provider Agreements 4,329,738 5,450,373 6,382,197 7,706,863 9,729,606 10,751,215 11,880,092 11,880,092 11,880,092 11,880,092 11,880,092 Installation 410,402 176,741 167,615 110,353 99,100 104,055 109,258 109,258 109,258 109,258 109,258 Miscellaneous 466,116 601,806 629,496 425,869 827,994 867,650 904,379 904,379 904,379 904,379 904,379 Total UIA Network Revenues: (1) 6,327,340 7,689,315 9,055,560 10,641,814 13,907,000 15,313,489 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 Total Available Revenues 6,327,340 7,689,315 9,055,560 10,641,814 13,907,000 15,313,489 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 Less: O&M Expenses(1)(2) 528,463 749,021 1,166,283 2,631,424 3,489,200 5,330,200 5,383,500 5,437,300 5,491,700 5,546,600 5,602,100 Less: IRU Annual Payment(3) 655,000 655,000 655,000 655,000 982,500 Net Revenues 5,143,877 6,285,294 7,234,277 7,355,390 9,435,300 9,983,289 11,79,413 11,425,613 11,371,213 11,316,313 11,260,813 Debt Service Series 2011A Bonds 1,117,680 1,117,680 1,117,680 1,117,680 Series 2011B Bonds 1,007,923 1,004,883 1,006,123 897,521 Series 2013 Bonds 782,100 780,275 781,875 541,300 Series 2015 Bonds 1,597,098 1,113,024 Series 2017 Bonds 1,172,824 6,237,125 5,781,575 5,775,125 5,751,600 5,752,400 5,743,125 5,533,750 Series 2018 Bonds 867,543 1,676,088 1,677,838 1,678,088 1,676,838 1,674,088 1,674,713 Series 2019 Bonds(4) 978,225 3,228,825 3,226,950 3,231,575 3,227,575 Total Debt Service 2,907,703 2,902,838 4,502,775 4,842,349 7,104,668 7,457,663 8,431,188 10,658,513 10,656,188 10,648,788 10,436,038 Debt Service Coverage(4) (5) 1.77 2.17 1.61 1.52 1.33 1.34 1.36 1.07 1.07 1.06 1.08 Source: The Agency and the Municipal Advisor, based on the Agency’s audited financial statement for the fiscal year ended June 30, 2018. (1) Projected based on the Agency’s preliminary financial statements for the fiscal year ended June 30, 2019. Does not include Available Franchise Tax Revenues. (2) Excludes depreciation. The Agency’s Operation and Maintenance Expenses primarily consist of the monthly fees it pays to UTOPIA pursuant to the UTOPIA Service Agreement. (3) Pursuant to the IRU Agreement, which provides long-term rights to the Agency to connect the UIA Network to the UTOPIA Network, the Agency makes an annual lease payment to UTOPIA. IRU payments were accelerated and paid in full in FY 2019. (4) Preliminary, subject to change. (5) Net Revenues divided by Debt Service on the Series 2017, 2018, and 2019 Bonds.
Estimated debt service coverage without franchise tax revenues is approximately 1.07x.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
MEMBER CITY FRANCHISE FEE INFORMATION
Shown below is a summary of annual gas and electric revenues for the member entities.
HISTORIC ENERGY FRANCHISE TAX REVENUES FISCAL YEAR BRIGHAM CITY CENTERVILLE LAYTON LINDON MIDVALE MURRAY OREM WEST VALLEY CITY PAYSON TOTAL (ENERGY) 2014 740,253 835,849 3,836,957 1,250,990 2,102,495 3,645,488 6,322,744 7,705,249 1,019,442 26,440,025 2015 1,051,117 858,683 3,775,194 1,259,381 2,086,631 3,518,888 6,238,725 7,847,940 986,971 26,636,559 2016 1,203,869 872,627 3,916,318 1,312,423 2,192,132 3,586,379 6,454,275 8,065,445 1,077,430 27,605,468 2017 1,230,038 864,741 3,898,959 1,301,408 2,205,527 3,518,071 6,549,235 8,095,002 1,030,903 27,668,376 2018 1,297,465 854,772 3,890,891 1,398,641 2,212,291 3,555,500 6,709,878 8,053,310 1,019,824 27,972,748 2019* 3,710,152 1,356,176 2,115,894 6,787,660 8,108,111
Source: Member Cities * Preliminary, subject to change.
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UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019
SECTION XI: ONGOING NETWORK EXPANSION
EXPANSION WITHIN MEMBER CITIES
With the utilization of funds from the UIA-Layton bonds, Layton City is now about 70% built-out and will be substantially complete by the
end of the year.
Additionally, Payson City completed a bond transaction in early Summer 2019 to finance the costs of its remaining infrastructure.
EXPANSION BEYOND MEMBER CITIES
Interest level by other cities continues to grow
- Morgan City and West Point City completed bond transactions in Spring 2019 and Summer 2019, respectively to finance the costs of fiber
infrastructure in their cities.
- These transactions are self-supporting and governed by separate service agreements and bond documents.
A member of the Executive Team meets with a different City almost every week at the invitation of the City. Financial model discussed is one of two options:
- The City provides cash for UTOPIA/UIA to build the fiber network; or
- The City enters into a Service Agreement similar to the Morgan or West Point Service Agreement and UIA will finance the fiber build-out
in that City.
As other cities come online UTOPIA/UIA will not slow down the buildout in its member cities. UIA has a contract in place with Idaho Falls, Idaho to build and manage their FTTH network.
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