Q2 2021 Uniti Group Inc Earnings Call
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Pardon me the since the operator today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
The next question.
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Many of them.
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Welcome to the Uniti Group second quarter 2021 Conference call. My name is Carmen and I will be your operator for today a webcast of this call will be available on the company's website at www Dot Uniti Dot com beginning all the fifth 2021 and will remain available.
For 14 days at this time all participants are in a listen only mode participants on the call. We will have the opportunity to ask questions. Following the costs, but he's prepared comments the.
The company would like to remind you that today's remarks include forward looking statements and actual results could differ materially from those projected in the statements the.
The factors there.
That could cause actual results to differ are discussed in the company's filings with the HCC.
The company's remarks. This afternoon will reference slides posted on its website and are you are encouraged to refer to those materials. During this call.
Discussions during the call will also include certain financial measures that were not prepared in accordance with generally accepted accounting principles reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's current report on form 8-K.
Data today.
I'd now like to turn the call over to Uniti group's Chief Executive Officer, Kenny Gunderman. Please go ahead Mr. Gunderman.
Thank you.
Good afternoon, everyone. Joining me on the call today is Paul Boynton, our interim CFO.
The reported another strong quarter of results of both Uniti leasing and here the fiber demand.
The demand for our fiber infrastructure remains very strong fueled by growing tailwind within the communications infrastructure industry.
The demand this demand was evidenced of that consolidated new sales bookings of approximately $1 million in MRO are representing a sequential increase of over 80% from the first quarter of this year.
1 of the highest quarters ever for consolidated bookings of unity.
Yes.
The slide 4 of our presentation illustrates fiber as the mission critical connective tissue for virtually all current and future broadband delivery.
We're seeing an acceleration of of the virtualization of our society with 5 G mobile broadband fiber to the home.
Fixed wireless satellite and other technologies, enabling greater usage of video conferencing E learning telemedicine and remote work environments, all resulting in an overall continued surge in broadband traffic.
Turning to slide 5 Uniti is 1 of the largest independent wholesale fiber providers in the country at our desk World class fiber network is at the Nexus of each of these trends in.
In fact, 90% plus of all of the business, we're generating today, including the lease up is wholesale in nature, and we expect that to continue in the future.
We have a growing portfolio of small cells connected buildings macro towers at homes passed and the need for more investment by our customers of <unk> networks and other technologies is also growing.
For example, our wireless carrier customers are particularly active in an effort to keep their underlying infrastructure ahead of the explosive growth in mobile broadband.
These carriers are increasingly looking for 10 gig upgrades on our macro tower backhaul circuits, while simultaneously continuing to push for backhaul to new macro towers and sea ray of small cell deployments of our metro markets.
These investments provide the entity with the unique opportunity to expand our networks with anchor economics setting the foundation for attractive future of lease up and further validating the shared infrastructure benefits of fiber.
Our non wireless carrier customers such as the fan group of National Msos are also active as they expand their cloud based services.
Satiable demand for high capacity of long haul routes in particular continues to accelerate.
Our residential and enterprise focused carrier customers continue to be active in driving broadband to more and more consumers.
Our dense metro networks. The day passed 250000 buildings and we're aggressively building deeper into the commercial parts of neighborhoods through fiber to the home of fixed wireless bills.
Over the past 3 years, we built almost 10000 route miles of new fiber and we expect that number could increase significantly over the next 3 years.
We've amassed as valuable and hard to replicate portfolio of only 6 years through our proprietary M&A efforts and organic sales strategy and our portfolio is growing every day.
As evidenced on slide 6 unit, he's demonstrating the economics of an attractive shared infrastructure model that continues to drive meaningful returns.
As a reminder, unity believes that a healthy mix of wireless and non wireless bookings and installs represents the most effective way to drive optimal profitable economics.
Uniti requires or builds new fiber largely for our wireless customers with attractive long term anchor cash flow yields in the mid to high single digits.
We're also successfully adding additional tenants with very high margins and minimal capex.
Hosting an accumulative cash flow yield today of approximately 18% and almost 3 fold increase from the anchor yield at all within the past 5 years.
Turning to Uniti fiber during the quarter small cell revenues grew 27 per set from the prior year, while enterprise revenue grew 16%.
Australia that we're choosing good anchor markets to expand our network in a disciplined manner and that we're executing well on follow on lease up.
Uniti fiber sales bookings in the second quarter were approximately $8 million of MRI.
An increase of almost 70% from the first quarter at our highest level of bookings in over a year.
In terms of mix 65 per cent of our sales bookings came from non wireless customers.
Almost 40 per cent of lease up of them all of our sold over the past 12 months of occurred in the second quarter alone as we continue to ramp up our lease up efforts 1 of our within our southeast markets.
Uniti fiber installed the <unk> 6 million of the MRI. During the second quarter was <unk> 75 per cent of gross installs related to non wireless opportunities, 20% related to wireless at 5% related the bandwidth upgrades.
Accordingly for the first time and unities history of our time to install new circuits has dropped below 90 days.
This is a terrific accomplishment that really helps improve customer satisfaction as well as profitability for the company.
And as the law and as a result of largely selling on net services to our customers.
Turning to slide 7 of.
At Uniti leasing we continue to actively market over 3 million strand miles of fiber that is available to lease the third parties.
Our sales pipeline is a day stands at a little over $1 billion of total contract value, which translates to about $65 million of potential annual recurring revenue, reflecting the continued significant interest from our wholesale customers.
Over 70% of the deals utilize fiber, we acquired as part of the settlement with Windstream.
And our success is the result of less than 1 year of actively marketing this fiber.
We continue to be successful in monetizing our portfolio of assets and to date of execute on opportunities that represent total remaining revenues under contract of $805 million with an average contract term remaining of over 14 years and incremental cash flow yields of approximately 11%.
Turning to slide 8.
Our growth capital investment program continues to yield positive results as a reminder, our tenant has invested over almost $1 billion of tenant capital improvements in our network over the past 6 years and that investment is expected to continue.
Uniti has now begun investing its own capital of long term value accretive fiber largely focused on building highly valuable last mile of fiber, including income most commercial parks of fiber to the home.
Collectively these investments have resulted in around 20% of the legacy copper network being overbuilt with fiber and almost 10000 route miles of new fiber constructed.
Both of those numbers are expected to increase materially in the coming years.
We believe our GCI program as an attractive investment for our stockholders, providing a secure near term cash flow yield while simultaneously future proofing our network for renewal.
With that I'll now turn the call over to Paul.
Thanks, Kenny and good afternoon, everyone.
As Kenny mentioned earlier, we delivered another strong quarter of results of both Uniti fiber and Uniti leasing.
Our guidance remains mostly in line with prior outlook.
However, we are tracking ahead of plan year to date, and we now expect adjusted EBITDA and <unk> per diluted common share for full year 2021 to be closer to the high end of our guidance range due to the strength of our second quarter and the expectation that strength will continue into the second half of 2021.
However, we are not adjusting the midpoint of our 2021 outlook as there remains the possibility that some contractual revenue could slip into the first quarter of 2022.
During the quarter, we closed our strategic Opco propco transaction with ever strain as part of the transaction. We recorded a pretax book gain of $28 million relating to the partial sale of our northeast operations and the sale of certain dark fiber <unk> contracts the.
The gain is excluded from both adjusted EBITDA and <unk>.
Please turn to slide 9 and I'll start with comments on our second quarter.
We reported consolidated revenues of $268 million consolidated adjusted EBITDA of $216 million <unk> attributed to common shares of $103 million and <unk> <unk> per diluted common share of <unk> 41.
Net income attributable the common shares for the quarter was $49 million or 20.
Per diluted share and includes the $28 million pre tax gain on sale I mentioned earlier relating to the related to the stream transaction.
At Uniti leasing, we reported segment revenues of $196 million and adjusted EBITDA of $192 million up, 6% and 5% respectively from the prior year.
Accordingly.
No the leasing achieved an adjusted EBITDA margin of 98% for the quarter.
The year over year growth reflects straight line rent recognition under the Windstream Mla's and GCI investments subsequent to our settlement agreement the.
Dark fiber <unk> contracts, we acquired from Windstream as well as annual lease escalators.
During the second quarter Uniti leasing deployed approximately $50 million towards growth capital investment initiatives with almost all of the investments relating to the Windstream GCI program the.
GCI investments added around 600 route miles of 56000 strand miles of valuable fiber to the entities own network across 13 different states.
As of June 30th Unity has invested a $177 million of capital to date under the GCI program with Windstream, adding around 5000 route miles and 178000 strand miles of fiber to our network.
These investments will be added to the master leases at an 8% of initial yield at the 1 year anniversary of Uniti, making such investment.
They are subject to a 5% annual escalator and result of near 100% margin.
The investments we have made today will ultimately generate approximately $14 million of annualized cash rent.
At Uniti fiber, we turned over 150 lit backhaul dark fiber and small cell sites for our wireless carriers across our southeast footprint during the second quarter.
These install of that annualized revenues of approximately $1 million.
We currently have around 1200 lit backhaul dark fiber and small cell sites remaining in our backlog that we expect to deploy within the next few years.
Of this wireless backlog represents an incremental $10 million of annualized revenues.
Uniti fiber revenues of $72 million during the quarter were in line with our expectations as I mentioned earlier, we closed the <unk> transaction on May 28, and the results from our Uniti fiber northeast operations that were sold as a part of the transaction we will no longer be included in our financials from that date.
The impact of the second quarter from the sale of the northeast operations was approximately $2 million in revenue and $1 million and adjusted EBITDA adjusted.
Adjusted EBITDA of $29 million during the quarter was higher than expected due to lower operational and maintenance costs adjust.
Adjusted EBITDA margin for the quarter was 41% representing a 480 basis point improvement from the prior year due to the lower cost I, just mentioned and our continued emphasis on higher margin recurring revenue.
Uniti fiber net success based Capex was $37 million in the second quarter consistent with our expectations. We also incurred $2 million of maintenance capex or about 3% of revenues.
Please turn to slide 10, and I will now cover our updated 2021 guidance.
We are revising our prior guidance primarily for the impact of the gain on sale of operations in income tax expense related to the stream transaction the impact of transaction related and other costs incurred to date and revised estimates of interest expense.
Our current outlook excludes future acquisitions capital market transactions and future transaction related and other costs not specifically mentioned herein actual results could differ materially from these forward looking statements of.
Our current full year outlook for 2021 includes the following for each segment.
Beginning with Uniti leasing, we continue to expect revenues and adjusted EBITDA to be $784 million and $766 million, respectively at the midpoint, representing adjusted EBITDA margins of approximately 98%.
Revenue and adjusted EBITDA each include $26 million relating to the straight line rent associated with the Windstream master leases and GCI investments.
Our outlook reflects $210 million of net success based capex at Uniti leasing at the mid point of our guidance of which $200 million relates to estimated windstream GCI investments.
Most of these markets are similar to our own tier 2 tier 3 markets, providing windstream with substantial growth opportunities over time.
As slide 11 highlights non windstream revenues and adjusted EBITDA continued to grow at a healthy pace and are expected to be about $55 million and $42 million, respectively up 27% and 17% from 2020 levels.
This includes the assets and dark fiber <unk> contracts, we acquired from Windstream, where the revenue is diversified across multiple third parties and the dark fiber <unk> leases that are part of the ever stream transaction.
Turning to slide 12.
We expect uniti fiber to contribute $305 million of revenues and of $118 million of adjusted EBITDA, representing a margin of 39%. This year at the midpoint of our guidance, which is 300 basis point improvement from last year.
As we pointed out on our earnings call last quarter Uniti Fiber's outlook is impacted by the sale of our northeast operations as part of the ever stream transaction and the winding down of our noncore construction business adjusts.
Adjusting for the impact of these 2 items revenue and adjusted EBITDA for 2021 at Uniti fiber are expected to increase by 6% and 10% respectively from the prior year.
Net success based Capex for Uniti fiber of this year is still expected to be $125 million at the midpoint of our guidance.
Turning to slide 13 for 2021, we continue to expect full year <unk> to range between $1.61.
And $1.65 per diluted common share with the midpoint of $1.63 per diluted share.
On a consolidated basis, we expect revenues to be $1.1 billion and adjusted EBITDA to be $852 million at the midpoint.
Our guidance contemplates consolidated interest expense for the full year of approximately $397 million, excluding any deferred financing cost write offs and premiums paid relating to early repayment of our debt ripped.
The reported interest expense in 2021 will include an additional $44 million relating to the write off of deferred financing costs and premiums paid on the early repayment of our 8 in the quarter percent senior unsecured notes and 6% senior secured notes due 2023.
Corporate SG&A, excluding amounts allocated to our business segments is still expected to be approximately $42 million, including $10 million of stock based compensation expense.
We continue to expect weighted average diluted common shares outstanding for full year 2021 to be around 263 million shares as a reminder guidance ranges for key components of our outlook are included in the appendix to our presentation.
Turning now to our capital structure.
At quarter end, we had approximately $574 million of combined unrestricted cash and cash equivalents and undrawn revolver capacity, our leverage ratio stood at 565 times based on net debt to annualized adjusted EBITDA.
On August <unk>, our board declared a dividend of <unk> 15 per share to stockholders of record on September 17th payable October 1 which is our current estimate of the maximum amount allowed under our current debt agreements.
I'll now turn the call back over to Kenny.
Thanks, Paul turning to slide 14.
Before opening up the call for Q&A I'd like to take a moment to comment on the <unk> public market valuation.
We get questions regularly from investors and analysts about how we think community should be value given the unique nature of parts of our business.
We believe there is a material disconnect between how the public market values unities equity and our intrinsic valuation.
We believe our scale high performing fiber business, which includes uniti fiber and non windstream operations at Uniti leasing.
Should demand a 15 to 20 times cash flow of multiple based upon substantial public.
Private market comps.
Our attractive economics, which includes 95% recurring revenue monthly churn of 2%.
Meantime to deliver of less than 90 days companywide net success based capital intensity of 30% and cash flow growth of 5% to 10% are evidence of the quality of our platform relative to other fiber businesses.
Using the midpoint of this range our remaining business is being valued at a 14% yield of roughly 7 times cash flow of multiple.
This 7 times cash flow multiple compares to an 11% to 12 times implied cash flow of multiple from the valuation we received in 2015 as part of the original spin off from Windstream.
And the refreshed valuation we received in 2020 and connection with Windstream emerges from bankruptcy.
Both of these valuations were performed by separate and independent third party valuation firms.
Further windstream exited bankruptcy at of roughly 375 times cash flow multiple.
And when combined with an 11.5 times multiple for our infrastructure, the resulting blended multiple of 6.5 times is in line with other publicly traded out of legs.
This valuation is only a jumping off point is market based comps suggest even greater upside since our lease streams have never been disrupted and of repeatedly been proven as a priority payment.
In closing the value and strategic interest in <unk> fiber small cells and now fiber to the home has never been greater.
Immunity represents a unique portfolio of all of these infrastructure assets with.
Operator, we're now ready to take questions. Thank.
Thank you and as a reminder to ask the question simply press Star 1 on your telephone to withdraw the question press the pound or hash key please.
Please standby, while we compile the Q&A roster.
First question is from Phil Cusick with JP Morgan.
Thanks, guys to I guess Kenny to start.
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If you the company believes your shares of cheap then whats. The next step do you are you willing to borrow to buy some shares would you consider selling assets to buy shares or do you engage with the private equity companies. Certainly there is a lot of private equity chasing fiber assets today, 1 of those conversations look like.
Hey, Phil Yes, those are all of the right questions and frankly, some of the questions and the dialogue that we hope to spur from from this from this page in this framework.
Yes look we've said for some time that we think we're undervalued. We've said for some time, we think the portfolio of our assets and just the core.
The predictable performance of our of our underlying operations are underappreciated.
We've continuously thought that and look for ways to unlock that value I think for sure we need to continue to execute and continue to grow both organically and inorganically.
But I think especially in this environment, where there's just the industry is awash with capital. We also have to look for other ways to lock in value as opposed to just talk about it theoretically.
And I think there are a number of different ways to do that I mean, we could we could we could look at secured securitization of the leases we.
We could look at monetizing a portion of the leases through JV or selling interest.
Or other things, including some of the things you mentioned. So these are all things that we're leaning into but with all of that said, we think it's very important for our investors, especially our public market investors to understand a framework for looking at value for unity.
And then we can all haggle over what the right assumptions are but having the right framework to look at it because we do get a lot of questions about.
A good way to look at it and given the unique nature of our business we.
We think leaning into this a little bit more now is the appropriate thing to do.
Okay.
And then on the operational side.
But we took a number of times from the past about about deal pipeline. There's a lot going on I think this is the same question in the last 3 months ago, but.
You've talked about hey, it took a year last time to get things up and running.
Been nearly a year at this point.
What's the status of that pipeline.
Yes, Phil.
Phil you beat everybody else to that question. So thanks for asking it and nothing's changed in our strategy, how many of its going to.
We're still not quite to the.
To the 1 year anniversary of the emergence.
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I would just encourage our investors to be patient.
We're still working very hard on developing the funnel and I would encourage investors to look back at our track record of being disciplined not setting artificial deadlines, but at the end of the day being very successful at executing on.
On acquiring assets and businesses at attractive multiples despite of frothy market.
And also at the same time, finding ways to monetize non core assets at very attractive premium multiples. So I think we've got a good track record we've been able to demonstrated over a 6 year period, we have not set of artificial deadlines, but we're working very hard at it and we've got a very nice funnel, that's developing continuing to develop.
Hi.
Thanks Kenny.
Thank you. Our next question is from Frank Louthan with Raymond James.
Okay.
All of your audio.
Frank.
Please check your audio we cannot hear your question.
Please.
You in the Q&A I'm going to continue with the next question from David Barden from Bank of America.
Hi, Kenny.
Thanks for the.
Taking the question. So I guess I got 2.1 from the Big picture 1 small picture. So I guess I'm going to follow up on Phil's question. So I mean, we reverse engineer. The you guys went through this.
Process with Windstream in the courts and got the lease kind of certified and the fact.
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For the core assets and a lot of ways I view, it as kind of of Super senior secured kind of security.
You've kind of <unk>.
Litigated it to the degree of 692 million of 10% yield is.
Basically $7 billion the fiber business is effectively free inside unity the day.
And so the bigger picture question is why or why are these 2 businesses 1 business like why did we separate them and just kind of create value right away.
Rather than kind of waiting from the private negotiation with the private entity, let's just break it apart.
And the second question is related to the pipeline.
On leasing that you guys shared in the foot.
The sense of $18 million of the roughly $65 million in annualized revenue was related to 1 particular IR you deal.
What is the value of that IR, you deal versus the $1.1 billion of total pipeline revenues that you guys disclosed thanks.
Yes, David on the second question will probably come back to you on that 1 I'm pretty sure I know, which 1 it is and I think all of those too but in terms of the specific numbers, we'll come back to you on that.
But it was it was 1 of the large anchor IR use that we sold when we first took over the network.
And it was with 1 of the large national Msos.
In terms of your first question again, I think those are all the right questions and good observations and some of the things that we're thinking about.
I do think these 2 businesses together do make sense. However, the.
The network that we lease to Windstream.
The substantial amount of valuable fiber and capacity for Uniti fiber, we use that network and we're leasing it up through Uniti leasing.
And a lot of cases the networks that we're selling are.
Network solutions that we're selling some unity fiber fiber, we're selling some some of the windstream fiber that we got in the settlement were selling some of the fiber we got from Sapphire, So the strategic value.
In keeping all of this together.
But at the same time some of that can be accomplished.
Through through other means if there were some some value accretive ways to separate or to lock in some of these value. So.
All things, we're thinking about and I think your line of thinking in terms of the value and sort of getting uniti fiber for free.
Speak at these prices is right.
Kenny if I could follow up just with 1 more so we heard over the course of the last couple of weeks.
Crown talking about how care, you said kind of pivoted from.
Small cell densification to more macro C band deployments were reallocated capital actually defunding of small cells. The fund more of kind of macro geographic builds and also we heard from the SBA that the dish is actually doing much more broad geographic build.
And simply the Las Vegas market announcement that they made earlier and obviously you have the strategic relationship with them are you are you seeing an acceleration.
In in the activity level, either in terms of the conversations funnel.
Contractual signing that sort of thing contributing to this kind of record or near record monthly recurring revenue billings in the in the quarter or is that still to come.
Both.
The first are.
We're expecting an acceleration in the second half of the year on bookings of lot of our.
The expected.
We're expecting a pickup in general at the beginning in the second half of the year. So that was something we expected coming into the end of the year.
But the dish we've been extremely active with dish.
Frankly, much more so than I thought and I think even what our sales folks thought coming into the year.
And it's accelerating.
And I think it is macro related.
Paul cell activity, but macro related as you alluded to and we expect that to continue at least for the foreseeable future.
On small cells again, we don't have a huge small cell portfolio. It's growing grew 27% this quarter year over year, so growing off of small base.
As we've always talked about and you know David we bill.
Aleve when small sales do come to our markets, we're going to have a first mover advantage there in the tier tuition 3 ish markets. So we expect that.
But with that said, we have seen some of the carriers pull back on small sales and re prioritize macros.
And in return.
That's C band related it's 10 gig upgrade related.
But.
We don't we haven't seen I wouldn't say, we've seen small sales fall out of our funnel I think the they've just been pushed out in terms of timing now of course that always means there's greater risk to them staying in the funnel, but at least for now we're not taking anything out of our overall forecast they've just been pushed out in terms of timing.
Got it okay. Thanks, guys.
Thank you. Our next question comes from Frank Louthan with Raymond James.
Great. Thank you very much 1 quick thing in the in the quarter did the.
Asset sales have any income ever seem to have any impact on revenue and EBITDA in the quarter or was it the timing of that and then what do you think about opportunities with any of the art off.
Some of the startups there to be part of their bill Gee, that's going to be opportunity for you guys going forward.
Hey, Frank of the Abbey back and I'll take the second 1 and then Paul can take the first but yes I think.
A number of our current customers, whether it be sale leaseback customers like windstream or cable south of others.
Our art off recipients large ARD off recipients and what we think what that means is greater investment in the edge of the network and therefore greater need for the middle mile and ultimately the backhaul on our networks and we've already seen that I mean, I think it's going to lead.
Just.
Later traffic excuse.
Excuse me coming from those customers on the network.
We've also seen for non customers.
Companies, who were art of recipients, who are currently not customers we've been having some good dialogue with them about them using our network is jumping off points.
There are fields, because as you as you know many of these builds are in more rural areas and that's where a lot of our network goes so it's a great jumping off point for many of these customers I can't give you a sense yet Frank for how big of an opportunity. It is for us, but I do think it's an opportunity and I certainly do.
I don't think its the competitive threat.
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On the on the on the margin we may have some fiber.
Or some additional competitors in certain markets.
But I think the benefit to us outweighs the outweighs the additional outweighs any competitive threat.
Paul you want to comment on the evergreen growth, yes sure Frank.
Yes, I'll take that so yes.
Yes the.
The the sale of our northeast operations to ever stream.
Did have an impact on the quarter at close.
On May 28, so it basically had 1 month of impact on our financials in the <unk>.
Dollar amounts.
At a $2 million impact on revenue and of $1 million impact on adjusted EBITDA.
Alright, great and 1 quick follow up.
You mentioned the edge and so forth.
Yes.
As ever consider of building small edge data centers as part of your network and the branched out into the towers at 1 point.
So is that something you would consider for growth as part of your infrastructure of portfolio or should we just pretty much taking you guys more on the fiber network side going forward.
Frank we are considering that.
And as a reminder, look we still have macro towers, we're obviously building small cells and we're actually developing have developed a prototype and even a business case around.
What you are calling edge data centers, we call them something different but its really just pause at the edge of the network.
And Thats the result of a.
Carrier customers asking for it.
Certain markets and so again I can't give you any sense of how big of an opportunity that is but when you think about it we're in a we're in a market with the fiber network, we've got boots on the ground.
We are a natural extension.
A natural extension of that network is adding some pods on the edge.
The net effect serve as the edge data centers. So that is something that we're doing and I think something that will.
We see more of the.
The coming quarters and years.
Alright, great. Thank you very much.
Thank you. Our next question comes from Simon Flannery with Morgan Stanley.
Great. Thank you very much.
The following up on the sort of art of you've got a lot of money set aside in the infrastructure Bill Kenny I was wondering if you.
Do you see any opportunities around leveraging some of those funds over the next several years and then on the MLR was nice to see the bookings coming through.
To what extent of that.
Largely run on your existing network or is there much capex needs associated with those new bookings.
Hey, Simon on the first question I think yes, so were.
We are proponents of the infrastructure Bill at least the part that related to communications infrastructure of excited about it.
That's another tailwind in our industry, where theres just bipartisan support for $50 billion to $100 billion of additional investment in fiber and we think of lot of that is going to be directed towards more rural areas.
The suburban areas, which again.
Is where our network is so we were not going to be direct recipients of that funding or at least we don't think so unless something changes, but we don't think we will be but we will be a.
Derivative recipient through to our customers and our customers' investment for the for the reasons I said earlier related to <unk>. So we just think it's another example of the continued sort of <unk>.
Steady pace of.
The federal and state subsidy for investment in our in our space, which were which were beneficiary of.
On the bookings question and I'll comment and Paul can jump in but.
It's a mix the.
Very strong quarter.
Very strong frankly start to the third quarter based on early numbers I've seen for July and it's a good healthy mix of wireless, including wireless anchor builds and wireless lease up in addition to enterprise and regular wholesale the vast majority of that.
As on our existing network.
Or it's being built off of our existing network. So if we're building new fiber it is going to be connected to the existing network. So it's coming in at very.
What we consider attractive incremental yields.
And we demonstrate those yields early on in our presentation the.
Initial anchor yields of 5% to 10% and then getting up to the near 20% blended yields.
We continue to see that.
And our book of business and our new bookings that are coming on.
So what does that due to the capital intensity in the fiber business.
I think I think of into 'twenty, 2 and beyond.
Yes.
It's going to continue to decline as we as we forecasted we are still managing that number down.
So what were.
The bookings levels that were.
We're currently at and frankly that we see continuing are going to be a mix of those on net greenfield Greenfield build and near net and it's all going to result in what we think is a steadily declining capital intensity.
Thank you.
Thank you and this concludes our Q&A session for today I would like to turn the call back to management for his final remarks.
Thank you. We appreciate your interest in Unity group and look forward to updating you further on future calls.
Thank you for joining us today.
Thank you and this concludes today's conference call. Thank you for your participation and you may now disconnect.
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