Welcome to Uniti Group's First Quarter 2019 Earnings Conference Call. My name is Ditamara, and I will be your operator for today. A webcast of this call will be available on the company's Web site, www.uniti.com, beginning May 9, 2019, and will remain available for 14 days. At this time, all participants are in a listen-only mode.

Participants on the call will have the opportunity to ask questions following the company's prepared comments. 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 afternoon will reference slides posted on its Web site, and you are encouraged to refer to those materials during this call.

Discussions during the call will also include certain financial measures that were not prepared in accordance with the 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 afternoon everyone, and thank you for joining. We continue to strong demand for fiber infrastructure both for macro backhaul towers and small cells, as well as demand for new tower builds as wireless carriers continue their progress towards a broader rollout of 5G wireless services.

Again, we believe that both Uniti Fiber and Uniti Leasing are uniquely positioned to capture this demand with over 5 million strand miles of valuable owned fiber. We continue to expect to complete the build out of several dark fiber and small cells projects, primarily in the Southeast by the end of this year.

We've deployed over a 1,100 small cells today and currently have over 1,700 small cells in our backlog with over 1,500 of those expected to be deployed in 2019. An important part of our strategy is to replace shorter-term lit wireless backhaul with longer term contractual dark fiber and small cell revenue.

Dark fiber and small cell revenue contracts generally have 10 year to 20 year terms with virtually no associated churn. In 2018, dark fiber and small cell revenue grew by almost a 100% from the prior year and represented approximately 70% of total wireless bookings. We expect these trends to continue in 2019.

Another important part of our strategy is for the lease up of anchor wireless networks to grow including lease up from non-wireless customers such as enterprise, schools and government.

In 2018, non-wireless revenue grew as a percentage of total Uniti Fiber revenue year-over-year and non-wireless bookings grew from 55% in the prior year to 63% of total Uniti Fiber bookings in 2018. Again, we expect both trends to continue in 2019.

These lease up opportunities drive attractive incremental cash flow yields at substantially less CapEx than our anchor wireless builds. On May 1, we acquired the fiber network of Southern Fiber Net. Southern Fiber Net is a privately held regional fiber Internet and cable provider with services located in Southern Georgia.

As part of the transaction Uniti will acquire SFN's 1,800 mile fiber strand network for $6 million and simultaneously enter into a 20-year triple net master lease that will pay Uniti approximately $570,000 in annual rent plus a 2% annual escalator. This investment will generate an initial cash yield of 9.5%.

Uniti will also have exclusive use of fiber on parts of the network where it provides us with strategic assets for additional lease. As with our previous sale leaseback transactions, Uniti is protected with minimum rent coverage and maximum leverage ratio covenants that are included in the lease. The transaction closed on May 1.

We're pleased to execute another sale leaseback of valuable nonexclusive fiber at attractive returns and we expect this trend to continue.

We continue to believe that by offering a full suite of services across the Uniti fiber, towers and leasing, we are uniquely positioned as a complete infrastructure provider and have the potential to unlock significant value for our company and stockholders.

We currently have consolidated revenue remaining under contract of nearly $10 billion and excluding revenue relating to the Windstream lease our total revenue under contract grew 30% from the prior year's first quarter which included both the TPx, and CenturyLink transactions.

We believe it's important to reiterate that over 90% of our revenue remaining under contract relates to leasing, towers, dark fiber, and small cells which have little to no churn associated with them and provide highly visible steady cash flows over the next several years.

In fact, our total company monthly churn for the quarter was less than 0.5% which we believe is on par with some of the best companies within the communications infrastructure industry. Let me now provide an update on our operational results.

Uniti Fiber sales bookings in the first quarter were approximately $0.4 million of MRR 76% of our sales bookings in the first quarter came from local enterprises government schools and wholesale and 24% from the four national wireless carriers.

As I highlighted earlier our non-wireless bookings have become an increasingly larger part of our overall bookings over the past two years and we expect they will continue to comprise a significant part of our bookings going forward.

A significant portion of our wireless sales bookings were related to leasing dark fiber to the tower for backhaul and for small cells and expectation for the eventual broader rollout of 5G services. RFP activity for both small cells and backhaul from our wireless carriers continues to remain healthy in our markets.

Overall we had a successful e-rate season this year. If you recall we had 100% retention on existing e-rate customers last year but our bookings on new e-rate opportunities were small. This season we were able to retain almost all of our existing customers as well as add over 20,0000 of MRR associated with new e-rate awards.

As a reminder these awards will be part of our second quarter bookings and are not included in first quarter's data. Aligning our new awards was a 10-year contract with a large metropolitan school district in Florida that will add over 118,000 of MRR representing total contract value of approximately $14 million.

As I stated last quarter, we're already seeing benefits from our ITS acquisition as we have won a handful deals that our ITS and Uniti sales teams partnered on. And we expect ITS to play even a larger role in E-Rate next season, as we further integrate within Uniti Fiber.

Uniti Fiber installed 0.7 million of MRR during the first quarter, which was a 30% increase from last year's first quarter with 30% related to enterprise opportunities, 23% related to dark fiber backhaul and small cell projects and 20% related to bandwidth upgrades.

Total churn for the quarter was $0.6 million resulting in a monthly churn rate of 1% for Uniti Fiber, in line with our expectations for the quarter. Disconnect and re-rate churn were both 0.5% for the quarter respectively. Re-rate churn was primarily driven by renewal pricing for lit back all sites with two of our larger wireless customers.

Turning to Towers, in the U.S. we continue to expect to complete the construction on approximately 200 towers in 2019. Although we are still in the early stages of leasing up our Tower portfolio with additional tenants, we've been pleased with the progress, we have made to date and expect lease-up activity on our U.S.

tower portfolio to continue to ramp throughout 2019. Building towers continues to be a significant part of our overall strategy to provide a full suite of solutions to wireless carriers, as well as other customers. In Uniti Leasing we continue to see possible momentum for additional lease-up opportunities on our existing fiber networks.

In addition, we continue to pursue additional value accretive sale leaseback opportunities and in OpCo/PropCo Partnership. As a reminder the economics of additional lease-up at Uniti Leasing are very attractive with near nearly 100% margins and little to no additional CapEx required.

Our sales model at Uniti Leasing continues to represent numerous opportunities and then include leasing additional routes across our entire footprint to a wide variety of customers including the largest content providers, MSOs and wireless carriers in the industry. With that I will turn the call over to Mark..

Thanks, Kenny, and good afternoon everyone. We reported strong first quarter results with all of our business units performing well to start the year except for a few discrete items that I will cover in a moment.

We're maintaining our previous guidance while we are certainly keenly focused on the Windstream bankruptcy process and positioning Uniti for long-term success, one of our priorities this year is solid operating performance by all of our business segments. We were pleased that each of our businesses delivered on that priority this quarter.

So let's review the numbers.

Turning to slide 5, we reported consolidated revenues of $261 million, consolidated adjusted EBITDA of $200 million AFFO attributable to common shares of $107 million and AFFO per diluted common share of $0.59, net income attributable to common share for the quarter after transaction and integration related costs was $1 million or $0.01 per diluted share, net income for the quarter was impacted by a few items that did not effect AFFO.

Those items include $6.7 million of transaction and integration related cost, $4.6 million of cash taxes associated with tax basis cancellation of debt income partially offset by approximately $3.3 million of income from changes in the fair value of contingent consideration arrangements, the cancellation of debt income is related to the fourth amendment and waiver to our credit agreement we executed in March and impacted our tax book only as there is no associated income recognized under GAAP for financial reporting purposes.

For the first quarter of this year our leasing segment revenues were $176 million with adjusted EBITDA of $135 million. Non-Windstream revenues and adjusted EBITDA were $5.2 million and $4.2 million respectively and should continue to represent a growing share of Uniti Leasing revenues over the next several years.

The new lease accounting standard known as ASC 842 had the most significant impact on our leasing segment, so let me walk you through the impact. We adopted ASC 842 effective January 1, 2019.

Among its other provisions ASC 842 provides an updated accounting standard regarding evaluating the realized ability of straight line rent receivables and leasing arrangements.

In accordance with this new standard, we were required to re-evaluate the realized ability of straight line rent receivables associated with our Windstream Master Lease under a higher probability threshold than the previous accounting literature.

We determine that the balance were approximately $61 million of straight line rent receivables should be charged off through equity as a cumulative adjustment from the adoption of ASC 842 in light of Windstream's bankruptcy proceedings.

Accordingly we will account for the Windstream lease on a cash basis starting this year until there is more clarity regarding the Master Lease. The change reduced Uniti Leasing's first quarter revenue and EBITDA by about $3 million. We'll have more comments regarding Windstream later in our call today.

Our sales funnel at Uniti Leasing remains well diversified with opportunities from international, domestic and regional carriers as well as cable and content providers. With one year of development work our current Uniti Leasing sales funnel represents approximately $18 million of annual revenue and $350 million of total contract value.

During the quarter, Windstream made nearly $30 million of improvements to our network with their capital bringing the cumulative amount since our spin-off to just under $640 million of tenant capital improvements.

Turning to our fiber business Uniti Fiber reported revenues of $77 million and adjusted EBITDA of $30 million achieving adjusted EBITDA margins of 39% for the quarter and is slightly ahead of our expectations.

As Kenny mentioned, we continue to make progress in our dark fiber and small cell projects as we turned over 200 dark fiber and 100 small cell sites this quarter across multiple markets for wireless carriers adding annualized revenues of nearly $2 million during the quarter.

At the end of the first quarter we still had seven major dark fiber projects and -- separate small cell projects under development all of which remain only scheduled for completion. Uniti Fiber Net success-based CapEx was $31 million for the quarter.

We also incurred $4 million of integration CapEx during the quarter principally related to our off-net savings initiatives. Integration CapEx was higher in the first quarter and we expect to average each quarter for the balance of 2019 as a portion of the integration CapEx shifted from the prior year into early 2019.

Maintenance CapEx for the quarter was $3 million or about 3.6% or revenues.

Uniti Towers reported revenues of $5.1 million and adjusted EBITDA of $0.3 million for the quarter including a full quarter's results related to our Latin American operations which were sold on April 2 Towers CapEx was approximately $27 million during the first quarter and we completed the construction of 72 towers and the acquisition of two towers.

At quarter end Uniti Towers had 504 completed towers in the U.S. and approximately 300 towers in various stages of development.

During the quarter we issued an aggregate of 1.2 million shares of common stock off of our at-the-market or ATM program and an average price of $18.63 for net proceeds of $21.6 million, this brings total shares issued under our ATM program to approximately $6.7 million shares for aggregate net proceeds of over $131 million.

Please turn to slide 6 and I'll cover our current 2019 outlook. Today we're revising our prior guided solely for four items. First the impact of the change in accounting for our master lease with Windstream as a result of the adoption of ASC 842 principally the elimination of Windstream straight line rent recognition.

Second incremental Windstream funded TCI revenue realized in the first quarter of this year. Third transaction and other income reported in the first quarter and last the AFFO impact of cash taxes related to the tax basis cancellation of debt as I previously mentioned.

Other expectations continue to be consistent with the previous guidance provided in our last earnings call and a reconciliation of our current outlook to our prior guidance is included in the presentation materials posted on our Web site today.

Our outlook exclude any future acquisitions, capital market transactions and future transaction and integration costs except those specifically mentioned, our current outlook assumes Windstream continues to make timely payments of all rent under our master lease, the acquisition of the Bluebird Fiber Network, sale of our Uniti Fiber's Midwest operations to Macquarie and the concurrent lease of the Bluebird and Midwest fiber networks to Macquarie are included in our outlook based and closing this transaction by the end of the third quarter.

Our outlook is subject to adjustments based on events arising during Windstream's reorganization proceedings, the timing and closing of acquisitions, any future capital market transactions, market conditions, finalization of purchase price allocations related to acquisitions and other factors.

Accurate results could differ materially from these forward-looking statements. Our current outlook includes the following fleet segment. Starting with Uniti leasing, we now expect leasing 2019 revenues and adjusted EBITDA to the $730 million and $707 million respectively at the midpoint.

This is in approximately $9 million net reduction from our providers which consist of $12 million reduction for foregoing, the recognition Windstream trade lines rents partially offset by incremental TCI revenue of approximately $3 million.

Slide 7 highlights the major Uniti leasing transactions we have complete to date, these investments currently have an attractive cash yield of over 10% with the potential for higher cumulative yields through additional lease-up over the life of the contract terms, which generally range from 15 to 25 years.

Regarding the Bluebird transaction, we continue to work through the various regulatory approvals and still expect the transaction to close in the third quarter of this year. As a reminder, this transaction we will include a 20-year initial term actual lease with an initial cash yield of 9.6% and over $20 million of annual cash rent.

I want to underscore that Uniti leasing represents a proprietary business strategy within communication infrastructure that allows fiber networks to be positioned for their most productive use. In addition to attractive initial cash yields, these transactions can be structured with multiple growth drivers to enhance returns over the life of lease.

We continue to see strong interest in additional lease up on existing routes, new sale leasebacks and OpCo-PropCo opportunities with a diverse set of potential counterparties. Given the attractive economics of our leasing business we may deploy more capital and it can be leasing than any of our other business units over time.

Moving to slide eight, consistent with our prior guidance at the midpoint we expect Uniti fiber to contribute $337 million of revenues $128 million of adjusted EBITDA and achieve adjusted EBITDA margins of 38% for the full-year.

As noted on our last call net success-based CapEx for Uniti Fiber in 2019 should be about $125 million at midpoint of which about 45% will be directed to our dark fiber and small cell projects.

For the seven dark fiber and seven small cell projects currently under construction we still expect all of these to be completed by year end except for two dark fiber projects and one small cell project that should finish in 2020.

Upon completion, these 14 projects are projected to consume $57 million of net capital in 2019 and $24 million in 2020 while add annualized incremental revenue of about $20 million will add approximately 100,000 fiber strand miles and will add 1,300 80 small and it will bring 1,380 small cells on air.

We expect Uniti Fiber's net success based capital intensity to decrease - decreased to about 42% in 2019. And then trend towards the mid 30% range thereafter. We also expect integration and maintenance CapEx for 2019 of $9 million and $7 million respectively.

Turning to slide 9, it's previously announced we closed in the sale of our Latin America tower business for approximately $100 million to Phoenix Towers on April 2 and have included the Latin America results in our 2019 guidance up to that date.

For 2019 we expect Tower revenues to be about $50 million with reported adjusted EBITDA of $0.5 million 2019. As we continue to invest and building out our U.S.

Tower business, we expect Uniti towers to complete the construction of about 200 towers this year with capital expenditure which forecasts to range from $60 million to $70 billion, resulting in Uniti towers having 620 million -- 620 completed towers in the U.S. at year-end.

Turning to slide 10, for 2019, we now expect full-year AFFO to range between $2.25 and $2.31 per diluted share, with a midpoint of $2.28. On a consolidated basis, we expect revenues to be nearly $1.1 billion and adjusted EBITDA to be $814 million at the midpoint.

We continue to expect weighted average common shares outstanding for 2019 to be approximately 183 million shares. As a reminder guidance ranges for key components of our current outlook are included in the appendix to our presentation today.

On the slide 11, we've provided a tabular reconciliation of our prior guidance to our updated 2019 outlook which summarized some of my comments this afternoon.

Turning to our balance sheet, at quarter end, we had approximately $106 million of combined unrestricted cash and cash and cash equivalents, our leverage ratio under our debt agreements at the end of the first quarter stood at 6.3 times based on net debt to analyze adjusted EBITDA.

Subsequent to quarter end on April 7, we received approximately $100 million of proceeds from the sale of our Latin American business which reduced our net leverage to approximately 6.2 times. Yesterday, our Board declared a dividend of $0.05 per share to stockholders on record on June 28, payable July 15.

Consistent with my report marks on our last call, for tax year 2019, our estimated allowable dividends attributable to our capital stock continues to be approximately $180 million including the dividends paid in January and April of this year for the next three quarters such allowable dividends are estimated to be approximately $60 million or about $0.32 per common share under our credit agreement.

We expect our board will reconsider our dividend policy as key developments in Windstream's reorganization process occur and in context of our long current business strategy and financial profile. So with that I'll now turn the call back to Kenny..

Thanks, Mark. As I mentioned last quarter Uniti is uniquely positioned to participate as both the buyer and seller of valuable communications infrastructure assets as we demonstrated this quarter we have the ability to transact on smaller value accretive M&A despite the overhang from the Windstream bankruptcy proceedings.

We also continue to remain active with our diversification efforts during the duration of these proceedings. I'd like to provide a short update on Windstream. So far we've been pleased with how the Windstream bankruptcy proceedings have progressed.

We were also delighted to see that Windstream received court approval and was able to finalize its $1 billion in debtor-in-possession financing, Windstream continues to remain current on its monthly lease payments which have been paid in full and on time through May, we continue to be open to pursuing mutually beneficial outcomes with Windstream that could potentially be credit enhancing to Windstream and its stakeholders and value accretive to Uniti.

We still believe we have the ability to navigate the Windstream bankruptcy proceedings without having to raise external capital and still be able to invest in all of our valuable business units in -- including potentially pursuing smaller M&A transactions.

We remain confident that Windstream will successfully emerge from the restructuring process and continue to remain focus on operating its business on normal course resulting in a potentially stronger tenant and a commercial relationship that could be enhanced. Operator, we are now ready to take questions..

[Operator Instructions] Your first response is from Brett Feldman with Goldman Sachs. Please go ahead..

Thanks for taking the question.

And two about Uniti Fiber, if you don't mind, it looks like revenue declined sequentially in the quarter, so I was hoping I can get a little more insight into what's behind that and what supports your guidance that you reiterative that segment for the full-year on an operating basis, so beyond just the M&A implications? And then also maybe at a higher level, I'm curious for your thoughts on how you think about the Uniti Fiber business fitting into your business mix over the long term, particularly as you move past the resolution of the Windstream bankruptcy, it certainly seems like you're getting more and more visibility into your opportunity funnel and leasing and is there a merit to maybe pivoting away, maybe selling off the fiber -- the Uniti Fiber business and exclusively focusing on leasing in OpCo/PropCo relationships? Thank you..

Yes, great. On your first question regarding the revenues, they were down a little bit in the first quarter from our expectations on revenue, not really on EBITDA because we have some cost savings there.

They were down slightly from what we expected on revenues for Uniti Fiber, but it was mostly construction income, which is mostly a timing item and then also some equipment sale income as well.

So as we look at our forecast for the balance of the year, again those are primarily just timing issues and we remain confident that those will be made up in the balance of the year. Then I'll let….

Got it..

Then I'll let Kenny take the balance of your questions..

Hey, Brett. Yes, good question and we -- as I mentioned in my prepared remarks, we are constantly evaluating the asset portfolio where -- as we have been for the past couple of years have been fielding inbound interest in the assets given the strategic nature of them and I think that's only continued accelerated in this current environment.

But as we look out we still think having a fiber operating platform is valuable for the optionality that it brings to us not only in terms of investing our capital organically but also the incremental M&A opportunities that it presents for us.

So I still see that as a value play for us, but ultimately as I mentioned and as we've proven with some of the other sales that -- asset sales we've executed on including the Latin American towers and selling the Midwest fiber operations not the fiber but the operations at attractive multiples, we are open to opportunities like that particularly where they enhance our shareholder value.

So we'll continue to be open-minded and look for value accretive opportunities going forward..

If you don't mind if I sets a follow-up to the very first question just about the impact of the equipment and construction revenues, during your prepared remarks, it did not sound like churn and Uniti Fiber had really ticked up.

So, is it fair to assume that the recurring revenues in that segment were flat to up or much more stable during the quarter or are there any moving parts in there we need to be thinking about?.

Not really, the churn was pretty much as we expected and I think we outlined kind of all the different waterfall of the MRR growth that we expect for this year on our last call.

So there's a slide on our last quarter -- quarter's call deck, so I think we expect -- still expect it to be consistent for the full-year with the growth rates I already outlined on that call..

Great, thank you..

Thank you. Your next response is from Philip Cusick, JPMorgan..

Hi guys, I suppose a similar question to Brett's with towers, does it make sense to have this in the company any more or less than fiber and any restrictions on selling that asset?.

Hey, Phil. Yes, look, we think there is value to having the three pronged infrastructure -- well, actually four prong infrastructure approach including Uniti fiber backhaul, small cells, towers and leasing.

We think that's a very unique offering to the marketplace and we see the benefits of that values of value that with our customer relationships every day and I think it's growing as we as the scale and the portfolio under each of those businesses grow.

So we see value in it and our tower business our thesis going into that initially was that there was a unique niche for a new tower provider particularly a REIT with staying power given the carrier's desire for vendor diversity and so we thought the opportunity was there that's proven to be true particularly with the FirstNet opportunity and with the activity of AT&T and others.

So we've been very pleased with that and we've been pleased with the early returns on the lease up that we're seeing on those towers it's as expected. So we feel very good about that and we've been pleased with the synergy value associated with that across our customer relationships in the rest of our portfolio.

So a lot of -- both what I characterize as quantifiable synergies and qualitative synergies across our customer relationships. Having said all of that, we are we remain open to optimizing shareholder value in various ways and so we're going to remain open minded around all opportunities..

Are there any restrictions on who you could sell those towers to from your anchor tenant?.

No..

Okay. One other if I can your first OpCo-PropCo deal, Bluebird is supposed to close I think in the third quarter anything you can share on how that's going.

And then what does the pipeline look like here for additional fields like that?.

Yes, as we -- as I think Mark mentioned in his remarks we're still working towards I think late third quarter closing. So everything is on track there with the work towards integration and that sort of thing is progressing. So, no surprises.

I would say on the funnel as frankly as evidenced by the SFN deal the funnel on sale leaseback opportunities and OpCo-PropCo partnerships remains robust and growing.

And we I think I mentioned this on our last call Bill but we don't even though there's a lot of volatility in our securities we're very cognizant of not overextending ourselves with really sizable transactions but we do want to maintain the development of that pipeline and engagement with the M&A market particularly on sale leasebacks and OpCo-PropCo opportunities so we continue that in both over the coming months and quarters..

Thanks, Kenny..

Thank you. Your next response is from Simon Flannery of Morgan Stanley..

Great, thank you. Good evening. Thanks for the color on the Windstream lease and on the progress on the lease payments.

Have you had any substantive discussions with Windstream or their advisors at this point or is that still a TBD? And do you have any sense on the timeframe, are they on track for a plan of re-org, I guess in the four month time frame or do you think it might take longer? And then Mark, just to clarify on the dividend point, you talked about the $0.32, is that the maximum that you can pay and what would you be required to pay on under REIT rules [ph] in terms of IRS net income distribution? Thank you..

Hey, Simon and I'll take the first couple..

Thanks..

I think I'd rather not comment on specific conversations but I'll say that with our both legal and financial advisors, you can rest assured we're having conversations with advisors and principals and I would, I would say that we continue to feel optimistic about the progress.

You know we're -- we think all parties are looking to expedite the bankruptcy process and believe that there's no benefit to any one of dragging out the process, along getting the process and spending a lot of unnecessary legal fees and advisory fees. So that continues to be true.

We think that there is a - general consensus that our network remains mission critical to Windstream's business and so we've been pleased by that. And again no surprise but that has met our expectations and we also continue to feel optimistic about the engagement around mutually beneficial opportunities to enhance the commercial relationship.

So all of those things are consistent with our last quarter of messaging and I would say no changes there.

With respect to the specific time line, again, I - we've talked about the dates on that are sort of in the lease and dates plus extensions in June and then September, really don't have anything new to say beyond that, Simon and so we'll just leave with that..

Okay. Thank you..

Hey, Simon, this is Mark. On your dividend question, those amounts that I gave are consistent with the same amounts I gave previously except for the dividend that we have -- that we've declared since that time. So those do represent the minimum that we are required to pay out under the 90% of taxable income that you're required to pay out.

And that's the maximum that we're allowed to pay out through the -- under the credit agreement amendment..

Great, thank you..

Thank you. Your next response is from David Barton of Bank of America. Please go ahead..

Thank you for taking my questions. I guess I have kind of three questions.

I guess, the first one is, Kenny, when you talk about, you're working with Windstream for a mutual beneficial outcomes and creating value for unit that offsets the potential loss of value with respect to the lease, when I think about that, you have a $650 million lease, for there to be a change in the lease relationship that means pretty much anything to the credit quality Windstream, probably a minimum of $100 million and that $100 million over a 30 year lease is discounted back, a $1 billion, $1.5 billion.

I think a lot of people struggle to see where Uniti could extract $1 billion or $1.5 billion or other relationship with Windstream, so if you cannot point to where you think that value is, so you could come to this mutually beneficial outcome may be helpful? And then the second question maybe for you Mark, I guess as you look down this bankruptcy is going to be still going on in a year, your evolver matures in April.

I was just interested in knowing kind of what you think the banks appetite to roll that is and if you don't think there is one, do you need to wait for the lease to be accepted in bankruptcy to do anything about it and if you do is there any way you can get Windstream to kind of accelerate that process, which you know should happen in June, but could be pushed off until September? And I'm sorry, but this last question is fundamental, which is really again back on the Tower business which is you know with respect to you know the winds that you're getting in the Tower business mostly built to suit I imagine, can you kind of profile the terms and conditions that you're offering relative to you know kind of standard industry conditions that are letting you win and talk about the returns you're generating off of those terms? Thanks..

David, this is Kenny, I'll take the first and third and I'll let Mark take the second. So on the first one, I think, first of all, we don't, we don't, you mentioned $100 million red guiding roughly $1 billion of discounted value associated with that. We don't, we don't have a bogey or rent cut bogey that we're trying to hit at all.

And so I think that's the big -- the big difference in what you're saying versus how we're thinking, but our view is there are some opportunities to enhance the commercial relationship that could be beneficial to both and whether it's a billion dollars of value or something more or less, I won't comment on, but we're not - we don't have a bogey there that we're aiming towards..

The Windstream creditors probably do that right?.

Well, I won't speak for them but at the end of the day we're not a creditor, we're a landlord and so with respect to what the creditors may be hoping for, or what that doesn't necessarily dictate what conversations we're prepared to have or what opportunities were prepared to pursue..

Got it..

So, Mark, you want to comment on Dave's second question?.

Yes. Hey, David, the revolver, so we're certainly focused on getting the revolver refinances. We had started conversations pre-petition when trimmed with the banks previously with the bankruptcy filing those one [indiscernible] to say, about addressing the revolver.

I don't want to go into too much about it right now but I do - but to answer your question specifically, I do that there is appetite for exiting at this time or you know we could wait till there's more clarity around Windstream bankruptcy process and/or you know resolution around the lease.

So but I think either way, I think the banks do have appetite for helping us get that addressed and we are certainly focused on it right now..

And Mark, just a quick follow-up, it's my fine own experience with the process, but is there a reason why when Wind would or wouldn't want to accelerate or decelerate the acceptance of the lease if they said, they're already just going to keep paying it in the ordinary course?.

I think it's hard to kind of say what for us to comment on what Windstream is thinking. I think you know our view is always been that trying to get -- trying to have a resolution to run the bankruptcies and the regulator is probably in everybody's interest. So but we'll just have to see how it plays out right now..

Got it..

David, with respect to your last question on towers, you're right most of our opportunities to invest new capital there in the U.S.

are on build-to-suit opportunities we did acquire a tower portfolio from Windstream a few years ago when we acquired a portfolio when we acquired Hunt and I think together that represents roughly 220 or 230 of our towers that there alone where we spent a de minimis amount of money to acquire those but with respect to buying new portfolios of towers in the U.S.

we really shied away from that because the valuations are at a level that we find difficult to make accretive and so we've shied away from that.

But the build to suit opportunities are ones where we think we have a proprietary opportunity especially with certain customers where we're not necessarily competing against the entire tower industry and so as a result we've pursued those and I would say we have definitely seen some build-to-suit opportunities in the U.S.

that are unattractive us where we just can't make the returns work for a variety of reasons and we're perfectly willing to just let those opportunities go because as I've said many times we're not a tower company, we don't want to be a tower company, we're an infrastructure company with a focus on fiber who happens to believe that having a tower business in our portfolio is additive to that fiber business but we're not in a position where we're we have to take on to our deals that are unattractive and so we've really stuck to what we said from the very beginning and continue to say in our public filings about the type of tower deals that we will take on and I think we still show that 5% to 10% range on cap rates, 1% to 3% escalators and so -- and of course there is other -- many other terms to tower deals with those tend to be the big economic once the people focus on.

And I would say we have held true to that - to that - to those terms that we laid out really two years ago, one or two years ago..

Thanks so much, Kenny..

Thank you..

Thank you. Your next response is from Matthew Niknam from Deutsche Bank..

Hey, guys. Thank you for taking my questions.

One on leasing, so I think in the past, you've talked about say, leaseback opportunity being more prevalent, larger and larger deals maybe being out there, but I'm just wondering, I know there's sort of a tendency right now given the current date that keep yourself to maybe smaller sell leaseback deals, but are you seeing more appetite for these types of deals from a larger operators, whether they be telcos or cable co's, that's question one.

And then secondly on the fiber side, I think you had mentioned about three quarters of the bookings coming from non-wireless. Just wondering what sort of demand have you seen of late from the wireless carriers, has that evolved to decline that all. And then how we should think about the opportunity on a go forward basis? Thanks..

Yes, sure. I'll take both of those. We have definitely - so as the pipeline development work has progressed and on the leasing side and as we have began –begun to show real transactions, [indiscernible] transactions and announced transactions including larger and smaller ones. And we've devoted a team of experienced executives to that business.

Ron -- as mentioned in the past, Ron Murdy, is now heading up that effort for us. We have definitely seen an increase in interest and including smaller deals and larger deals.

And I would say that on the larger transactions, I don't want to imply that we would not pursue larger transactions now because in reality there is capital out there to help us finance those types of opportunities and we've got some very interesting assets that can enhance those deals with synergy value and other -- and in other ways.

But I would just cautioning that the likelihood of those types of opportunities are lower during this period of volatility. But we are definitely continuing those conversations and I would say that the interest level in that type of opportunity is continues to grow including with larger opportunities.

With respect to second part of your question, I would say the demand among our wireless carriers continues to be strong and especially when you consider the fact that we're selling both traditional, wholesale we're selling fiber traditional wholesale and fiber to the tower backhaul and the small cells so we're now doing all three with pretty much all of the big four carriers.

So that is growing our focus on growing the other parts of our business the non-wireless parts of our business is definitely a conscious effort because we've always talked about the need to lease up those anchor wireless networks with enterprise schools and government as a way to really drive better economics off those networks and so it isn't that the demand has declined among our wireless carriers, it's really a conscious effort on our part to focus on the other parts of our business that's driving that change in mix..

That's helpful. Thanks, Kenny..

Thank you..

Thank you. Your next response is from Frank Louthan with Raymond James..

Great, thank you.

Can you characterize how you're handling employee retention during the process what's the current number of quota bearing heads and what do you expect that to be throughout the course of the year and then just kind of what are you doing maintain that and keep folks motivated while you're going through the whole process for Windstream..

Yes, Frank, great question. We've got roughly 40 quota bearing reps now. We've been growing that number especially as we're beginning to move into some of these markets, where we're building fiber or fiber is now coming online.

So we're backfilling with on the ground enterprise or [indiscernible] sales folks and so I would say we've been growing our base and have a conscious effort to - excuse me to continue doing that.

We really haven't seen a lot of churn among our base but I will say and I would certainly wouldn't attribute any of the churn to some of the volatility that we've seen with Windstream, I will say that it's the labor market is tight.

We've found that up and down the chain in our organization and so and as I talk with other folks in the industry, I don't think that's an uncommon thing. I think that's just something that's impacting a lot of us. But I don't think there's -- we've seen churn related to our volatility.

Having said that, we're very focused on employee engagement, very regular employee engagement at the executive level on down, and we were even before the filings earlier this year, preparing people with talking points on how to deal with customers and talking points with respect to our position in all of this.

And so I think that's the best approach is to communicate and give people the facts and lean into it and that certainly what we done and with respect to any other items we are in discussion with our board constantly about comp related matters. And so I think we're very focused on all the things that we need to be focused on their..

All right, great. Thank you very much..

I am showing no further questions at this time. I would like to turn the conference back over to Kenny Gunderman..

Okay. We appreciate your interest in Uniti Group and look forward to updating you further on future calls. Thank you all for joining today..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect..