UNIT - NASDAQ

Welcome to Uniti Group's Third Quarter 2022 Conference Call. My name is Gigi and I will be your operator for today. A webcast of this call will be available on the company's website, www.uniti.com, beginning today, and will remain available for 14 days. At this time, all participants are in a listen-only mode. [Operator Instructions] Forward-looking statements disclaimer. 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 these statements. The factors that could cause actual results to differ are discussed in the company's filings with the SEC. The company's remarks this morning will reference slides posted on its website, and you are encouraged to refer to those materials during the call. Discussions during this call will also include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliation 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 dated today. I would now like to turn the call over to Uniti Group's Chief Executive Officer, Kenny Gunderman. Please go ahead, Mr. Gunderman.

Thank you. Good morning everyone. Starting on slide three. Our results for the third quarter were once again strong as the demand for our mission-critical fiber infrastructure continues to grow. We achieved our sixth consecutive quarter of elevated new sales bookings, which we now consider the new norm. As importantly, we also had another strong quarter of gross install activity with a mean time to deliver of less than 100 days. Consistent bookings balanced between anchor and lease-up along with installs that can be turned up quickly and our industry-leading monthly churn of 0.2% demonstrate that our strategy is sound and that we're executing on it well. To reiterate, our strategy continues to focus on buying and building mission-critical fiber infrastructure and then leasing infrastructure to anchor customers in the 5% to 10% cash yield range and additional lease-up customers, driving cumulative cash yields above 10%. This strategy has resulted in Uniti becoming the second largest independent fiber operator in the country with 134,000 route miles and a long runway for profitable growth. As slide four demonstrates Uniti continues to track well on these shared infrastructure economics. We're building new fiber largely for our wireless customers and then successfully adding additional tenants with very high margins and minimal CapEx, resulting in a cumulative cash flow yield today of 22%, a more than threefold increase from the anchor yield on these projects. Slide five illustrates that the majority of new bookings continue to be lease-up in nature and along with our intentional focus of balancing wholesale, non-wholesale and anchor lease-up opportunities has resulted in outsized margin enhancement, AFFO growth and a business that remains relatively immune to swings in the economy. Turning to slide six. High capacity long-haul routes are needed by all of our customers, including wireless carriers, hyperscalers, international carriers, MSOs and large enterprises to connect their disparate markets, data centers and pops. Today, dark fiber in North America is an approximately $1.5 billion annual market opportunity and is expected to grow about 10% annually over the next several years. A growing component of our wholesale strategy is wavelength services, which represent a $2 billion annual revenue opportunity today in North America and is expected to grow approximately 7% over the next several years. We're selectively lighting more long-haul routes to provide wave services and capitalize on growing demand while maintaining the same discipline on anchor and lease-up economics. For example, we recently announced two new long-haul routes that will offer wavelength services and multiple terabit spectrum services to key markets in our Southeast footprint. This is in addition to our previously announced Miami to Tampa route. The anchor cash yields are approximately 10%, and we have a clear line of sight to a combined cash yield of low to mid teens once leased up over the next few years. Having an own national network is a meaningful competitive advantage for Uniti, especially given that it would take billions of dollars in many years to build a new national network. We estimate there are only five truly owned national networks and two independent fiber providers with national networks in the U.S. today, with Uniti being one of them. Thus, our ability to deploy dark fiber and wave services present Uniti with a unique growth opportunity with minimal competition. The resulting economics of our national wholesale business are very attractive with high margin, passively managed revenue, virtually no churn, long-term contracts that routinely have escalators built into them and minimal CapEx requirements. Before turning to our enterprise business, I'd like to comment briefly on lit wireless backhaul. Lit backhaul is a terrific way to lease-up existing network or build new network with attractive yields for wireless carriers. However, the contract lengths are typically shorter than that of dark fiber, and there's some pricing pressure on returns. As such, Uniti has always considered managing return risk as a strategic imperative, and we manage that risk by offsetting reterm discounts with lease-up on the networks, additional business from the wireless carriers and upselling bandwidth. As an example of this focus, today, we're announcing that we recently retermed approximately 1,100 lit backhaul sites with one of our major wireless customers, resulting in a net price increase of approximately 20% as we upgrade these sites to 10-gig, and we're extending the contract term from a blended 2.5 years remaining to eight years remaining. We're actively working with another of our major wireless carriers to reterm an additional 1,200 lit backhaul sites. Together, these two agreements represent over 60% of our existing lit backhaul portfolio and provide stability and increased visibility for our earnings going forward. Now turning to slide seven. Although, enterprise sales represent less than 5% of our total revenue today and will likely always represent a minority percentage, it remains a critical element of our lease-up strategy. Enterprise new sales bookings and installed activity during the third quarter were again both very strong. And we expect these trends to continue as we further capture market share in our existing and new metro markets. As a result of our consistently strong bookings activity, enterprise recurring revenue was up 16% during the quarter. Slide eight is an example of how we're executing to increase market share in markets with existing fiber and where we're currently offering lit services. Birmingham is the largest metro area in Alabama and the 50th largest metropolitan statistical area in the U.S. It's a very attractive Tier 2 market, which we originally entered in 2017 with a large greenfield build. Today, we have an extensive fiber network there with almost 27,000 strand miles of dense fiber. And despite our growth over the years, our enterprise market share is still only approximately 5%. Homewood is an affluent neighborhood of Birmingham. And for less than $1 million of capital, we can expand our already robust network to reach an additional 600 attractive enterprise customers. These investments not only expand our market share, but will result in very attractive economics for Uniti, resulting in cumulative cash yields of approximately 50% and IRRs of 30%. These type of investments are only available to providers like Uniti with an extensive network already in place. Equally exciting, and as we've mentioned before, we own metro fiber in nearly 300 markets nationwide, which represents terrific capital and margin-efficient growth potential for enterprise, wireless backhaul and even small cells. We only recently acquired most of these markets on our 2020 settlement with Windstream. So, we're just beginning to capitalize on the opportunity. Given the proven success of our anchor and lease-up strategies and the attractive economics of these enterprise opportunities, with payback periods of almost half the initial contract term and cash yields of 50% plus, we continue to actively prioritize these metro markets for expansion in both 2023 and beyond. In looking at our national wholesale network and our 300 metro markets combined, we estimate that less than 5% of our total 8 million strand miles of fiber are actually lit. This virtual blank canvas provides us with a terrific runway for disciplined growth without the burden of legacy declining products. With that, I'll now turn the call over to Paul.

Thank you, Kenny and good morning, everyone. We are once again pleased with how our businesses performed during the quarter with robust booking and install levels driving in line consolidated revenue and better-than-expected adjusted EBITDA. While non-recurring revenue at Uniti Fiber was lower than expected during the quarter, recurring revenue, both at Uniti Fiber and Uniti Leasing was strong. Uniti remains well positioned to weather current macroeconomic conditions, given our robust level of long-term revenues under contract, our declining capital intensity and the work we have done to strengthen our balance sheet and push out our debt maturities. As a result of the strength of the quarter and our expectations for the fourth quarter, we are increasing the midpoint of our 2022 outlook for consolidated revenue and adjusted EBITDA. Please turn to slide nine, and I'll start with comments on our third quarter. We reported consolidated revenues of $283 million, consolidated adjusted EBITDA of $225 million. AFFO attributed to common shares of $112 million, and AFFO per diluted common share of $0.43. Net loss attributable to common shares for the quarter was approximately $156 million or $0.66 per diluted share, which includes a $216 million goodwill impairment charge related to our Uniti Fiber segment that was driven by an increase in the macro interest rate environment. At Uniti Leasing, we reported segment revenues of $209 million and adjusted EBITDA of $203 million, both of which were up 5% from the prior year. Accordingly, Uniti Leasing achieved an adjusted EBITDA margin of 97% for the quarter. Turning to slide 10. Our growth capital investment program continues to provide positive results for Uniti. Over the past six years, our tenant has invested approximately $1 billion of tenant capital improvements in our network. Uniti continues to invest its own capital in long-term value-accretive fiber largely focused on highly valuable last-mile fiber, including fiber in commercial parks and fiber-to-the-home. Collectively, these investments have resulted in 18,800 route miles of newly constructed fiber and 23% of the legacy copper network being overbuilt with fiber. Based on the investments made to date and our expectation that Windstream will utilize most, if not all, of the GCI program, we expect that nearly half of the legacy copper network will be overbuilt with fiber by 2030. During the third quarter, Uniti Leasing deployed approximately $72 million towards growth capital investment initiatives, with the majority of the investments relating to the Windstream GCI program. These GCI investments added 2,250 route miles of fiber to Uniti's own network across several different markets. As of September 30th, Uniti has invested approximately $460 million of capital to date under the GCI program with Windstream, adding around 13,500 route miles and 731,000 strand miles of fiber to our network. These investments will be added to the master leases at an 8% initial yield at the one-year anniversary of Uniti making such investment. They are subject to a 0.5% annual escalator and result in nearly 100% margin. The investments we have made to date will ultimately generate approximately $38 million of annualized cash rent and increase the overall value of our network. At Uniti Fiber, we turned over almost 300 lit backhaul, dark fiber and small cell sites for our wireless carriers across our Southeast footprint during the third quarter. These installs add annualized revenues of approximately $3 million. We currently have around 1,200 lit backhaul, dark fiber and small cell sites remaining in our backlog that we expect to deploy over the next few years. This wireless backlog represents an incremental $11.5 million of annualized revenues. At Uniti Fiber, we reported revenues of $74 million and adjusted EBITDA of $29 million during the third quarter. Revenues were lower than expected due to lower non-recurring equipment sales and installs resulting from several factors, including the timing of those sales, a modest impact from delivery delays and key employee turnover within our E-Rate Group. However, adjusted EBITDA was slightly higher than expected given the low margin nature of the equipment sales combined with lower than expected costs. Uniti Fiber net success-based CapEx was $26 million in the third quarter. We also incurred $2 million of maintenance CapEx or about 3% of revenues. Please turn to slide 11, and I will now cover our updated 2022 guidance. We are revising our guidance primarily for business unit level revisions and the impact of transaction-related and other costs incurred to date. Our 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. Our current full year outlook for 2022 includes the following for each segment. Beginning with Uniti Leasing, based on our continued strong lease-up success, we now expect revenues and adjusted EBITDA to be $827 million and $805 million, respectively, at the midpoint, representing adjusted EBITDA margins of approximately 97%. Revenue and adjusted EBITDA each include $14 million of cash rent associated with the GCI investments and $25 million related to the straight-line rent associated with the Windstream master leases and GCI investments. We still expect to deploy $275 million of success-based CapEx at the midpoint of our guidance, of which $250 million relates to estimated Windstream GCI investments. Turning to slide 12. We now expect Uniti Fiber to contribute $305 million of revenue at the midpoint, given the factors I mentioned earlier that are impacting our non-recurring revenue. However, we are increasing the midpoint of our full year recurring revenue outlook on the strong bookings and install activity we continue to see. Our full year outlook for adjusted EBITDA remains $121 million with a lower non-recurring revenue offset by higher recurring revenue and lower costs. When adjusting for the Everstream transaction that occurred in May of 2021, the year-over-year revenue and adjusted EBITDA growth is 5% and 8%, respectively. This strong growth demonstrates our continued success in managing our cost structure and improving margins, while executing on lease-up that leverages our existing dense Southeast fiber footprint. As I mentioned last quarter, we expect 2022 to be the peak year for Sprint related churn. As a reminder, as we turn to 2023, we still expect to realize some ETL fees, but most likely $12 million to $13 million less than what we recognized in 2022. We also still expect that our core recurring revenue at Uniti Fiber will increase by a mid single digit percentage rate for full year 2023 when compared to 2022. Net success-based CapEx for Uniti Fiber this year is expected to be $120 million at the midpoint of our guidance, a 12% decrease from levels in 2021. Turning to slide 13. For 2022, we still expect full year AFFO to range between $1.70 and $1.77 per diluted common share with a midpoint of $1.74 per diluted share, a 4% increase from 2021. On a consolidated basis, we expect revenues to be $1.1 billion and adjusted EBITDA to be $900 million at the midpoint. Our guidance contemplates consolidated interest expense for the full year of approximately $390 million. Corporate SG&A, excluding amounts allocated to our business segments is expected to be approximately $34 million, including $8 million of stock-based compensation expense. We still expect our weighted average diluted common shares outstanding for full year 2022 to be around 267 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. Given the current macroeconomic and interest rate environment, we will continue to be opportunistic in our approach to managing our capital structure over the near-term. At quarter-end, we had approximately $270 million of combined unrestricted cash and cash equivalents and undrawn revolver capacity. Our leverage ratio stood at 5.80 times based on net debt to last quarter annualized adjusted EBITDA. On November 1, our Board declared a dividend of $0.15 per share to stockholders of record on December 16, payable December 30. With that, I'll now turn the call back over to Kenny.

Thanks Paul. We continue to believe that our core business will likely see little to no noticeable impact from any economic downturn given the mission-critical nature of broadband. Further, the vast majority of our revenue is wholesale in nature with long-term contracts. Lastly, 95% of our debt is fixed rate, and we have no significant near-term maturities. So as it relates to potential debt refinancing and M&A, we have the ability to be patient. Our strategy since 2015 has been to acquire and build mission-critical communications infrastructure and then lease that infrastructure to quality anchor customers with a clear path to lease-up, resulting in combined cash yields of 10% plus. While in our early years, our priority was more focused on acquiring rather than building as we established our national fiber platform. We're now much more focused on building given the attractive returns we're seeing in the challenging economic and capital markets backdrop. We believe our strategy is working, and the initial investments both in M&A and greenfield builds are paying off. We currently have over $7 billion of revenue under contract with an average remaining term of approximately eight years. The majority of this revenue is passively managed in the form of triple net or dark fiber MLAs. As a result, the operating costs associated with this revenue is very predictable, which results in a cash flow-rich business over the mid to long-term. By 2030, we expect to have generated approximately $1.5 billion of cumulative free cash flow if we maintain our current dividend and approximate level of annual capital investment. This trajectory leads to substantial deleveraging, resulting in 2.5 to 3.5 times net leverage and more than doubling the size of our fiber business. Our network is highly underutilized, presenting profitable growth potential for some time. We expect net capital intensity to decline from our current level of approximately 35% to 5% to 10% by 2030 and is indicative of accelerating operating leverage in the business and many years of high margin and high yielding lease-up, including dark fiber, lighting unique long-haul routes and expanding deeper into our existing 300 metro markets. With that said, our cash rich MLAs provide great optionality to pay an increasing dividend and invest even more in our core business in lieu of paying down debt. Regardless of our capital allocation policy, our runway for organic growth appears long and fruitful, especially given strong industry tailwinds. With that, operator, we're now ready to take questions.

[Operator Instructions] Our first question comes from the line of David Barden from Bank of America.

Hey, guys. Thanks for taking the question. Appreciate it. Kenny, can you -- you've got a banking background. Can you talk a little bit about where we sit now with the sale-leaseback business where every incremental capital dollar you're putting to work kind of generates an 8% return day one, but your bonds are yielding 9% to 13%. Presumably, that's the cheapest part of your capital structure. Your equity is going to be more expensive. So your cost of capital is a lot higher than the yield that you're generating at the margin in this business. How do we think about resolving that as an investable thesis? And then just second on the fiber business itself. Again, the inevitable question is the transformational transaction out there that's going to unlock the value that you guys see in this fiber business. Is that practically doable in the current market climate, kind of with the rates going where they are and the recession coming? How do you convince people that that's still a thing that can be done?

Good morning, David. Yeah. On your first question, I think you're right. I mean, generally, in the five -- you're right about part of what you said, generally in the -- our anchor yields, whether it's sale-leasebacks or greenfield builds or any other anchor type agreements are in the 5% to 10% range, as you mentioned, 8%. So that's kind of at the higher end of that range. That's been our -- part of our true north, if you will, for many years, kind of sticking to that range. But importantly, then through lease-up, you're getting well above 10% yields. And the second page in our materials consistently is where are we tracking on that. We're tracking at 22% cash yields as a result. So yeah, there are different projects that are at different stages of maturity along the way. But on an aggregate basis, our core business is returning 22% yields and frankly, those are going higher. And I see every day a dashboard of yields that are being generated from our CapEx and they're very attractive, 50%-plus yields. So, with respect to what could be a temporarily high interest rate environment, I agree with you, you're looking at high single digits, low double-digits in terms of some of the yields that are out there, but we're still hurdling those comfortably with our core business, and I don't see that changing. With respect to your second question, we're really trying to get away from this quarter-to-quarter play-by-play on M&A. It's just not constructive. But look, I do think that in these types I'll put the old bank or add back on in these types of environments, there's two, three different types of counterparties out there. One is those that just go into bunker mode and want to do nothing, the fetal position, if you will. And there's no criticism of that. The other is counterparties who look to take advantage of forced sellers or forced buyers, and we call them bottom theaters, people who are just looking to be -- take advantage. And frankly, we're not engaging with parties like that. And frankly, I never have. But thirdly, there are parties who are much more savvy who have a lot of capital and make no mistake, despite the market backdrop, there is a lot of equity capital and debt capital sitting on the sidelines looking to be put to work, whether that be in public securities or private. And a lot of it is out there earmarked for digital infrastructure. And so, there's a huge opportunity out there. There are savvy, sophisticated counterparties who look at situations like this as an opportunity to engage in more creative structures or in more bespoke type transactions. And you're seeing some of those deals happen. And we saw a deal a few days ago, one of the large funds did a large transaction and basically spoke for the debt financing themselves as opposed to relying upon the public markets. So look, opportunities are out there. I think one thing we've proven -- hopefully, we've proven in our history in doing M&A is that we're able to execute on down the fairway cash acquisitions, and we've also executed on mergers. We've executed on much more creative type transactions, and that's never going to be -- never not going to be a part of our DNA. But I also think very strongly that our Board thinks very strongly that having the ability to be patient in M&A is critical, because being a forced buyer or a forced seller almost always results in a subpar outcome. And for us, every day, we're executing on a business that's generating, we think, terrific returns. We think it's a business that is highly valued, especially in the private market. And with that execution and the platform, we think we're creating value every day, and it affords us the ability to be patient for what could be value-accretive M&A either in the near-term or longer term.

Thanks Kenny. It make sense.

Thank you. One moment for our next question. Our next question comes from the line of Gregory Williams from Cowen.

Great. Thanks for taking the questions. Just first one, you mentioned, Kenny, about expansion to eventually the 300 markets you're in. Do you have a sort of cadence on how many markets you'd expand per quarter or per year, that would be helpful. Second question is just if you're seeing any labor supply or inflation concerns on the business. Just in the last two days, we heard Lumen talk about slowing down on their fiber enablement to their homes. And the day before that, I think, consolidated, so the cost per home pass is coming up a little bit. I'm wondering if you're seeing that broadly or maybe more particularly in the Windstream fabric to the home space. Thanks.

Good morning, Greg. I'll let Paul comment on some of the second part of the question. But on the first part, yeah, we're actively looking at all of our metro markets and prioritizing. I don't have something we're ready to roll out yet in terms of the cadence. I think probably in February, we'll have a little more color on that. But the reality is -- and part of the reason we picked one of our markets, in this case, Birmingham and showed some of the investment opportunity in that market, that's a terrific market for us. And it's right down the fairway for being a Tier 2 market, not a lot of competition there. We've been in there since 2017 with an anchor award, and we've been chipping away at enterprise market share now for four or five years, and we're still only at 5%. And we've got these just what I characterize as low-hanging fruit investment opportunities in those existing markets. So, we mentioned being able to expand into the Homewood neighborhood for less than $1 million. But the reality is that's -- when you really peel back the onion, it's spending a couple of hundred thousand dollars to expand the backbone and then the rest of that is just all success-based to light up new customers. So -- and the returns on that capital back to the earlier question, are just terrific. It's very high yielding returns without a lot of incremental OpEx, because we already have people on the ground there. We've got salespeople, operations people, et cetera. So, all that to say, the near-term opportunities for us on market expansion are building out existing markets as opposed to in the near-term at least, expanding into brand new markets. We have a robust fiber network in Little Rock, for example. And today, we're not offering any enterprise services, but we're a wholesale provider here. We're providing wholesale to three or four additional carriers. And so, while we're focusing enterprise on more of the Southeastern markets and eventually we'll start to expand that footprint. In the meantime, we're getting really nice returns on some of these other metro markets through dark fiber sales or just wholesale in general. And so I think it's just a real nice way for our Uniti Fiber and Uniti Leasing businesses to be complementing each other. With respect to the supply side, I think that we are feeling some pressure like we've said, generally on the labor side, finding -- in order to keep crews fully staffed and even our quota-bearing -- number of quota-bearing reps is down. I mean, we're hitting all of our targets and exceeding our targets on bookings, but the reality is our number of enterprise sales reps is down something like 15% or 20% compared to our plan. So, the silver lining in that is we're still hitting our bookings numbers because our existing reps are more productive, but we're still behind plan. And frankly, we'd be doing a lot better if we could keep that fully staffed. But that's just day-to-day blocking and tackling. I think with respect to pricing pressure or cost increasing, I mean, Paul, you can comment, but we're seeing some of that, but not huge.

Yeah. No, I agree with that comment, Kenny. I mean, it is obviously a very tight labor supply market out there. But in terms of our -- the construction of our network, the labor that we rely on to construct our network, we use primarily a contractor labor force to build that network. And we really have not seen to date any market increase in the costs we're paying for labor and our construction -- in the construction part of our business. And I contribute attribute that to a few things. One, we have a deep bench of contractors that are focused really primarily in one region in the Southeast. We have a really steady, consistent supply of work. And we have a very robust competitive bidding system for those -- for all of those jobs. And I think those factors together have helped to keep those costs stable for us, which doesn't mean that we're completely immune from rising labor costs there either. But to date, we really have not seen any material increase in the labor piece of the cost of construction.

That’s helpful. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Frank Louthan from Raymond James.

Great. Thank you. So, pretty material downtick there in the quota-bearing heads. Where are you losing folks to? And do you think you can get that back up and maybe expand that? And is there any concern for the outlook for next year with the base going down that much?

Yeah. Frank, no concern about next year. I think, again, the real takeaway from that is a positive one in the sense that we're still hitting our numbers because our existing reps are more productive, and we just have so much opportunity to monetize the network -- going back to some of the slides in our prepared remarks. With that said, yeah, we're very focused on getting that number higher. And look, if you go back in our history over the past couple, three years, we've always struggled to keep that number where we want it to be. And part of the reason for that is we're very -- our team is very selective on adding new reps. And once we get those reps on board, we're also very proactive about churning out reps who are not productive. I think our -- I can't remember exactly, but I think our churn rate is something like 20% on reps who aren't productive. So, we don't -- I don't consider it a problem or a leading indicator of a problem that, that number is lower. But at the same time, yeah, we're constantly looking to add new quality reps. We're always looking for ways to tweak our existing commission plan or compensation plan or otherwise in order to do that. But at the same time, we're not going to move away from the discipline and the rigor that we apply to holding those reps accountable and productive. And at the end of the day, I think if we wanted to just hit a number for a number of reps, we could do that, but that's not what we're going to do.

Sure. Okay. And to follow-up on a previous question, is -- do you think Windstream is having any issues in getting trucks or equipment or so forth to hit their build plans? And any chance they would stretch their build plans out due to increased costs.

So, Frank, we have an opinion on that, but we're going to let them address that. I think they've got an earnings call coming up, so we'll let them address that directly.

All right. Fair enough. Thanks very much.

Thank you. One moment for our next question. Our next question comes from the line of Simon Flannery from Morgan Stanley.

Great. Thank you very much. Good morning. On the fiber business, I think, Kenny, you did talk about capital intensity coming down over time, but also you've got this nice backlog here. So, how should we think about near-term capital intensity, you're still over that 40% level this year? Is that going to come down to that sort of mid-30s you've talked about over the next year or two? And any update on DISH. I think you sort of said that they hope -- you hope that as the Sprint business came off that DISH would start to kick in, in 2023. Any updated clarity on what their plans are.

Simon. Yeah, our capital intensity is going to come down. So, nothing new or no changes to any forward-looking guidance we've given there. I think the reality is -- I mean, part of what we're trying to show in some of our materials is just where our capital is being invested and how we're getting the good returns that we're getting. And as I said, the yields that we're getting on the capital is actually better than we've been forecasting. So, theoretically, we could spend less capital and get the same returns. And so, we're looking for ways to spend the capital -- always looking for ways to spend the capital more efficiently, get the highest returns. And so that's not going to change. But with respect to the trajectory of the capital intensity coming down, that isn't going to change. DISH continue to make great strides with DISH. When we first started talking about DISH and Sprint a couple of years ago, I think we said there would be some Sprint churn. I think we said it would probably be in the $5 million to $10 million recurring revenue range that we would lose and that we thought that DISH would eventually replace that and more. And in the meantime, there would be some pretty lumpy ETL fees to sort of smooth that transition. And in hindsight, I think that is playing out as we expected. The Sprint churn is on track with high ETLs this year, dropping off a little bit next year. And DISH has really been ramping up. And I think we will more than hurdle that $5 million to $10 million on this lost Sprint churn with DISH with the business that we have already turned up or that we have in the backlog. And again, I think going forward, over the longer term, it's -- we think there's a really, really attractive opportunity for us.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Michael Rollins from Citi.

Thanks and good morning. Just a strategic question. As you think of the fiber portfolio and if you think about communications infrastructure more broadly, there are business models in this category. That it really doesn't matter how big the portfolio is. If the local asset is the right asset, right, it tends to get sales, yet there's other portfolios like data centers where there's been a nice cross-sell. The larger the portfolio is, it seems like there's been this natural benefit for that. How would you describe fiber infrastructure in that? Is it one that benefits from being part of a larger portfolio? Or is it the -- if you have the right assets, the right location, you have a great chance of getting the win? And then how does that instruct the type of strategic aspirations that you have for Uniti over a multiyear period?

Good morning, Michael. Scale does matter in fiber. I think that especially on the wholesale side, the national network. When you have a national network, you're in a very different class of providers. And your ability to have conversations with large carriers, the data center providers, the hyperscalers, you're just in a different class, because they need national network. And from our vantage point, when you look at our national strategic accounts business today versus what it looked like a year or two ago, it's changed dramatically to the point where it just kind of rolls off the tongue that we're having conversations with the hyperscalers. I won't use any specific names, but we're just in a different category with respect to those types of conversations. And therefore, the business opportunity that it presents. And so our leasing business is growing at 10%, 15%, 20% a year as a result, with very high margins and great returns. And it also -- having that national network provides you with the ability to have more bespoke-type transactions and conversations. And we mentioned the lit backhaul reterm that we just signed. That's 1,100 sites. There aren't very many people that have that many sites with each of the carriers. And when you have that many sites and you have the capital available and the brand to deliver 10-gig, that puts you again on a different plane and extending a lit backhaul contract from 2.5 years to eight years is a big deal. And that's why we called it out. But you don't get those types of opportunities unless you have real scale. With all that said, Michael, if you don't have high-quality dense metro fiber in select markets with minimal competition, good demographics, good growth potential, you can't be successful in fiber, in our view. And so, as a result, we're really focused on the metro element of our business. We're -- we like to say we're the local partner with the national scale. And so, in markets like Birmingham, we've got boots on the ground. We know the various permitting authorities. We know the local -- we know all the local businesses. We know the terrain. We know what it costs to build. We know where the opportunities are to expand our network and pick up low-hanging fruit. And you don't get that unless you're very conscious about which metro markets you go into and you make investments, you stick to the 5% to 10% anchor yields and you've got a clear path to lease up. And if you pick the right markets, you've got a plethora of customer opportunities, including enterprise, schools, traditional wholesale and then, of course, lit backhaul, dark fiber backhaul and small cells. And that's really what we're seeing. When you've got the right network and the right market, you can have a great opportunity for both anchor and lease-up and a healthy balance of both.

Thanks. And just one quick follow-up. What's the algorithm these days for the minimal capital intensity in fiber as a percent of revenue to replace churn and to keep that fiber revenue flat to organically growing over time?

Yeah. We haven't we haven't disclosed that number. I think in some time. I don't know if we ever have actually, but our maintenance CapEx is around 3% and our capital intensity is from an aggregate basis. I really think -- and our churn is very low. I mean, we talk about it as industry-leading. It's certainly right up there with a write-down there in terms of industry-leading, so very low 0.2%. So, we'll have to refresh on that number, Michael, but I really think it's kind of around -- probably around 10%, plus or minus a little bit, but right around 10%.

Thanks.

Look to updating you further on future calls in Community Group and look forward to updating you further on future calls. Thank you for joining today.