Uniti Group Inc. (UNIT) Earnings Call Transcript & Summary

Well, thanks, and good afternoon. Welcome back to Citi's Global TMT West Conference. For those of you I haven't met, I'm Mike Rollins, and I cover the communications services and infrastructure sectors for Citi Research. Just for your reference, we do have disclosures that are available on the conference and registration site. And I'd like to welcome back to our conference, Mark Wallace, CFO of Uniti Group; and joining Mark is Bill DiTullio, Vice President of Finance and Investor Relations. Mark and Bill, thank you both for joining us today.

Michael, thank you for inviting us. It's always good to be here at the Citi conference. I think this is the -- one of the conferences we haven't missed yet since our spin off. So always good to be here.

Thanks. Well, Mark, maybe to kick us off, the best place to start is, I realize it's been a very busy 2020 for you and the company. Maybe you could help us appreciate what the key strategic and operating priorities are now that you're looking at the new year?

Sure. Let me start by just maybe a brief overview. I'd say that going into 2021, I think Uniti is just very well positioned here for the current year. As you know, we've got the Windstream bankruptcy now behind us. We've got a much stronger leases and a healthier tenant in place. As part of the settlement, we acquired access to over 2 million fiber strand miles, which we'll talk more about that at [Technical Difficulty] We're performing very well. We've made some changes with our sales organization to make sure that they're really focused on lease-up going into this year. And I think they are very well organized, and have some real industry veterans in charge of key areas there. And then we started to do a lot more affirmation at this conference and others as well with our investor base, both the debt holders and equity holders as well, potential equity holders. And we started to get a lot more traction now. As you know, we had some turnover and we had some investors that considered us kind of uninvestable during the Windstream bankruptcy process. And we have a lot of both new investors and previous holders of our securities are starting to reengage with us, update their models and really take an interest. And I think you've seen -- starting to see our bonds perform very well. I think they're all trading above par now. They started to perform very well and the equity is starting to do better as well. So a lot of good things happening, and we're looking forward to the current year. So let me just jump into your question specifically about what the real priorities are, and I'll try to just go by business unit. I don't think you'll find any surprises here in my comments today. They're pretty consistent coming out of which Windstream bankruptcy process. At Uniti Fiber, it's really about steady as she goes there. We're very focused on lease-up now that we've completed a lot of these anchored bills that we've had going on for several years since we did a series of acquisitions. We're very focused on lease-up, and Joe McCourt heads up our enterprise -- commercial enterprise sales. And he's very focused on the lease-up of these assets. So that's really the key opportunity that we have there. As you know, when we lease up assets of the fiber business, those usually come at 10% to 40% incremental yields. They come in incremental contribution margins of 70% to 90%. So they're very -- they really juice the returns on those investments that we've made over the last few years. I think on our last call, we had mentioned that just this year, we had been able to sell about $2 million of annualized revenues to date at about a 50% incremental margin. So that's going very well, and I expect it to continue to go well this year. So at Uniti Fiber, we're very focused on bookings and installations, customer service. And one other thing that we've mentioned is winding gas for the noncore business, primarily our construction business. We really want to get the business to where it's very long-term revenue, recurring revenue and get some of the noise out of the business as well. We've essentially wound those down by the end of last year. Uniti Leasing is a little bit different in that I think it's probably the one business unit that probably has been the least focused on, least understood and maybe least appreciated of our business units by investors, but that's starting to change a lot. As you know, with the 2 million fiber strand miles from Windstream, we're starting to have a lot of growth prospects at Uniti Leasing. And it's a totally -- it's a complementary but different business, meaning Uniti Leasing is passive income, or a passively managed business, long term. So it's opco/propco, some leaseback transactions, dark fiber IRU transactions. But -- and with the 2 million strand miles, we really have increased our leasable inventory substantially with the settlement -- with the Windstream settlement. And so we're really looking forward to making a lot of progress at Fiber. And it really gives us, like we saw in the Everstream transaction that we announced, to be able to bundle together fiber that we got in the Windstream settlement, pre-existing fiber we've been managing and leasing. And in some cases, even the fiber at -- Uniti Fiber and also operations that we have in some our non-Southeast markets. So really encouraged about what we see at Uniti Leasing. We have a good pipeline there. Ron Mudry, who was the -- who came to our company from Tower Cloud is our Chief Revenue Officer. He's very focused on that. And then, of course, recently, Greg Ortyl, we've appointed him as Head of National Accounts. So to the extent that customers want to buy across the business units, then Greg Ortyl really handles some of our major accounts and is able to present one face to the customer as opposed to them because we have 2 different business units. So we've made a lot of internal changes. We've got plenty of inventory, and we're really looking forward to executing well on Uniti Leasing. And then last thing I'll say is on the corporate side, we certainly look forward to engaging more on the M&A side as well. And then we've got some -- starting to try to address our debt maturity profile, and you've seen us do that with the revolver being refinanced recently, and we'll be looking at reducing the debt stack here toward 2021 as well. So I'll stop there, and we'll see what else you'd like me to cover.

Thanks for that introduction. And you mentioned -- just to key off on something you said, that sometimes there's some confusion between the Leasing business and the Fiber business. So is the revenue really segmented by the customer use case? So it could be the same fiber, but if it's a dark fiber IRU, it ends up in Leasing? And if it ends up being active, it ends up in the Fiber business? Or is it more complicated than that?

I'd say that, that's essentially correct. So if it's going to be long-term passive -- if it's going to be a long-term IRU agreement or it's going to be a sale leaseback transaction where there's -- we don't really control the operations, most likely, to be in the Uniti Leasing division. Whereas other -- then the rest of the business that requires more active management will be in the Uniti Fiber division. Not always clear cut, but I'd say, generally, what you said is essentially correct.

That's really helpful. So you mentioned -- one of the latter priorities you mentioned was on the corporate side and looking for more M&A. So as you're looking to engage with new investments or acquisitions, how does Uniti consider the product opportunities beyond fiber infrastructure as well as the geographic opportunities being within or outside the United States?

So we're really focused on the United States. We're really not focused on doing anything internationally at this time. There's plenty of opportunities for us to do in the United States. And in terms of geographies, so there's really 2 -- there's really -- the business units actually have different focuses. So in addition to being actively managed at Uniti Fiber, Uniti Fiber is really focused on the southeast. So on those acquisitions, we'd be looking for acquisitions in Uniti Fiber footprint, adjacent -- in adjacent markets and kind of [ digital ] fiber networks that would really serve the Uniti Fiber in their footprint now or maybe expanding out on the edges. Uniti Leasing is a different animal. It's really nationally. So much less -- it's not geographically constrained, and that's just because of the nature of it's passive income. We're generally not the operators of the assets. And so there's really 2 distinctions. Southeast-focused for Uniti Fiber, natural focus for Uniti Leasing.

And things like towers, which you were previously in or as think about the future of fiber and small cells and micro-edged data centers. Does any of that end up on the radar screen? Or does that just end up really in someone else's opportunity set at this point?

Now small cells, obvious -- small cells are already part of Uniti Fiber, and we do have a -- Uniti Fiber has been deploying small cells now for a while, probably since we acquired Tower Cloud. So that acquisition, if you're able to look at it, it's small cell business. In terms of managed data centers, we do have a team that is looking at that. We have had customer requests to satisfy some of their needs. So there'll be more to say about that. It's fairly small now, and in some cases, exploratory. But it is something that we're focused on. It's primarily Uniti Fiber, but there could be some opportunities at Uniti Leasing as well. We really just have to see how it develops. It's pretty early stages at this point.

And you mentioned buying fiber from Windstream. Can you give us some progress on the opportunity to execute on leasing on that portfolio and just the larger portfolio now of assets that you manage?

Yes. Sure. I think it's a really good opportunity. But let me let Bill jump in, give him a little bit of time here. If you can let him cover that.

Yes. Thanks, Mark. So yes. So we acquired the fiber -- 2.2 million strand miles of fiber from Windstream as part of that settlement back in late September. And since then, we announced a -- on the last quarterly call, we announced an opco/propco transaction with Everstream, which utilized about 165,000 strands of that fiber. So we've already -- we've had increased discussions with parties regarding sale leaseback, opco/propco transactions since we've acquired that fiber and since we've done the Everstream transaction. And in fact, our first opco/propco transaction was with Macquarie and Bluebird, and that got some interest, too. And so the fiber that we got from that settlement increased our leasable capacity to third parties by over 90%. And so the other large asset that we had within our Uniti Leasing business that we've been monetizing and leasing up is the fiber assets we acquired from CenturyLink, which was about a little over 2 years ago. And so on that -- on those assets, it's about 270,000 strand miles of fiber. Long-haul routes only, we have generated over $50 million of upfront IRU fees in that a little over 2 years that we've had those assets. So we've had great success on leasing up those assets. And then when you compare it to the Windstream assets that we acquired as part of that settlement, Windstream fiber, that was 2.2 million strand miles of fiber, so it's almost 10x the amount of fiber we got in the CenturyLink transaction. And it's a healthy mix of both metro and long haul. So not only can we do these 20-year IRUs with the Windstream fiber, we could potentially use that fiber to support build-outs for dark fiber, small cell for 5G that's coming more and more into our markets today. We also can use it also for other non-wireless opportunities potentially to support enterprise, wholesale, E-Rate, government. And so given the success we've had on the -- on the CenturyLink assets and what we've been able to do in that in the short term we have that. And given the short order that we've had the Windstream assets and we've already been able to monetize and lease up some of those, we feel really good about the opportunity set there. And so when we got -- as another part of getting that Windstream fiber, as you saw, we announced that our sales pipeline at Uniti Leasing had doubled from Q1 to Q2, went from $500 million in total contract value to about $1 billion in Q2 and now -- at the end of Q3 sat around $1.2 billion. And we even doubled that sales pipeline before we had even actually acquired the rights to that fiber or have been actively marketing. It was just known in the marketplace that we were going to get this fiber as part of the settlement, and so we saw a lot of inbound interest from that. So now we've been able to actively market these assets from little over 4, almost 5 months now. And again, we used that as part -- essentially, a part of that -- as part of the Everstream transaction, we're going to continue to see a lot of demand interest from content providers, cable providers, both domestic and international carriers across the United States, where we have a lot of this fiber to lease it to either on a long-term basis or potentially use it in a similar transaction like we did with Everstream in an opco/propco transaction. So we feel really good about the opportunity, and we continue to drive incremental lease-ups through there.

Helpful. And earlier in the conversation, Mark mentioned the balance sheet. You mentioned the IRUs. So let's ask our audience a question that we'll come to later in our conversation, which is how will Uniti fund reduction in net debt leverage below 5.75x EBITDA, which, I believe was the target that at least you previously discussed as a management team? And we gave a few choices: IRU sales, asset monetizations, internally generated cash flow or accessing the equity market. So while that goes to the polls, let's talk about the pandemic for a few minutes, if we can. As a number of markets have experienced a second wave, what should audience be mindful of in terms of the impacts to Uniti, the operations and the ability to get deals done, if there's been any impact to that?

Yes, Mike. So I'll speak about the impact to the business. So in terms of our business at both Uniti Fiber and Uniti Leasing, we haven't seen much of an impact from COVID. In the beginning, when the first -- when the pandemic first hit, we did see some customers either delay installs or some orders from us, and -- but we've worked through most of that. Again, today, enterprise as a percentage of our consolidated total revenue is less than 5%. So it's a small piece of our overall business today. It's something -- enterprise is something we want to grow in terms of lease-up and non-wireless. But it's one component of that. We're also focused on bringing services to schools, to the federally funded E-Rate program, health care and government. And so while we have seen some businesses remain closed or have closed and there's been some impact there, we've seen more than an offset and a pickup in other areas such as health care, government and schools, where those entities are looking for new technologies to stay connected, such as through telemedicine, remote learning, things like that. And so we have seen new technologies emerge and new adaptations of technology in a post-COVID world here. And so we have seen some tailwinds related to that. But then more or less, in terms of our overall business, it really hasn't slowed us down, and we continue to see strong demand in both wireless and also on the non-wireless side.

And can you talk a bit more about the Uniti Fiber strategy? And in order to grow that business, do you need more investment in SG&A? Or do you need more investment in fiber to continue to push that revenue line forward?

Yes. So at Uniti Fiber, Mark touched about on this on his opening comments, but really, the focus there is leasing up the assets that we've had. So over the past several years, you've seen us build out these large dark fiber small cell projects, which we -- most of them were inherited when we made the acquisitions over the last several years in Uniti Fiber. And so at one time, we had 14 major small cell dark fiber projects going on at one time. Our capital intensity was north of 50%, approaching 60%. And so over the last 2 years, in 2019, we completed the majority of those projects and then by at the end of last year, in 2020, we had 2 completed and remaining in the majority of those projects. So now the focus turns to leasing up the -- leveraging the existing network that we have there and driving that lease-up. And for the most part, we expect that lease to come through these non-wireless opportunities that I spoke about before, enterprise, wholesale, schools, government, health care. When you look at the mix of our bookings over the last several quarters, the majority of those bookings have been in that bucket. Now that's not to say we won't pursue greenfield builds. We'll continue to go after RFPs within our markets or in our next door markets that either densify or expand our southeast footprint. But we're going to be particular -- very particular about the ones we pursue. We want to make sure they have good lease-up potential, attractive economic returns. When we pursue anything on a greenfield build, it's always with an anchor tenant secured. We target yields in the 5%, 7% range. And on those projects we've completed, we've been at the upper end of that range. And they're all high margin, 70%, 90% margin, like Mark said before. And so through the lease-up, and again, you've seen us do that this year to 2020. Through the first 9 months, we've sold of $10 million of annualized revenue of that lease-up that was generating incremental yields of 40% plus. And so when you layer on that incremental yields and those margins onto the anchor, it drives that 5%, 7% up into the low double digits. And so we've seen that play out, and we continue to see that play out in the markets that we're leasing up here. So again, we're driving higher-margin business. We're driving more revenue there. But the other thing is it's also driving down capital intensity. And so what we said is we expect our capital intensity to get into the 30% range going forward, and that's a function of leveraging the existing network to drive incremental lease-up, but also, at the same time, pursuing a handful of greenfield builds, not 10, 15 at a time.

And then Mike, let me just add also...

Let's hear our audience.

I'm sorry. Let me just answer a part of your question about do you need more. Yes, we have added resources in our organization because of the Windstream fiber that we've got. And then we've also had obviously expanded some of our sales force in the Uniti Fiber in order to handle some of the focus on lease-up. But overall, we're not adding cost from a total cost structure standpoint. What we're really doing is reallocating costs. And to the extent that construction-related activity winds down and we can take some of those people and our cost, reallocate them to other places that we're needing in the business now, whether it be lease-up at Uniti Fiber or lease-up at Uniti -- more lease-up at Uniti Leasing, administration of the GCI program with Windstream, other places like that. But we're certainly not adding to the overall cost structure in the business.

Let's bring our audience back with the answers to the first survey question in terms of the opportunity to reduce net debt leverage. And the audience is 43% asset monetization, 29% internal cash flow, 14% IRU sales, 14% accessing the equity markets. So Mark, as you look at this, what's your reaction to this? And I guess, how important is that 5.75 target as well to the company?

Well, I think it might have been good on your question, if you had had a couple of choices that were A and B but not C or C and D, but not A. So look, it's -- the real story is, it's going to be a combination of some of those factors. So look, I mean, we've been clear about issuing equity, that we think the equity is undervalued now. So it's not really attractive to issue it. But there's no question that there will be a combination of those things. The 5.75, look, it's not -- it's important, but it's important to try to put it in context. We have a stated intermediate target to bring leverage within 5.5 to 6, right at the higher end of that range. So it's in the -- so the 5.75 is in the midpoint of the range. We obviously want to bring leverage down towards -- directionally down over time. And -- but at the same time, we're not anxious to get to the 5.75. There's no pricing need right now in order to do that, but it is something we'd like to do over time. How do we get there is, to your point of your survey, it's going to be a combination of those factors, things like the Everstream transaction, that there's an opco/propco transaction that brings in a large amount of proceeds upfront. It can be very helpful to that, and we hope to do more of those type of transactions this year. So we'll see. But at this point in time, we have plenty of liquidity currently to continue and make all of our -- to make all of our commitments and not have to access the equity markets, at least through end of 2021.

And if I think about going back before Windstream had some challenges that you had to navigate through, you were pursuing acquisitions of different assets to focus on fiber infrastructure. You had some adjacencies that you did, like the towers, and part of that was also the benefits of diversifying revenue. And during those transactions, because of where the prices of the assets were and where your cost of capital was there was -- each step caused a little bit of dilution on the AFFO per share line as you're executing those. Are you now at the point where you can do deals and you see them accretive in the first year to AFFO? Or how should investors think about the balance of doing the deals versus the financial implications of those deals?

Yes. So here's what I'd say, is with our business, I think this is one thing people miss when they talk about the acquisition environment, the transaction environment. We have a lot of different structural ways that we can do transactions, and it really depends to your question. Opco/propco transactions, sale leaseback transactions, IRU transactions are likely to be accretive upfront. Whole company acquisitions is really dependent upon what the prices of the acquisition and what the synergies are that are related to the acquisition and how long it takes in order to realize this. I will say this, on the cost of capital, to your point, is our cost of capital continues to improve. As I said earlier, the bonds have continued to trade very well. The yields on them now are far below, in some cases, the coupons. So we have a real opportunity over time here to refinance our debt, really save on our cost of debt. And then the other thing I'd say about even on whole company acquisitions, in many cases, what's really important is if it's to the extent that it's a transformational acquisition and the perception of the market, the marginal cost of capital is very important to consider as well. But we have a lot of different structural ways to do transactions. And some of those we do based on pricing at the time and work what's best within each portfolio.

Mark, if you were to just take a snapshot of your screen today where the credit markets are, where your bonds and debt trade, is there a simple snapshot that our audience should just be thinking about in terms of what the rough -- doesn't to be exact, but what the rough opportunity for interest savings would be on the total amount of debt that you have outstanding? And roughly, based on all the things that you know about, whether it's call dates or opportunities to refinance, like how many years roughly would it take to achieve that type of savings level?

Yes. So I don't have a -- I'm not going to be able to give you a specific number, and I'll be glad to explain why. But just as I, for instance, because I do get a snapshot of this each morning. It's not like the first thing I look at. So I mean, this -- the 6% volumes have yield to worst, as of end of yesterday, at 4%. The 7.125% unsecured bonds had a yield to worst of below 6.5%. So it's substantial. And so now when you think about what the yield is, what the savings is, then that presupposes -- and this is one thing I think about as well. We have a lot of debt to refinance. And a lot of the debt from the original spinoff comes available for your refinancing over the next couple of years. So we really have to think about a lot of things. And that is given our business model today, what's the right mix of secured, unsecured? What's the right debt maturity profile that we want to be in place because the yield and the savings is very dependent upon what the tenure of the instrument is. We have to think about fixed floating and how much we want to be repriceable, callable, noncallable. There's a lot of things. So when I -- to consider, when you have -- you essentially have a substantial portion of your debt profile to address. And so we do want to be thoughtful about it. So rather than just doing a transaction here and there individually and singularly, I do want it to fit into a broader concept in a scheme of what we want the debt maturity profile to look like when we're done and be thoughtful about it, so that it can also evolve as our business continues to evolve. So I don't have a hard and fast number, but at least those are some of the parameters that we're trying to take into account.

And after the transaction that you announced in the fourth quarter, is there any restrictions now on your ability to reset the dividend to whatever level that you would like it to be at? Or should I say what the Board would want it to be at?

So the restriction is still the restriction -- generally, 90% of forecasted taxable income is still in effect under the last series of notes that we issued. And that will be in effect until we get to the 5.75 net leverage target. So when we get there, and then that would eliminate those restrictions. But until we accomplish that, then those same restrictions would still be in place.

And what have you learned about what the optimal dividend payout would be? If you have that flexibility to adjust it to whatever the management team and the Board would think is optimal, what have you learned about what that right mix or balance looks like?

So I don't want to get too far ahead of expressing my view before the Board actually determines what they want to do with it and going forward, that's their decision. Look, I will say that as we've talked to investors, we've taken a lot of feedback from investors as to what they think, how -- the dividend is just part of capital allocation. So how do they think about, given the policy relative to reducing debt or continuing to invest more in the business? So we've -- we certainly have listened to a lot of investors and we'll do some more even later on the day in this conference. And fortunately, investors are -- freely expressed their views on this. I will say that one thing that always comes up in those conversations is the dividend is, on a relative basis, I think it's very attractive. I think a lot of investors think is attractive where it is. Relative to communication REITs, so data centers and towers, to pick a couple, the dividend yield that we have to date is 5% plus or minus, depending on the stock price. And I think those are 3% plus or minus as well, depending on which ones you look at. The payout ratio on the dividend is very safe. It's 40% now. So there certainly is room to grow the dividend. But it's also a very attractive dividend, meaning it's -- the yield is probably 100, 150 basis points better than the peer group, and it has a very safe payout ratio. So in my mind, that's a very valuable and attractive dividend. Whether the Board decides to increase in the future or not, I'll let them make that decision, and we'll communicate that most likely on our next earning call when we talk about guidance.

What can you share with us about the health of Windstream and how your customers been doing since emerging from bankruptcy?

Look, as far as we know, I think Windstream has continued to perform as expected, kind of consistent with coming with their plans when coming out of the bankruptcy process. So we get updates from them periodically. Investors have asked if we're going to be able to share some of the results of Windstream in our upcoming reports, and I have been clear that, yes, when we file our 10-K or in connection with our year-end reporting processes, it may not be exactly on the date that we file. But we would love to be able to file [indiscernible] related reporting process. So there'll be more information forthcoming then.

Have there been any updates to the pace at which Windstream wants to draw down capital from you to invest in its own fiber and upgrade its own footprint, which was part of the settlement arrangement between the 2 companies?

No. No really -- I'd say there's no -- so if the question was accelerate, no. I mean the program is pretty established, pursuant to the agreements. Windstream, there's a group that meets between us and Windstream to review the projects that they're deploying in the trucking. And so we review those. They'll submit the GCI reimbursement request for us. We'll go through those and determine that they meet all the criteria, long-term value-accretive fiber. They meet certain tax real estate criteria and they meet the return thresholds. And so we'll go through a pretty extensive underwriting process on those. And then there'll be a determination as to -- then we'll reimburse for those qualifying assets, pursuant the agreements. So as you know, those assets in at that point in time, they'll become ours to the time that we acquire them from Windstream and then the lease payments will start 1 year after that.

And you mentioned it's an extensive process. So what's the lead time typically on that, where is it 3 months out, 6 months out? Could it be even longer out in terms of Windstream saying, okay, I'm going to put in to get reimbursed for this amount of money in this amount of time frame. So we could appreciate the visibility that you have for those future payments.

Well, it's a -- we get pretty detailed information on a project-per-project basis. Mike Friloux who's our Chief Technology Officer, kind of heads up that project. If you remember, Mike was the CEO of PEG Bandwidth when we -- the first acquisition that we made since our spinoff. So he has been with us for a long time and he has a number of other people that help him work through that. So it's a pretty extensive process. We get very detailed information. As part of each annual -- there's a forecast. The group meets to go with forecast, forecast the spend for the upcoming year. I don't want to have that to share yet for 2021. That's still being developed. But perhaps we can share some more information on that when we give earnings guidance later this year.

Thanks. And just thinking a little bit more about the situation in terms of Windstream. In terms of the go forward, are there any other opportunities that might be underappreciated? You talked about the 2.2 million miles of fiber, the upgrades into its plant with the -- partly from the capital that you're providing for fiber upgrades? Is there any other part now of the future relationship that's important for investors to understand?

I can't really think of anything that we haven't covered previously either on our earnings calls or in other presentations that we've made. So I think it's -- I think the relationship and the agreements between the 2 parties are pretty well understood at this point.

And maybe shifting gears a little bit, like during the time where you were trying to think about the future and navigating the relationship that you had with Windstream over the past year. I'm curious, as you look at the assets that you have under your roof today, was there an industrial logic to consider splitting up the company between Uniti Leasing and Uniti Fiber? Or could there be that industrial logic in the future if one side of that scales to a certain level?

Not really on the radar screen today. I guess sometime that -- I never say never, but it's not really something that's on the radar screen right now.

And in past periods, you've sized the pipeline for M&A, just to get a sense of the totality of opportunities that you're thinking about. How does the current pipeline for M&A in terms of the quantum of dollars that are out there for possible investment by Uniti? Can you share what that number is or how that number compares to historical disclosures of that?

Yes. So I don't recall that we've actually shared the quantum of the pipeline. I think we've given some breakdowns about what it relates to and what the size of the individual transactions are, but then maybe not so much the actual quantum of the pipeline. Look, the pipeline continues to be pretty close to what it has been traditionally, meaning that it's primarily proprietary transactions. We have -- we did put some of the M&A transactions we want to hold and focused on smaller deals. With independency of the Windstream bankruptcy, we're much focused on larger transaction sizes now, closer to what we did prior to Windstream bankruptcy, what we've done historically. So top line is still in good shape. It's very robust. And I'd say it has a -- to my point that I tried to make earlier about the diversity of transaction structures that we -- that are available to us and has a good mix in terms of the -- transaction structure that we're considering. And we've got a lot of inbound inquiries as well. So a lot of inbound inquiries and outgoing transactions and then also from infrastructure funds and others that weren't discussed, a partnership on something or the like.

Back when there was tax reform, I remember as part of -- and this is now a few years ago, right, it's hard to believe it was a few years ago. But when there was tax reform -- what was that, Mark? I'm sorry.

I have more tax reform coming.

Well, that's probably another question. So the first one is based on at least what we had, at the time, there were some limitations on leverage, net debt leverage for tax deductibility of the interest expense. And at the time that we've spoken, I'm curious if you still believe this is the case. So the first part of the question is, is it your understanding that if someone takes some assets and enters into a sale leaseback, which becomes synthetic debt, but it creates a lease expense, that the lease expense would be tax deductible and a way for a company to kind of maintain the synthetic leverage but transfer some of that interest expense into a deductible lease expense. Is that is that a fair understanding of what could happen?

That is still consistent with my understanding, that lease expense is still deductible as opposed to limitations on interest expense. It still my understanding of that, yes.

And so I guess the second part of the question. So as time has marched on and we're getting closer to that point where those -- at least under the current tax situation where those restrictions could be imposed on interest expense deductibility. Are there customers that are out there talking to you about using this type of a structure as a way for them to manage their tax efficiency and provide you an opportunity to grow your asset base?

Yes. It's -- so we have had those discussions. But usually, when we're doing transactions, particularly transactions that are more complex, like a little bit sales leaseback, opco/propco transactions, it's really in the context of so many more tax issues as well. It's hard to say that, that's a priority item for them. It really depends on their own situation. I mean there clearly are a number of issues in terms of what's the structure? Are you going to get inside basis? Are you going to get an outside basis? Who's going to recognize gains? Is it going to be -- do you have to deal with certain taxes? There's all kinds of issues, valuations and things and -- depending on assets. There's all kinds of issues that come up with these things. I can't really say that I can tell you that. And so that has been -- it has been discussed in some of our transactions. I can't really tell you that it's been a priority or not in some of these because they're usually very -- buyer and seller both pay taxes.

You mentioned earlier, you mentioned some of your views on the stock price. And as you've had conversations with investors, are there certain things that you think are still on investors' minds or certain aspects of Uniti that just need to be better unpacked for the investment community?

Yes. I would say that we spend a fair amount of time initially coming out of Windstream bankruptcy just explain the settlement, explain the changes in the lease, explain the GCI program and how it works. And certainly, to the question you raised earlier, people are interested in Windstream's performance. And I should be cautious here that Windstream's restrictions on regulatory performance, how they're doing. It's not material. So now, I'm just giving you what my sense is so far. So yes, that's the things that people understand that pretty well at this point in time. There's still some education to people that are new to the story. I think the -- to your point also, I think the opportunity that we have with Uniti Leasing with the 2 million fiber strand miles that we spoke about earlier, I think there's been a lot of conversation in our individual meetings with investors just about trying to understand that opportunity, size it, think about timing of it and how you make of it and how to model it. So I think it's that. And then I'd say one other thing is we're spending more and more time just, as I said earlier, just kind of re-engaging with investors who really followed with our story during bankruptcy, but really didn't follow at a level of detail that would allow them to analyze it and think about whether it makes sense to make an investment. And we're having a lot of people, both equity investors and even fixed income investors as well that are testing off their models. We already have a lot of conversations, either at conferences or one-offs to really understand the business better. And that's folks -- as I've said, both new investors, existing investors and ones that used to be involved in our story and then kind of dropped out through the bankruptcy process. So we have a lot of work to do on evolving our investor base over the next year. And so me and Bill will be very focused on it.

Well, Mark and Bill, I want to thank you for joining us today. We appreciate you sharing your time. Thank you.

Michael, thank you very much.

Yes. thanks, Mike.

Thanks, and thanks to our audience for joining today.