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

Good afternoon, everyone. I'm Matt Niknam, comm infrastructure analyst here at Deutsche Bank. For our next session, we're very pleased to be joined by Uniti's CFO, Mark Wallace. We also have the President of Wholesale and Strategic Accounts, Greg Ortyl. We also have Investor Relations Head, Bill DiTullio, with us. So welcome to the conference, guys.

Thanks for having us, Matt.

Thanks for having us very much.

Of course. Well, maybe just to start, can you talk about some of the key milestones and achievements from 2020 and the top priorities you have for the business in 2021?

Yes. Sure, Matt. This is Mark Wallace. I'll start. So we -- I think we accomplished a lot in 2020. I think we're set up very well to have a good year in 2021. If you remember, in 2020, we got the Windstream settlement finalized. Windstream, as our largest customer, is now a much healthier customer than they were previously. They deleveraged -- significantly deleveraged their balance sheet and so far, have performed in line with expectations this year. The -- we also strengthened the master lease with Windstream. We were able to add both the -- both Windstream Holdings and Windstream Services as tenants and a lot of their direct and indirect subsidiaries. We also added financial covenants in the lease and then made a lot of other changes to make the master lease much stronger than it was previously. We were also able, during the year, to divest some of our noncore assets, in particular, our Tower portfolio. And then we've also been able to wind down some of our noncore construction business as well. So at this point, going into 2021, we're really focused on Uniti Fiber and Uniti Leasing as the 2 main business units that we're really focused on. And both of those have performed exceedingly well and are set up to perform well. We've taken a lot of action over the last few months to look at where we need resources, both in Greg Ortyl's group, the national and wholesale accounts strategic group as well as some in our enterprise sales group, which Joe McCourt heads up, and other areas to make sure we have the right sales personnel and operational personnel in place going into 2021. You might have also noticed that we've been able to improve our balance sheet as well. We've improved our liquidity position. We've got our revolver refinanced at the end of last year. And we recently have started to make some progress on improving our cost of debt by refinancing some of our shorter-dated debt into longer-term maturities and hope to do more in that both this year and likely into 2022 as well. We've been very fortunate that COVID has had very negligible impacts on our business and demand. Install activity remains very high across our entire customer base. And so I think we're really set up well based on what happened last year to have a really good year in 2021.

Okay. And maybe just digging in a little bit in terms of the Windstream settlements. Can you talk about some of the key benefits from that and how Uniti emerges as a stronger player as a result?

Yes. Sure. I'll start, and then I'll let Greg Ortyl jump in also and talk a little bit about the Windstream settlement brand. But as I said, the MLAs were strengthened. But also the most important thing probably is that we acquired -- as part of the Windstream settlement, we acquired about a little bit over 2.2 million strand miles of fiber. That is now lease that adds to our leasing portfolio at Uniti Leasing. So Uniti Leasing today with what we already had, we now have about 3 million strand miles that we can lease to third parties. And that -- with that amount of fiber inventory that we have available, we've had a lot of inquiries to lease up that fiber. Greg Ortyl can talk more about that here in just a minute. We also have announced that with some of that fiber, plus some existing operations and other fiber that we have, we've been able to combine that into a transaction that we announced with Everstream and that we expect to close in the second quarter. So it's an OpCo-PropCo structured transaction with them. And I think we're just going to have a lot more leasing success at Uniti Leasing with the sales pipeline that Greg and Ron Mudry, who's our Chief Revenue Officer, have been able to sell and accomplish and develop over the last few months. Keep in mind that the sales funnel now at Uniti Leasing is over $1 billion. But let me stop there on the Uniti Leasing front, and I'll let Greg add a little bit of color in terms of this -- the sales funnel there and the types of customers that we have there and maybe give you a little bit more insight as to what the sales cycle looks like.

Yes. Thanks, Mark. Yes. So Matt, one thing to think about as you consider where we are today is kind of where we came from. So was it 2 or 3 years ago, we acquired long-haul fiber from Lumen. And we've been public about that, the fact that over the first 2 years of having that asset that we acquired deals that resulted in about $50 million in upfront IRU payments, right? That was with one salesperson marketing those long-haul dark fiber assets. Additionally, that entire Lumen network that we acquired was only long haul. There was no metro fiber assets whatsoever. And it was limited strain count. I say, limited, compared to what we received in the Windstream settlement, which I'll talk about in a moment. But we had 12 strands on some paths, 24 strands on other routes. But when you add up all the fiber strand miles on that Lumen network, it was about 270,000 fiber strand miles that we've been marketing to carriers over the last 24, 30 months or so. In contrast, the Windstream settlement fiber not only includes long-haul fiber similar to the Lumen fiber, right, but also what I would call mid-haul fiber, now I'm kind of backhauling from more rural markets back to Tier 1 Internet-presence markets as well as a significant amount of metro fiber. High strain count, dense networks built in the most expensive parts of the urban dense areas to build in, very hard to replicate. So you want to differentiate the type of asset that it is. And then when you compare it to a fiber strand count perspective, the Windstream settlement fiber has combined about 2.2 million fiber strand miles compared to that 270,000 fiber strand miles on the Lumen asset. And again, $50 million in upfront IRU payments, 1 sales rep in 2 years versus the Windstream settlement fiber, 2.2 million fiber strand miles. My team now sells that to all of our wholesale and strategic account customers. And we have 12 quota-bearing headcount on the team today. So as you can imagine, the interest level for this network has been significant. And that's across all verticals that my team sells into. So the large telco companies, the Lumens, the Windstreams, the Zayos, the Everstreams, the Segras, the large-cable MSOs, the international telcos that are building out U.S. network, not surprisingly, the content and hyperscale customers, FANG, et cetera, the data center customers is yet another vertical that we've been engaged with. So the other thing to consider is it's only been, what, 5, 6 months that we've had access to this Windstream settlement fiber. This isn't something that we've been marketing for years or even months. So really on the tip of the iceberg right now of what we think we can do with this network. And what's been particularly exciting for us is being able to combine all those assets into one customized solution for some of our customers. So for instance, we're working on a deal in the central U.S. with a cable company where we're leveraging Lumen fiber, we're leveraging Windstream settlement fiber, but then also our Uniti Fiber network in the southeast. So being able to bring all those assets together into one kind of seamless solution for our customer. It's about a 2,000 route mile deal that we're working on right now. But just as an example of some of the unique things we can do now, not just with the long-haul fiber, not just with the metro fiber, not just with the legacy Uniti Fiber Southeast footprint that really kind of combining all those assets and putting together the best solution that our customer needs.

Thanks, Greg. I'm just going to pause one second. [Operator Instructions] Maybe, Greg, just to follow up on that. So you talked about doubling of the sales funnel. I think we're at about $1 billion now, up from about $500 million in a matter of months. And so I want to dig in a little bit more into the inbound interest you're getting, the mix of potential customers. You gave us some color there, but I'm wondering, are there specific types of customers more actively engaged in the sales process relative to others? And maybe if you can help us frame how long these sales cycles for these deals typically last?

Sure. No, it's a good question. So I mentioned several of the verticals that my team deals with, the international, the content, the large telco. And I wouldn't characterize one as way out ahead of engagement with us than others. I don't think it would be to anyone's surprise if I said that the hyperscale content providers are probably a little bit more active than the other verticals. But I can assure you we have a lot of activity with all of those verticals. I mean virtually any international carrier that you can mention who either has or intends to have a U.S. network we're engaged with, every single one of the cable MSOs from #1 down to #10 we're engaged with or have already sold network to, the -- and obviously, I mentioned the FANG group content, hyperscale data centers. Data centers, we're certainly connecting data centers. That's always the objective, not always, but typically the objective of our larger customers. But the data centers themselves don't necessarily buy direct from us. They are more a means to an end for the network with our customers. Yes. Good question on the sales cycle. And I was making the point earlier today to somebody that in our Southeastern footprint, the legacy Uniti Fiber footprint, if you will, when we have a bid come in the door, we get a request for 1 gig of Ethernet or a 10-gig wave, long-haul 10-gig wave, that's something that we can price very quickly. I'm talking about if it's on net already or very near net, we can price it very quickly, get it back in front of the customer, let our customer go back and be able to bid to their customer. And we'll find out pretty quick in 90 days or so from there if we won or not. And so you're looking at a 3 to 6 months averaging, very high level, 3- to 6-month type sales cycle. And all the non-net near-net business in the Southeast, we can take from book to billing very quickly, right, because there's not any big bills we have to do, the equipment infrastructure is in place. We have capacity generally everywhere on our network to sell incremental waves and bandwidth. And that's -- the huge focus of Uniti is trying to lease up the existing infrastructure that's in place, particularly in a place like the Southeast. When you talked about our long-haul dark fiber assets that we acquired from Lumen and then the Windstream settlement fibers, really different ballgame there. So number one, we don't offer lit services today on those assets, on those leasing assets, Lumen and the Windstream settlement. It's dark fiber only. And when you're talking with customers and talking with network buyers, it's not surprising that there are several iterations of a proposal that take place when you're talking about going from city A and city B across the country, or you're talking about 48 or 144 strand counts in a particular metro area. So those sales cycles are much, much longer, if you're -- kind of the shorter side is a 3- to 6-month type sales cycle. But most of the time, you're talking about 6 to 12 months. There's a deal that we're working on right now that we've been working on for 2 years. And it's -- when a customer is writing a check to us for $0.5 million or $2 million or $5 million or $10 million upfront, that's not a deal that happens in 30 days. It takes a lot of iterations between the network engineers, making sure that the access points are where they expect them to be. You have to verify the colo space and power at each location along the route. There may or may not be a small build, a last-mile build to connect to the right data center that they're trying to get to. So the budget planning, oftentimes, we'll engage with a customer in one particular year and the customer will vet out that solution throughout that particular year so they can submit it into their budget for acquiring that fiber the following year. So again, when you're talking about 500 route miles, 2,000 route miles of fiber, that's a significant type of acquisition for any customer. And so yes, just -- it takes some time and getting from the first inquiry to let me put my signature on the contract, that could be upwards of a year, sometimes even longer.

Got it. And when we think about -- we talked about the sales funnel. When we think about the M&A pipeline for the leasing business, maybe Greg or Mark, if you could talk about what the M&A pipeline looks like today in terms of new leasing transactions. And then I know you've talked in the past about different flavors of leasing transactions, whether it's like IRU, dark fiber lease-up, sales leasebacks, OpCo-PropCo. Where would you say leasing maybe -- may see more activity in '21?

Yes. So Greg, you want to start with like the type of leasing deals we might do at either leasing or the types of transactions that we pursue in leasing? And then I'll follow up with -- on the M&A more broadly.

Yes, yes. So with -- on the leasing side, we've announced several deals the last couple of years of sale leasebacks or OpCo-PropCos. And the Windstream settlement fiber has given us some -- I think, such opportunity to look at some of those OpCo-PropCos. So for instance, as part of the Windstream settlement fiber, we have dark fiber, metro networks with high strand count in markets like Boise, Idaho, Seattle, Portland, L.A., the Bay Area, Vegas, Phoenix. We don't have operations anywhere near those markets like we do in the Southeast. So the -- it may not make sense for us, for example, to go like those networks and try to put an infrastructure in place to maintain and operate that fiber. However, there are certainly plenty of regional fiber providers that do have network in and around those areas or looking to expand into those markets. And that sets us up for some interesting OpCo-PropCo discussions whereby either Uniti could go out and try to win business direct with an anchor customer, be it a wireless provider, a content player, an E-Rate deal on the education vertical side, and then spin that into an OpCo-PropCo and let the OpCo kind of take it and run with it, if perhaps the OpCo doesn't have the customer relationships that we have. Or likewise, we could propose to that potential OpCo partner of leveraging the dark fiber that we already have and proposing a kind of managed solution to the end user. So if they already have the relationship, if this is on their target expansion list, leveraging the fiber that we have that might cost somebody else $5 million, $10 million to overbuild and duplicate, why not leverage this high strand count fiber that we have and go try to win that business direct. And so there's some really creative things that we can do there that are needle movers versus selling the singles and doubles as we like to call them, 10 gig here, 1 gig there that we're selling to the carrier customers. So Mark, do you want to finish off on that topic?

Yes. Sure. And just in terms of the broader M&A environment, I'd say that -- for our M&A pipeline, I'd say it's in really good shape. Even though we didn't pursue a lot of larger deals -- actually, we did mostly smaller deals during the pendency of the Windstream bankruptcy. We did keep the pipeline fresh. And so it's in really good shape right now. And I'd tell you, when I say it's in good shape, meaning it's -- there are deals spread across both Uniti Leasing and Uniti Fiber. The types of transaction range from all the types that Greg talked about, some sale leasebacks, some OpCo-PropCos, some JVs, some whole company acquisition opportunities as well. So it's got a good diversity of deals, size and types in the pipeline right now. I would say one thing that fiber multiples are -- have gotten pretty high lately. So high teens, somewhere up to 20x in some cases. For platform companies, I'd say that those are still very highly sought after, particularly by infrastructure funds. And there are -- there is a lot of infrastructure money that is very [ intriguing ] and interested in acquiring fiber assets. So that's one thing that pricing discipline is important, at least for us, for things that we look at. And then the other thing I'd say is that in some cases, we may be in situations where we may compete on a deal, particularly if a deal's being -- should it be -- being probably auctioned or have a sell-side firm involved. But if it's being auctioned, it's possible that we might be competing with some of the infrastructure funds on an acquisition. At the same time, we might -- also might be partnering with them on acquisitions as well. So OpCo-PropCo structures are a very typical way that we can partner, like we did in the Macquarie and Bluebird transactions. And there's other opportunities to partner with them also on transactions in other JV and other types of formats as well. So I think there -- lots of opportunities, I think, will present themselves to us over this year and next year given the current environment and [ the attractiveness of fiber ].

And Mark, if I could just follow up. Are the richer multiples for these fiber assets? You're seeing these in your Tier 2-, Tier 3-type markets as well?

Yes. As I said, particularly for platform companies like we have bought in the past, Southern Light, Tower Cloud. They had good, solid management teams that have infrastructure and systems infrastructure, et cetera, within them, good sales teams, et cetera, so will build out organization where they can take the platform company and then do additional bolt-on transactions themselves. So yes.

Got it. Okay. I want to jump a little bit and talk about the GCI program that's in place with Windstream postsettlement. Maybe Mark, can you talk about the program in place, the benefits that accrue to Uniti, and maybe talk about some of the plans for investments here in 2021?

Sure. So the GCI program with Windstream was really designed -- and I'm confident that it is beneficial to both parties. So the way it works is over the remaining term of -- the remaining initial term of the lease, we committed to provide Windstream up to $1.75 billion in capital. And the way the program works is that this is mostly capital to -- for them to make additional investments into their kinetic business. So the way the program works is there's a set dollar amount, so roughly $200 million a year, but it fluctuates per year. But roughly $200 million a year that -- and the way it works is that Windstream will identify what markets they find attractive. So they'll identify where they want to do new builds, and they'll do the market analysis and determine the economics. And once they have finished construction of new fiber based on their plans, then they'll present those construction builds to us, we'll review them and do -- and look at the costing and stuff. And then we will reimburse them for those assets. So essentially, what happens is they build the routes, we purchase the routes from them and then we lease those routes back to them at an 8% initial yield. So think of it almost like a preleased development. So they develop the route. And then after that, we reimburse them for it. It becomes our asset building our balance sheet, and it's preleased back to them at an 8% yield. Now that 8% starts 1 year after our reimbursement, and that was to -- that was designed to allow sufficient cash flows to start being generated from the assets to cover the cost of the rent. So that's essentially how it works. We have a -- there's a GCI committee composed of executives between us and Windstream that administers this. So we meet routinely and go through what the build plans are, what the markets are, what the types of routes are, what the customers are and what the economics are. And we'll do our forecast and our plans based on that. And we'll make sure that they comply with the lease because there are standards that these builds have to comply with. And from that point on, it proceeds kind of as I described. So it's designed to help Windstream be more competitive in those environments. At the same time, it allows us to effectively build new network. So in many cases, overbuilding copper with fiber. So it allows us to improve our network with new fiber builds. So it's good for the value of our assets. It brings in additional revenue streams to us, and it also helps our largest tenant, be -- hopefully be more competitive in their marketplace.

Got it. Okay. And I've got 2 follow-ups there. So first, how do you respond to potential pushback that this only increases your exposure to Windstream?

Well, I think you have to remember that, as I said up from the outset, Windstream has a much better credit in it than they were previously coming out of bankruptcy. They deleveraged their balance sheet substantially. At the same time, the lease is a much stronger lease than it was previously as well because of the -- some of the additional features that I mentioned that we put into place. But at the same time, the GCI program design -- is designed to continue to make Windstream a healthier tenant. So as they execute on the program, as they improve their competitive position, that should allow them to drive and -- more and more cash flows from those new investments. So it should be a program that is good for us and good for them. And frankly, as our network becomes more valuable from these investments, that also improves the value of our -- it improves the value of our network. And it also makes -- it substantially increases the value of our network and the revenues coming off of those leases as the credit quality of the Windstream improves.

And so is there still a target in terms of 50-50? There was a 50 -- getting to 50% revenue exposure at Windstream. I'm just curious if that target kind of still holds or is valid postsettlement.

50-50 is still a target that we'd like to get to. The one thing we haven't done coming out of the Windstream bankruptcy is we don't put a time frame on the target yet. And we may do that in the future. But as I said, we have a very robust pipeline. And so I do think -- and I do think that M&A will be a significant factor in how we get there. The real question is just the timing of what we're going to be able to get there. That will have to play out based on our ability to execute against the M&A pipeline that we currently have as well as some of the things that Greg talked to at Uniti Leasing and Uniti Fiber as well.

Got it. Maybe a question for Greg. Let's pivot to the fiber business. Can you give us an update on the demand backdrop you're seeing from customers heading into '21? And then also, how would you say demand has either changed or evolved post the COVID pandemic?

Yes, yes. So first off, on the COVID side, so I think we've talked publicly about this several times now that we really didn't see any material changes to revenue based on COVID. We had some delays in some deals that we experienced last year. It certainly accelerated certain business models that take advantage of telecom, infrastructure, communications infrastructure, such as the platform that we're leveraging today to talk. On the fiber wholesale side, we saw a couple of deals probably get delayed into 2021 from, say, last summer. But again, nothing really material that you could point to related to COVID. I can tell you that the activity level with all of the wireless carriers, for example, is very high right now. Not to jump ahead to a question that you might ask me, but talking about the C-band auctions that have recently taken place. Lots of money spent on acquiring that spectrum. And I've been asked, do we see that as a positive or a negative? Are the carrier's balance sheets in such a place where they might delay or slow roll their 5G densification plans? And I think that couldn't be further from reality. I think that having a good quality, fast, low-latency network is going to be table stakes moving forward. And they don't have the luxury, if you will, of taking their foot off the gas. And certainly, the activity that we've seen, as they've engaged us, is supportive of that. We've continued to see densification RFPs across all the wireless carriers. And not just Tier 1 markets or large Tier 2 markets, but Tier 3, Tier 4 markets across the board. And that's really no different than, frankly, what we've seen in the last 2 or 3 years. Will it get busier in Tier 3, Tier 4 markets like we have in the Southeast footprint? Absolutely. But there's already been plenty of activity that we've been able to participate in over the last 2, 3 years. Going back to the first question, can you remind me?

It's just more around the fiber business and what you're seeing in terms of demand primarily. I think you hit it on the head.

Yes, yes. Okay. I just want to make sure I covered it off. I think a laser focus for Uniti as it is, frankly, every year, but especially this year is just continued leasing up the existing network, right? So we've spent obviously a lot of capital, significant amount of capital building out these greenfields, anchor builds in our Southeastern markets, and now going out and layer on -- layering on incremental revenue from our enterprise teams, right? We have about 30 enterprise reps sprinkled throughout our Southeastern footprint that come in behind our big, wireless anchor deals and sell to the education space and participate in E-Rate bids, sell into the health care vertical, sell into the government space, certainly small- and medium-sized businesses, leasing up that infrastructure that we've put in over the last 2, 3 years. And then on top of that, my wholesale and strategic accounts team has been marketing an on-net, near-net building list that has a couple of hundred thousand buildings on it where our carrier customers can order anywhere from 100 meg up to 10 gig very quickly on a lit building or a site that's very close to near net, very close to our network. And then the 5G densification that we've seen on top of that just continues that story of lease-up that we shared in our earnings call recently.

You touched on this briefly, but around sales. I know there was a sales reorg that the company did last year. So I'm wondering if you can talk about what the changes were aimed at fixing. And then secondarily to that, are you now appropriately sized on the sales front in order to better lease up existing assets, both within Uniti Leasing and Fiber?

Sure. Yes. So some of that goes back to how we got to here, right? So when we acquired the Lumen Fiber 2-plus years ago, we dedicated 1 salesperson to market that network. And meanwhile, we had a wholesale team that was mainly marketing the legacy Uniti Fiber footprint in the Southeast. As we saw Windstream's exit from bankruptcy kind of light at the end of the tunnel as last fall came about, we wanted our largest, most strategic customers to be able to have 1 single point of contact, 1 salesperson that they can engage with, whether that customer wanted to buy 100 meg or a gig of Ethernet in Huntsville, Alabama; whether they wanted to buy a dark fiber segment between Evansville, Indiana and Indianapolis; or whether they wanted to buy a long-haul dark fiber route, San Francisco to L.A. And that's what triggered our reorg of my team focused on our biggest, most complex, fastest-growing, most strategic customers, and last summer -- late summer, early fall time frame. We have ramped up the size of our sales team recently. And just happy to say that as of March 1, we now have 12 quota-bearing headcount. So again, you compare that to where we were 12 months ago at this time with 1 single person selling on a 270,000 route -- sorry, strand mile network, the Lumen long-haul network, to now we have 12 quota-bearing headcount selling not just that 270,000 strand mile network from Lumen but also the 220 -- I'm sorry, 2.2 million strand miles with the Windstream fiber, in addition to the Uniti Fiber network. So I would say we are finally appropriately sized to take advantage of the lease-up that's out there. And I think that as we move throughout 2021 and '22, being able to start layering that sales force with more support would be a focus of mine. But first things first, we have to sell the heck out of the network.

Got it. I have a couple of questions on the financial side for Mark. Maybe, Mark, just to start, can you update us in terms of capital allocation priorities and how you're thinking about that for the year?

Sure. So at -- let's just kind of go through it by business unit as well. So at Uniti Leasing, we'll spend about $200 million, plus or minus, primarily on the Windstream GCI program. At Uniti Fiber, we are bringing our capital intensity there down. So we'll spend roughly $140 million this year on some of the additional fiber projects we have going on as well as building out additional routes as we continue to sell lease-up on the existing anchor builds that we completed at the end of last year. So those are 2 of our capital priorities for this year. On the dividend, we've already announced the dividend. Our estimate for that for this year is $144 million. On the dividend, we're still restricted on payments based on the covenants under the [ 7 and 7/8 ] debentures that we previously issued. But we have announced what that will be. So we previously declared $0.15 per share for the -- on the last quarterly dividend. And so right now, the limit on that, based on our estimate, is $144 million in total dividends until -- as long as we're still under those restrictions. So I'd say in addition to that, as I mentioned, it won't surprise me a bit if we don't allocate some capital to M&A transactions this year. That's not in our guidance, but we've always been active in the M&A market. And certainly coming out the Windstream bankruptcy, we expect to be more active in the M&A market as we have been previously. The other priority that I've had this year is looking at our maturing debt and addressing that. And so as I mentioned earlier, we've been able to refinance our revolver and lower our cost of borrowing on the revolver. We recently issued some 6.5% unsecured notes due in 2029 that refinanced the 8.25% notes that we previously had outstanding in 2020 -- due in 2023. And then we've also got other opportunities this year to -- at our debt stack and think about refinancing opportunities there. And so I think we have additional ways to reduce our cost of borrowings probably over the balance of this year over the -- and over the balance of next year as well. So those are some of the key things that we're doing on the capital front. And like I said, all those things will be -- are -- those are our key priorities for this year.

Got it. On the leverage, so I believe last quarter, you had about 5.7 turns, and it's squarely within the 5.5 to 6 turn range you've talked about in the past. So just curious, in the context of rising interest rates, does that change at all the way you approach sort of optimal leverage or potential M&A for the business?

Well, I mean, to the extent over time that the increase in rates would increase your cost of capital, it would. I'd say right now, the interest rate volatility hasn't been -- although I understand treasury rates have moved up pretty quick lately, I'd say overall, the rates -- the high-yield market has still held up very well. I think our securities have performed very well, certainly since the -- since Windstream exited bankruptcy. So I actually see our cost of capital coming down. Some of the rate volatility might impact like timing on refinancing of some of our capital structure just because of the volatility in the markets, but it doesn't really change my thought that we have substantial opportunity to realize savings from doing that this year and next year.

Got it. And as we think about just sort of longer-term AFFO per share growth potential for this business, I know the guide for '21 includes a little bit of a year-on-year decline. But as we think out over the longer term, you obviously have a restructured lease in place with Windstream. You've got opportunities at Uniti Fiber that we talked about. How should investors think about the growth potential for Uniti's AFFO per share, just given that backdrop we discussed maybe over the next couple of years, post '21?

Yes. So I'll be a little -- we obviously don't give guidance on a multiyear basis, so I will be a little bit less specific than your question is. But I'd say for the -- for Uniti Fiber, I think kind of a normalized growth rate over that period of time might be in 7% to 8% to 9% range for kind of a normalized year. So I think that would be on a revenue basis. I think over that period of time, with the lease-up that we're doing at both Uniti Fiber and Uniti Leasing, I do think, over that period, over a multiyear period, you should expect to see margin expansion as well. And then I think if you think about it on a cash flow basis, I do think what you should -- what I expect to see is some improvement in our cost of debt. I do expect that you'll see certainly capital intensity at Uniti Fiber coming down. So I think those are all the kind of -- I think those are the key ingredients that you'll see play out over that period of time. But I'll ask Bill DiTullio, as well, who's on the call, if he -- if I missed anything or if he'd like to add anything because he's very close to some of our multiyear models.

I think that's right, Mark, I think, the kind of growth [ direction ] you gave there. And listen, I think things to remember is things that Greg talked about earlier and Mark touched on as well is that we're seeing improved margin profile at Uniti Fiber, right, as we drive higher-margin opportunities not only through the wireless builds, but through the lease-up themselves. Again, these all have 70%, 90% margin profiles associated with them. Capital intensity is coming down at -- expected to come down at Uniti Fiber, right? So for 2021, we should be around 40% is the capital intensity, and then it should be going -- trending towards the mid-30% range. And again, that's a function of doing a handful of these greenfield builds at the time, we'll continue to pursue those, but also it's a function of the lease-up requiring substantially less CapEx. And then you combine that with significant cash flows that come from the Uniti Leasing side of the business where you -- the lease-up there, again, a lot of these structures upfront IRUs where you get upfront customer payment, the customer basically is prepaying that 20-year lease upfront? And so again, very high margin, right, talking 90% plus margins in most cases there. So you combine all those things with increased recurring revenue, higher margin, plus lower capital intensity at the fiber side of the business, I think I don't want to -- like to Mark's point, all sets us up for -- to potentially grow AFFO going forward.

And maybe just to wrap up, question for either Bill or Mark, what would you say is the most misunderstood among investors about the Uniti story today? And I guess more broadly, why should investors consider the story relative to other comm infrastructure REITs?

Yes, I can start.

Yes, I think the -- yes, let me just -- this is Mark. Let me start and then others can jump in. So I think the most misunderstood thing coming out of Windstream -- the Windstream bankruptcy and going into 2021 is the opportunity that we have at Uniti Leasing. I think that a lot of investors are really just now getting up to speed on the opportunity at Uniti Leasing that Greg's talked about during a lot of this call, the opportunity for lease-up, the value of those additional strands that we achieved from Windstream. And I think that has really changed the profile, really significantly changed the profile of the growth profile and the opportunity set that we have broadly at Uniti Leasing. So that's the thing I would really point to. I would say from a valuation standpoint because it's misunderstood and hasn't really been focused on previously, I do think that it is -- that opportunity there is undervalued.

Great. Well, I think we can wrap it there. I think we've hit our time limit. So Mark, Greg, Bill, thank you so much for joining us, and hoping we can do this in person next year back at Palm Beach. Thank you.

Thanks, Matt.

Thank you.