Greetings. Welcome to Liberty Broadband Investors' Call to discuss the GCI business. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. You may submit a question via the web at any time by using the Ask a Question feature on the bottom side of your screen. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Shane Kleinstein, Senior Vice President of Investor Relations. You may begin.
Thank you for joining. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10K and 10Q, filed by Liberty Broadband with the SEC and the registration statement on Form S1 as amended, filed by GCI Liberty with the SEC. These forward-looking statements speak only as of the date of this call, and Liberty Broadband and GCI Liberty expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Broadband's or GCI Liberty's expectations with regard thereto, or any change in events, conditions, or circumstances on which any such statement is based.
On today's call, we will discuss certain non-GAAP financial measures for Liberty Broadband and GCI Liberty. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, as well as information about the pending spinoff of Liberty Broadband's GCI business, can be found on Liberty Broadband's website. There are slides to accompany today's presentation that will be posted to Liberty Broadband's Investor Relations website after the call, after appropriate filings are made. Today, speaking on the call, we have Ron Duncan, who is CEO of the GCI business and will serve as President and CEO of GCI Liberty; Pete Pounds, CFO of GCI; and John Malone, who will serve as Chairman of GCI Liberty, will be available to answer questions following prepared remarks. Thank you to those who submitted questions in advance.
As mentioned, you may still submit questions via the web at any time by using the Ask a Question feature on the bottom of your screen. Today's call is being recorded, and we will make a replay available on our website after appropriate filings are made, so we ask for your patience in that being posted. With that, I will turn the call over to Ron Duncan.
Thank you, Shane. Good afternoon, and thank you to everyone for joining us today. Today is a great opportunity for investors to learn more about the GCI business. First, to briefly reiterate the background for the proposed spinoff of GCI Liberty. On November 12th, Liberty Broadband entered into a definitive agreement to be acquired by Charter. Liberty Broadband has agreed to spinoff its GCI business by way of a distribution to Liberty stockholders, which we expect to complete late in the second quarter or early the third quarter of this year. I will be CEO of the new entity, which will be called GCI Liberty. The new GCI Liberty will be my second trip around the Malone merry-go-round. Bob Walt and I started GCI in 1979 with the aim of providing Alaskans with better options in long-distance telephone service. TCI, under Dr.
Malone was our original investor, and we became a wholly owned subsidiary of TCI. We went public for the first time as a spinout from TCI in 1987. In the four decades since, we've grown from a competitive long-distance upstart—probably not many of you remember when you actually had to pay for long-distance service—to today, where we've become a fully converged telecom provider that serves all of Alaska. Along the way, we acquired all of the cable television properties in Alaska, moved into the wireless business, growing to become the state's second largest wireless provider, developed the statewide enterprise business, and with substantial revenues from the Universal Service Fund, became the largest provider of supported telecom service to the schools and healthcare facilities in rural Alaska. In 2018, GCI was acquired by Liberty Interactive and became GCI Liberty, with the bulk of our assets being an investment in Charter.
In 2024, it was announced that Liberty Broadband would merge with Charter Communications and that GCI would be spun off once again as an independent company, signing up for my second trip around the Malone merry-go-round. Today, GCI is far and away the largest telecom company in the Alaska market. We've invested $4.7 billion and tens of thousands of person-years to connect virtually every place in Alaska. We provide a full range of wireless, data, and voice services. Our hybrid fiber coax network passes 80% of the homes in Alaska, and we provide 2.5 Gbps high-speed data service to virtually all of those passings. Our wireless network covers all of Alaska, with the substantial majority having access to 5G wireless service. Within several years, we will offer 5G wireless to almost every community in Alaska.
We generated $1 billion of revenue and a record $383 million of adjusted EBITDA on a 12-month trailing basis. Alaska is different in size, large distances and small populations, in geography, the largest mountains in the U.S. and more coastline than the rest of the country combined, in climate, harsh and unique operating conditions, and most importantly, in connectivity. There are virtually no roads within Alaska, no roads to the state, and almost all transportation among the major areas of the state is by water or by air. These conditions create both challenges and opportunities. First of all, getting to the state requires construction of thousands of miles of undersea cable. GCI is one of only two Alaska providers that has built these cables.
Getting around the state requires construction of terrestrial systems: undersea fiber, terrestrial fiber, and microwave that cross vast, often frozen, open expanses of hundreds of miles. Pole access has not been one of our problems because there simply are not any poles. We have had to make it up as we go. However, without those unique and challenging connecting links, there is no high-speed data or 5G wireless to sell. The flip side is that because getting to and around Alaska is so difficult, the value of virtual connectivity is much higher than it is in other locations. That helped us build a business with better margins and less competitive erosion. Over 40 years, with $4.7 billion, lots of creativity, and more than a little learning, we have built an asset that simply cannot be matched. We own the undersea cables that connect Alaska to the rest of the world.
We own the terrestrial networks, including more undersea fiber, terrestrial fiber, and microwave that connect the communities within Alaska to each other and to the rest of the world. We own the local broadband networks, both wired and wireless, that provide that last-mile connection to homes and businesses. Duplicating GCI's network would be an almost impossible task. Collectively, our management team has centuries of Alaska experience, and we're very proud of what we've built. GCI is the only Alaska company able to offer a statewide suite of converged products. Looking more at our primary business lines, we're the only provider in Alaska with a full suite of data, wireless, and voice services for consumers. We first provided 1 Gbps internet service in 2015, and we launched Alaska's first 5G wireless service in 2020. Today, we cover 80% of Alaska homes with 2.5 Gb data services.
We generate more than half of our revenues from providing enterprise customers with data, wireless, and wholesale solutions. Our enterprise data offering is meaningfully supported by the Universal Service Fund. We have more consumer customer relationships than any other provider in the state. Other than the losses associated with last year's discontinuation of the ACP program, our consumer customer base has been stable. We continue to grow the number of customers on our GCI+ product, which provides a compelling bundle of wired and wireless services. GCI+ also provides a platform for the further development of fully converged services. It's important to note that we own and operate our own wireless network. We're an MNO, not an MVNO. As we continue to build out our network, offering 10 Gbps High-Speed Data and 5G Wireless on a statewide basis, we expect to be able to maintain our consumer customer base.
While we face competition for most of the services we sell, there is no single operator that competes with us across our full suite of products or geography. The only competitor that has a larger market share than we do in any of our segments is AT&T in the wireless business. However, we have the widest statewide wireless footprint of any provider in Alaska. For wired services, we provide 2.5 Gbps speeds to 80% of the households in the state using our HFC network. Our nearest competitor offers primarily DSL. We do not compete with any pure-play fiber to the home or any fixed wireless providers. The only other technology competitor of relevance in the state is Starlink.
While there are Starlink customers in the urban areas, the bulk of our losses to Starlink have occurred either in rural locations before we were able to offer our full suite of high-speed services, or in places that have experienced prolonged fiber outages, which have degraded our service offerings. Our enterprise service benefits from the ubiquitous statewide infrastructure and a full suite of products, including wireless and wired data. There are no competitors that have the breadth of our network or can offer our level of reliability. Notably absent from this slide is video. By the end of this month, we will have disconnected our last video customer. We made the decision to exit the video business last year and recently received regulatory permission to do so.
We simply don't have the scale to support the required investments in a video platform, and we're too small to meaningfully negotiate with immediate providers. Video customers have been tailing off rapidly over the past two years, and this strategy will increase free cash flow next year. The dotted lines on this slide represent the portions of segment revenue from USF-related services. In 2024, about 42% of our total revenue came from various programs under the Universal Service Fund. Over the last 12 months, through March 31st, 2025, approximately 80% of our GCI business segment revenue and 30% of our consumer wireless revenue were supported by USF. The Universal Service Fund is an approximately $9 billion annual program supporting telecommunication services in high-cost areas and for underserved populations. It was established by the Telecom Act of 1996 and has enjoyed broad bipartisan support.
It's an essential part of the telecom infrastructure in the U.S. It's funded by an assessment on interstate telecom carriers and administered by the FCC through the Universal Services Administrative Corporation. It is not funded by tax revenues, and it's not part of the federal budget. Alaskan companies receive approximately $600 million annually. In 2024, GCI received 42% of its total revenues from various programs in the fund to support a portion of the cost of services that we provide to approximately 185 rural clinics and 230 rural schools, and with the completion of our Alaska Plan program, 139,000 rural wireless pops. While Alaska is the largest single beneficiary of the Universal Service Fund due to its extremely remote location and challenging service conditions, USF is also critical to providers and beneficiaries in other states.
If USF funding were interrupted, school districts across the nation would face a $3 billion hole in their annual budget. Critical connections for rural health providers could be discontinued, and telecommunications in remote and high-cost areas of the country would be disrupted. USF support is essential to the provision of telecommunication services in rural Alaska, with the largest amount going to support high-speed two-way video connections to over 185 rural health clinics. Modern telecommunications in most villages and modern healthcare simply wouldn't exist in rural Alaska without USF support. While the USF enjoys broad bipartisan political and public support throughout the country, several conservative activist groups have repeatedly filed lawsuits challenging the structure and distribution mechanism of the fund. To date, all but one court has found the USF statute to meet appropriate constitutional standards.
Last July, the Fifth Circuit Court of Appeals in an en banc decision found the current structure to be impermissible. The FCC, through the Solicitor General, appealed that decision, and the Supreme Court heard oral argument in the case on March 26th of this year. We feel the oral argument went very well for the government, and we, along with all other telecom companies and the vast majority of the telecommunications bar, expect that the Supreme Court will overturn the Fifth Circuit decision, leaving the Universal Service Fund as currently structured. There is, however, some risk that the court could find problems with the fund that would result in a temporary suspension of payments and require congressional action to repair it. Something as simple as Congress putting a cap on the fund would most likely resolve their claims.
GCI has been working with members of the relevant congressional committees of jurisdiction and industry participants to develop legislation that could remedy any deficiency that the Supreme Court might identify. GCI has also developed a range of contingency plans that will allow it to operate during an interim period when USF payments might be suspended. GCI has adequate liquidity to survive such a period. In the event of any disruption in USF payments, there would be substantial pressure to assure that any congressional repair allowed for back payments for services provided during the interim period. In sum, we do not expect any disruption in the flow of USF, but we are appropriately prepared to respond in the event it should be necessary. We expect a decision from the Supreme Court sometime this month.
In summary, then, while we have the risks that we are managing, including the Universal Service Fund, the future looks very exciting for GCI. Following the spin-out, we will have a compelling asset with a stable customer base, consistent revenues in EBITDA, and an attractive tax asset due to the step-up in basis that will occur upon the spin. With 100% expensing retroactive to assets acquired after January 19, 2025, as in the version of the tax bill that recently passed the House, GCI's tax profile could be further enhanced. We also anticipate a significant acceleration in free cash flow, with the expected reduction in capital expenditures following the completion of the Alaska Plan build-out in 2026. What do we do with it? We have a lot of optionality.
We could deploy those cash flows with or without additional leverage to acquire other assets either in Alaska or elsewhere, or we could return capital to shareholders. Last time GCI spun out into an independent entity with Dr. Malone, we started a journey that ultimately resulted in a recombination with other entities accompanied by substantial value creation. I look forward to our next journey with John. Now I'll turn it over to Pete Pounds, GCI's CFO, to go through some financial detail.
Thank you, Ron. Over the last four years, we've seen a change in the components of GCI revenues. High-margin data revenue has been growing, while other revenue, particularly low-margin video revenue, has been declining. The combination of modest revenue growth and a rotation from lower to higher-margin products has been a formula that has allowed us to grow both gross margin and EBITDA. Upon completion of our wireless build-out in rural Alaska to fulfill the requirements of the Alaska Plan, I expect that we will allocate more capital resources to our urban wireless network, which will allow us to grow that part of the business as well. Our LTM EBITDA is a record $383 million. When I joined GCI in 1997, our EBITDA was only $39 million.
This significant growth of EBITDA is due to our willingness to invest meaningful capital in the Alaska market when many of our competitors were either unwilling or unable to make those investments. Given our current market position, we do not have as many opportunities to grow EBITDA as we had back in 1997, but we will continue to pursue growth in the Alaska market. However, that growth may be more skewed to free cash flow instead of EBITDA. We are a bit unusual as a cable company in that we have more revenue and gross margin on the business side as compared to consumer. Margins as a percentage of revenue are also higher on the business side due to the mix of products, with business having more of their revenue from data, while consumer has some video revenue, though, as Ron noted, that is being discontinued as we speak.
We do have some opportunity within our SG&A expense. We spent a lot of time and effort in 2024 figuring out how to better manage our network and IT groups, ultimately merging those into our Chief Technology Officer group. While that led to some temporary increases in costs, we are already seeing that pay dividends with improvements in both efficiency and efficacy. As Ron noted, we spent a lot of capital over our history. $4.7 billion in a state with 740,000 people is a massive investment. It has allowed Alaskans to enjoy a much better telecommunications infrastructure than you would guess from the population density and geographic challenges that are faced. Going forward, I'm not uncomfortable with 15%-20% of revenues that we've traditionally invested in CapEx. However, this will ultimately be dictated by the economics of the opportunities.
If there are few good investments, we would be comfortable below that level, and if there are many, we'd be comfortable going above that range. Due to the step-up in basis that could generate as much as $420 million of tax benefits on our spin-out, we are in a favorable free cash flow position, even at relatively elevated levels of CapEx. With more modest levels of CapEx, GCI could be a very significant generator of free cash flow. Now I'd like to turn the call back to Shane.
Thank you, Ron. Thank you, Pete. Thanks to everyone who's joined so far. We appreciate your interest in Liberty Broadband and GCI Liberty. Now I'd like to transition the discussion over to Q&A, where we are joined by Ron, Pete, as well as by John Malone. As a reminder, if you have not already submitted your question, you may do so using the Ask a Question feature, which should be at the very bottom of your screen. With that, we will turn to our first question. This is for Ron. Ron, it's evident that Alaska is a unique environment to operate in. Can you just elaborate on what has made GCI successful in this environment? What continues to position it uniquely relative to your peers?
Thank you, Shane. I think GCI's success largely stems from the nature of the Alaskan environment and the unique expertise that GCI's employee base brings to dealing with that environment. When Bob Walt and I started the company in 1979, the telecommunication industry was on the cusp of rapid technological change. We understood that technology, and we also understood that it would not be deployed in Alaska the same way that it was deployed elsewhere. Alaska, because of its long distances between places, the lack of physical connectivity, its harsh climate, and its geography of very small population centers separated by large distances, presents very unique challenges for delivering that technology. Our success has come by understanding Alaska better than anybody else.
We're not the top of the world when it comes to understanding the technology, although we're highly fluent in it, but our skill set has been in taking that technology, applying it to unique Alaska applications, such as 185 single-room village health clinics that need two-way video connections to provide any form of basic medical care, to remote learning in Alaska schools, to building terrestrial fiber across hundreds of miles of tundra or underwater that is covered in ice for nine months of the year, and making those networks operate reliably. That's a daunting task, and people who are not familiar with Alaska have tried and failed at that. Nothing is really changing about the geography or the climate of Alaska, and that continues to reward us for our Alaska knowledge.
I think, Ron, if we go deeper on the competitive landscape, a number of questions came in as well on that, particularly pressures from satellite broadband, how it differs in rural and suburban areas, and how do some of the competitive pressures or competitive landscape differ from what we see in the lower 48?
The primary difference from the lower 48 at the outset is we do not face fixed wireless competition up here. The spectrum that the fixed wireless operators use in the lower 48 is largely not available in Alaska. We do instead have competition from the LEO services, most particularly Starlink. Starlink is an excellent solution for people who are truly isolated. There are, I think, according to the state broadband map, something like 17,000 locations in Alaska that are not part of any community that are totally isolated. Those are absolutely ideal situations for Starlink, and almost all of those will end up ultimately having their connectivity that way. We do see some urban customers taking Starlink service. It is a competitor for us around the margin in the more developed areas.
We have seen customers move to Starlink in rural areas where either before we have been able to provide the full suite of high bandwidth and wireless services, or when, as unfortunately happens, fiber connectivity to those markets goes down for six or eight months because the fiber breaks under the ice and you cannot get in to repair it until the ice goes away. Starlink has managed to take a substantial number of customers in those communities in those conditions, and we have discovered that it takes a while to win them back once we are back in there with the higher speed services. To date, Starlink is not able to offer the truly high speed, high capacity services that you can get with a 2.5 Gb cable modem or with higher enterprise services, but they are definitely a relevant competitor for us.
How do you also see the risk of Alaska Telecom or other potential overbuilders upgrading DSL homes, primarily in the urban areas?
We've faced limited fiber overbuild in the urban areas. There are a few places where the fiber overbuilds by the local telephone companies have been more successful than others. The principal issue with that is the costs for everything are a lot higher in Alaska, probably 2x- 2.5x what they are in the lower 48. While our RPUs are somewhat higher, they're not double, and that tends to depress the return characteristics of a fiber overbuild because if you're spending 2x- 2.5x the capital that it takes to do it in the lower 48 and you're not getting a commensurately higher RPU from the thing, from the investment, then the incentive for that is not as great, and we simply haven't seen a substantial build-out of fiber to the home.
We also don't see any fiber pure play companies entering the state, largely because the state is far away from everywhere else, and once you get here, the market size is not very big. As I noted in my presentation, coming to Alaska and building fiber doesn't mean you can immediately provide the high speed services. You also have to negotiate with us or our competitors to acquire large chunks of the connective bandwidth through the undersea fiber cables to get back to the rest of the country. It is not as attractive a market for overbuilders, and the costs have disciplined the build-outs for many incumbents in the state.
Thank you, Ron. We'll change gears slightly, turn to John. John, how would you describe your capital allocation framework and priorities for GCI Liberty, both near term and long term?
First of all, we'll see, Shane, how the equities trade once we do this spin-off in the next month or two. Obviously, if it trades well, which we expect and hope, we would not be inclined to use free cash flow to shrink equity, but we'd be more inclined to look for highly accretive acquisitions, which there are very few, and they would require regulatory approval. Given the rising free cash flow characteristics due to the strong tax shelter that comes with the asset step-up coming out of the spin-off, we will be looking for accretive diversification, I would say, or paying a dividend if we can't find appropriate accretive diversification.
If we build on that, how do you think about potentially growing the entity beyond kind of the bounds of its current communications business? What sources of capital could you look to deploy, or what types of?
Yeah, we would certainly first look for operating synergies, but we will have financial and tax synergies that will be substantial as we look for opportunities to invest and diversify in similar businesses, I would say. I'd point out also that we're not highly levered. We have a lot of elbow room and financial flexibility in the company. With Ron and his team focused on driving free cash flow as CapEx requirements decline, it's a good problem to have.
Thank you, John. Ron, actually, back to you with this. Kind of building on that, what do you believe are the primary sources of growth for GCI in the future? A related question, once you get past video rolling off, how do you think about the arc of top line in terms of kind of the good guys, the bad guys for that growth outlook?
We're not forecasting, excuse me, a strong top line growth because the Alaska market is fairly flat right now, and we already have a very substantial share of all of the segments that we operate in other than wireless. Going forward, while we expect to prevail in the Supreme Court case, we believe that there probably will be top line pressure on USF funding in the rural areas, and while it will grow in some areas, it'll be compressed in others. We expect to see continued slow growth in the wired data and in the wireless business, but it's not a strong growth story from the Liberty Broadband perspective.
You really have to be looking more at the stability that the business has, the fact that there aren't great competitive alternatives, the fact that we're the only company that can bundle the wired data along with the wireless on a statewide basis and ultimately drive into converged products, and then sit back and admire the stability that those cash flows, that those revenue streams provide because the customers really don't have a full-scale competitive alternative for an integrated service. As the CapEx drops off, I think our focus will be much more on driving the free cash flows and benefiting from the fact that with the step-up in basis and with the new tax laws, we won't be a cash taxpayer for quite some time.
I think building on that, John, we got a question from a valuation perspective, building on what Ron had said. How do you suggest investors think about appropriate multiples or valuation for this asset, partially in light of the recent Cox Communications Charter Communications transaction, partially in light while GCI has strategic advantages? The dynamics have changed since it last traded publicly, so curious for views from a valuation standpoint.
If you're speaking of valuation in terms of EBITDA multiple, it should trade at a premium EBITDA multiple because its EBITDA will be fully sheltered. It has a modest debt leverage situation, so it doesn't have a lot of downside risk. It has a declining capital intensity, and therefore its free cash flow characteristics should be superior. Now, Charter currently is trading at or around a seven multiple EBITDA. I would think that this business should be trading at a premium to that. If it doesn't, we're going to have plenty of free cash flow with which to reduce equity if that opportunity presents itself. I think the board will be looking at returns on the free cash flow and how to deploy it.
Given the fact that we have more than enough tax shelter to shelter our own cash flow, we'll be looking opportunistically for acquisitions or investments that provide unusually high pre-tax returns, but that can benefit substantially from the shelter that consolidating with GCI could provide. It is kind of an ideal core asset around which to build some interesting incremental assets. We certainly look forward to that. I'm hoping that it can become the beginning of a new Liberty Media now that Liberty Media has largely gone to single line of business focus with its spin-offs. We will have the availability, of course, of the Liberty Media management team who will work for this enterprise under contract, providing services ranging from financial to tax accounting and public relations, Shane, including you.
Thank you, John. We've gotten a number of questions, if you don't mind, either for you, John, or maybe for Pete, to clarify what you've called as the attractive tax attributes of this transaction post-split. Do you mind just elaborating for a minute on that, and then Pete can even clarify as well on how the basis step-up will work?
Yes. In the transaction that was negotiated with Charter, they have agreed that they will step up the basis of the GCI assets in a transaction in which basically the tax basis of the spun entity will be stepped up to its debt plus the equity value and then allocated across its assets, then to be redepreciated going forward. In addition, of course, the Trump Big Beautiful Bill calls for first-year deduction of incremental capital spend. It would look that GCI will have extraordinary tax shelter available to it. Now, the spin-off from the company is taxable, which means that shareholders will be receiving a taxable distribution of GCI shares. I'm not going to give tax advice.
Check with your tax advisors, but I see that my folks seem on a pro forma basis to be treating it as an allocation of basis, and then to the degree it's above basis, treating it as a qualified dividend. I'm not a tax advisor.
I feel obliged to add in that there also is additional tax information in the S1, and as we get closer to the spin, we will provide supplemental information. Agree, consult your own, but we will try to provide additional color as well. Thank you, John. Let us go back to the business for a minute. Pete, for Ron, can you talk about your pricing philosophy at GCI? The implied RPU, while we do not disclose it, is higher than the lower 48. What drives that distinction?
The difference in RPU, which is generally higher than lower 48 RPUs, relates directly to the increased value of virtual connectivity in the Alaska environment. Because physical connectivity is so much more challenged, people are forced to substitute virtual uses for physical uses. One of the clear examples that I gave previously was how we connect the 185 village clinics to the greater medical resources. These are villages that can be anywhere from 25 mi-100 mi from the nearest regional center, which may have a small hospital with a limited number of physicians, and hundreds of miles from Anchorage, which is the primary medical facility in the state. Those connections are by air, not by road. You don't climb in an ambulance in a village and run down the road to the local regional hospital.
Your primary treatment occurs with a doc in the regional or the Anchorage hospital supervising a health aide in the village for the delivery of that. That's an example of substituting virtual connectivity for physical connectivity. It occurs in education, and it occurs on an individual consumer level when they're forced to do more of their transactions through the web. That leads to a demand for much higher speeds. The percentage of our customer base who takes the highest speed tier that we offer is approximately double the comparable percentage for lower 48 broadband providers. People are buying more bandwidth because they need it, because it has higher utility. The penetration of that bandwidth into the marketplace is greater than it is in the lower 48, again, because the connectivity is so vital to carrying out daily life in Alaska.
That's the principal reason that our RPUs run higher.
If you look at the residential customers, how would you characterize the split between rural/urban to the extent relevant in Alaska, and any differences in customer behavior between those cohorts?
Rural and urban is a bit of a stretch even in Alaska. I think if you're really looking at us, you should be thinking of us as serving what to the lower 48 would look like suburban and then truly remote. The distinction between the two really depends on whether you're on the limited road system that exists or whether your primary connectivity to the largest community in the state, which is Anchorage, is by air. You have a block of geography that runs north and south of Anchorage that's connected by roads from Fairbanks through Anchorage down the Kenai Peninsula to Homer. That would be more of a classic suburban environment in terms of densities, in terms of how you construct facilities and those sorts of things.
Those customers would be more typical to what you'd see in the lower 48, although again, because of the relatively low densities, the opportunity for overbuilds seems to be lower. The demand for bandwidth there is somewhat higher than in the lower 48, but not as extreme as in the rural areas. Once you get off the road system, you face a situation where the connectivity is absolutely essential to daily life. Much of the education in rural Alaska occurs through distance learning, online programs, and those sorts of things, and that creates a different competitive environment, a different demand environment. The other element that's unique to GCI is we're the only ones who are able to provide a statewide wireless platform.
If you want your wireless phone to work in every village that you land in in Alaska, the only phone that's going to do that is a GCI phone. Our competitors don't have roaming in the smallest places in Alaska. Those smallest places, while they're isolated, are also frequently the source of transient visits and roaming because people from the urban areas of the state go to those communities to do business, to build things, to sell things, to provide services. If you want ubiquitous connectivity when you're traveling, you better have a GCI cell phone. Those sorts of things create a bit of a unique differentiation, and it's a bit of a stretch to call rural Alaska rural. It's really remote, and it's in a category on its own.
How should or how would you recommend investors think about the historic or projected returns on your network investments over the past 40 years or the returns to which you underwrite? What's the calculus there?
We don't have a fixed formula that says, "Okay, if you don't achieve an IRR of 12%, then you don't build the project." We undertake projects that have rates of return that are probably in the 20%-30% range all the way down to high single digits. Our evaluation of investment really depends on the longevity of the investment. We would have a lower return period for a 30-year asset than we would for a 5-year asset. The risk of the asset that we're constructing and the potential for growth in the market that we're going to. We think that we've demonstrated a substantial value in the return over the 40-year period that we've been at this. Not all of our investments have been successful.
Going forward, we also expect that a substantial amount of what remains for build-out in our marketplace will be funded with the BEAD program when those monies hit the market in the next several years. That is part of why we think CapEx goes down. The last two years and next year are really kind of the peak of the CapEx wave as we build out the assets that we will be building with our own capital. After that, and including some assets that we are building this year and next year, there will be substantial contributions from the government funding that arose under the BEAD and the Infrastructure Act.
Great. A question for Pete, and then John actually would love your comments on this as well, but a question on how GCI's historical leverage has trended and how much leverage you're comfortable with the business. Then John, maybe after Pete answers, your views just more broadly on leverage for this business and your appetite to reduce debt further, thinking through just cable industry more at a macro level.
Thanks, Shane. I guess I would point to where our leverage has been in the past couple of years here. It has been generally in the 3-3.5 zip code. We ended Q1 at 2.84x total leverage. Obviously, there is a limit to how far down we could go on the leverage before it starts to be a bad capital allocation decision. I would say the range that we have been in, we are comfortable in, and we would go above that a little bit for investment or acquisition opportunities, but probably not dip terribly far below that level either.
From my point of view, Shane, I would say three is a pretty nice number. Going up for accretive acquisitions, sometimes you'll take it up in order to until you get the synergies realized from a combination. We would try to stay in the three to 3.5 range, I would think. If we drop below that, we might take it up in some kind of a small recap and shrink the equity. My guess is that if we look widely enough, we're going to find lots of accretive small but accretive acquisitions in the communications sector, looking primarily at special situations, in some cases distress. I think that we will find opportunities to grow the business outside of Alaska with accretive small incremental acquisitions in and around the communications industry.
Great. Pete, another one for you. Looking at the financial picture, how should we think about normalized CapEx? It's elevated with the Alaska Plan 2025 and 2026. Can you give a sense of maintenance CapEx for the business?
Yeah. Maintenance CapEx is one of those things that I think everyone defines a little bit differently. From my perspective, I define maintenance CapEx as roughly 10% of your revenues, and that keeps kind of a stable EBITDA stream or EBITDA stream there. Investments over 10% of revenue should drive real EBITDA growth.
Great. Back to Ron. Ron, a question came in. You are clearly critical to the business and its success as the founder, but if you can speak a little bit to the bench and the management team you have around you, the tenure of management and the team you have up there in Alaska.
Sure. We've got a pretty deep management team up here. Most of the senior members of the team have been here for more than a decade. They understand Alaska very well. That, as I mentioned earlier, is one of our unique attributes, the ability to translate from what works in the rest of the world to what works in the Alaska environment. My role today is largely guiding the strategy and making sure it all holds together. The team is excellent at the execution side of the fence. I see in that question somebody actually referenced my age, and I'm feeling a little bit insulted. I thought I looked a little bit better than that, but I'm having a good time. I enjoy what I do.
I've known John for 40 years, and I've never been disappointed being in business with him. I note, without reciting his chronological age, that he's older than I am, and I'm hoping to keep the road going just as long as John is, so.
John, I'll turn a related but different one to you. A question came through. What's your expected involvement in GCI Liberty? What are the areas that you particularly expect to be taking part?
I enjoy strategy. I enjoy strategizing with Ron. I love M&A. I love deals, and I love structure. The opportunity to rebuild what some people regard as complexity, and I regard it as high return investing, is what I look forward to. I think the combination of Ron and his knowledge of the business and his team with some of the young guys within Liberty Media's management structure who are pretty good at turning over rocks. We'll have talent available to the organization that is several steps above what an organization that size would normally have available to it in terms of finance, tax, structure, and clearly IR and public relations.
I think we have a little bit of a supercharger when it comes to capabilities that you would not normally find in a business of the size of GCI because of the involvement with Liberty, Liberty Media, me, and the Rolodexes that both Ron and I have been able to develop over this long period. I think we are going to find some very interesting opportunities which will have exceptional financial reward associated with them.
I think that probably is about the best place we could wrap. I'll close with one final logistical for Ron. If you can just remind the street the latest timing on when the spin is expected to be completed. And then we will leave it to you, Ron, to close it off for everyone.
All right. Thank you. The latest that we have is probably very early in July for the actual distribution of the shares. We're still waiting on final closeout with the SEC. I think we're mostly down to accounting questions, and we don't have the approval from the Alaska regulator yet, although we anticipate that in the not-too-distant future. I'm not expecting that to be the item that would actually hold up the distribution. Right now, it looks most likely to be in the first two weeks of July for the actual distribution of the shares. The process would start a little before that. It's about a 20-day process from the time you hit the launch button until the time the shares actually hit the mailbox of current Broadband Shareholders. Thank you, Shane, for putting this together and your team.
Thank you, Pete, for dialing in from the middle of nowhere this morning on your way to a trip with some of our bankers. Thank you, John, for the time you have taken to help explain our vision for where we want to go. Thank you to all of the people who dialed in. We are available as a group. You can connect through Shane with additional questions, and we would be happy to get back to you and discuss the opportunity further. Thank you very much, and have a great morning, a great afternoon, everybody.