What happened

Shares of Uniti Group (UNIT -0.27%) rode a dramatic roller coaster today. Share prices fell as much as 10.2% in the morning on unofficial reports that former parent company (and largest customer) Windstream Holdings (WINMQ) was preparing a bankruptcy filing. On the actual news of Windstream's Chapter 11 filing, Uniti's stock regained the morning's losses and jumped as much as 23% higher instead.

Windstream's stock did a nearly perfect mirror-image version of Uniti's moves, rising as much as 10.6% but trading 47.1% lower at 3:15 p.m. Eastern Time.

A red charting arrow bounces off a black trampoline.

Image source: Getty Images.

So what

Windstream's bankruptcy came as no surprise to longtime watchers of this struggling telecom services company. A recent court decision sided with Windstream's largest debt holder, hedge fund Aurelius Capital Management, in a dispute that put some of the company's debts in default while opening a window for other debtors to file similar claims. This decision aside, Windstream's business had been struggling for years.

The bankruptcy filing provides a hard stop for other exits to the Windstream story, such as a plain old buyout or a long court battle through various levels of appeals. It's not exactly good news for Uniti, but we shareholders appreciate a clearer picture of what's going on here.

Check out the latest Uniti earnings call transcript.

Now what

Uniti was formed in 2015 when Windstream spun off its network infrastructure holdings into a separate company, in an attempt to salvage some value from its infrastructure assets. The stock is now trading 65% below the initial public offering price, but that's still a win next to Windstream's 99.3% plunge over the same period.

Uniti has been working to separate itself from its former parent company for years, hoping to report more than 50% of its revenue coming in from clients not named Windstream before the end of 2019. That effort will clearly need to accelerate after this game-changing Chapter 11 filing, and might even give Uniti's sales team a new selling point. Windstream probably won't need to lease all these fiber-optic lines and other important assets for much longer -- is anyone else out there looking for some additional bandwidth?

Only time will tell whether today's jump makes any sense in the long run, but news that puts more space between Windstream and Uniti can only be good for the infrastructure specialist's stock.