Our run time of session, we are streaming, but we invite you guys to ask questions if you'd like. Just there will be a guy with a mic moving around as needed. So I guess, Paul, just maybe kick it off with, you know, the big question. You know, Uniti is a REIT. You don't have a choice whether you pay a dividend or not.
Mm-hmm.
And yet, the stock trades with an 11% dividend yield, 'cause no one's convinced that you're actually gonna pay the dividend. Can you square that circle for me?
Yeah. Well, first of all, Dave, good to be here.
Good to-
Glad to be, glad to be back. Like being in New York. We were just talking about my daughter's in school here, so,
Oh, NYU?
No, at Fordham.
Oh, okay. Great.
So, good excuse to get to see my daughter as well. So glad to be here. Yeah, so we've got a lot of questions about REIT status, and, you know, is it really worth it to be a REIT, and what about the dividend, and does the dividend we have to pay, in order to maintain our REIT status, does that make sense for Uniti? And so had a lot of those questions, particularly in this environment, where everyone is focused on cash flow and liquidity and the macro environment. And so a couple of quarters ago, we thought it would make sense for investors, given those questions, to really lay out our viewpoint and the case for maintaining our REIT status.
We think, we think it's pretty clear, we think it's very clear right now that the REIT status has real value for Uniti and for our shareholders. And, you know, we're not, we're not married to any particular tax structure for the long term. I mean, it's something we are gonna continue to evaluate and make sure it makes the most sense, but we feel strongly that the REIT structure makes the most sense for our investors. Now, the large, large piece of that is because of the tax advantages we get as a REIT. A significant part of our, portion of our revenue is triple-net cash flow from our master leases with Windstream and a few others.
And it's highly, high-margin revenue, you know, highly, profitable, that those kinds of cash flows, and so shielding those from, from taxes over the long term, we think creates significant value. You know, there's certain pieces of it, like, the new rules around deduction for interest expense. You know, for a C Corp, that's limited to 30% of, EBITDA. So, you know, there's a cap on that in a higher interest rate environment. As a REIT, we're actually able to deduct all of our interest expense, and so that creates a situation for us, along with some other pieces to the puzzle of that analysis.
That creates a situation where, if we were to switch to a C Corp, our projections for our taxable income over the next several years, you know, we'd be shifting a lot of that dividend just to-
The government
The federal government, a nd so when it's a choice between paying the federal government and paying shareholders, we think shareholders like to like for us to pay them. So there's also other advantages that we think comes from being a REIT in terms that are strategic, a little bit harder to quantify. But you know, in terms of strategic transactions, some of the tax advantages that we can get in terms of our ability to transfer assets to potential buyers of assets with a step-up is enhanced as a REIT, and so we find significant value there. So once we kinda we laid out that, I think that resonated well with shareholders.
But then the next question is, okay, well, you've also told us that you expect that the current dividend level to be over distributing, distributing above the REIT minimum by about $100 million-$150 million between now and the end of 2025. Is that the right thing to do for the business? To date, our board has elected to continue to maintain the dividend at its current level. But it's something we're continuing to evaluate, given, you know, our other capital allocation priorities. And I think, you know, that could change. It's flexibility that we have as a business to do that. But to date, the board has elected to continue to maintain the current REIT dividend, and there's some trade-offs there between...
You know, we are about two years away from being free cash flow positive. So there's a really short window for us in terms of the period where we've got to fund the dividend, you know, outside of free cash flow. And that path to free cash flow, we can talk about that a little bit, but that path to free cash flow is mostly baked in the cake because it's mechanically a part of the Windstream settlement and how those settlement payments roll off, and how the GC and GCI investment commitments step down over time, and GCI revenue steps up over time. And so a lot of that is just mechanical. It's already baked in the cake. It's not dependent on us, you know, raising our level of performance or...
I mean, we've got to continue to execute our core business for sure, but a lot of that is just already baked into the cake. So there's a limited period of time here between now and have, and being to free cash flow positive, including the dividend at its current level. And so, you know, the board is weighing the trade-offs between lowering that down and bringing some of that, you know, that $100 million-$150 million of excess into liquidity and into the business, you know, versus the stability of that dividend and, you know, the signaling of that dividend of lowering that dividend in terms of our confidence in the business going forward. So we're weighing all those things.
We continue to weigh all those things, but to date, we've been committed to maintaining the dividend at its current level.
So if we kind of take that out and say, on an annualized basis, if you did bring down the dividend, how much could it come down to the minimum distribution?
So, I mean, you can shift it around a little bit from year to year, but, you know, you'd call it $50 million, you know, a year that on average between now and, you know, so 2023, 2024, 2025-
Mm-hmm.
Somewhere in that neighborhood, that it could come down, is our projection.
And so when you think about the idea that if you did lower it, and then if the yield, you know, reflected a conviction that you had done what had to be done, but there was no wiggle room to do more, is the... Do you believe that maybe the yield would then kind of revert back to more of a normal 6%-7%? And, you know, so it would actually be kind of net neutral to the stock, but then it would be positive from a liquidity standpoint. What's the, what's the bull case scenario or the best, the most compelling reason not to lower the dividend?
Yeah, well, I think, I mean, if you look at, you know, statistically, dividend cuts are destructive of equity value. I mean, there's a negative reaction, you know, pretty much across the board-
I'm familiar.
Yeah, with dividend cuts. So I think, you know, I know it's a debate, something we talk to investors a lot, and there are differing opinions among our investors. I mean, I don't think we are necessarily a yield-driven stock. You know, if you look at our investor base, there's not a ton of income-type investors, traditional REIT-type investors that have been invested in Uniti, historically. I think you can debate whether or not the market is expecting a dividend cut. We have definitely investors that have different opinions on that, for sure.
Mm-hmm.
So, I can't tell you I know for sure what the dividend, what the yield would settle on, but we do think there would be a negative reaction in the market likely to a dividend cut, for sure.
Well, so then, but if we get then to the point in time where you're free cash flow positive and all these other things in the post-2025 time, you would have to just simply raise the dividend again, correct?
Yeah. So, and here's another piece of it, Dave, is that I... You don't see REITs generally, and it's not something that we think would be the best idea to really peg our dividend to something like REIT taxable income, even though the-
Mm
The minimum distribution requirement is absolutely pegged to-
Taxable income
Taxable income. You don't see really REITs pegging their dividend policy to taxable income. Taxable income can move around a lot.
Right.
It's, you know, things like bonus depreciation elections and moving dividends from one year to-
Usually-
You know, to the next
Have a full per share.
It can bounce, it can bounce around and yo-yo around a lot. So, you know, I think we want to be, we want to be careful about, you know, pegging our dividend to something that's going to move around a bit. But if you, if you did reduce it down for a period of time, we would. Our projections over time would be that the taxable income would begin to grow as those, as settlements roll off, as, you know, we continue to grow the business. You know, interest rates also have an effect on, on taxable income for sure. So depending on where interest rates went, that could have an effect on that.
But I would expect that over time, taxable income is going to come back up and that the dividend would have to come back up with it. Yeah.
Yeah.
Yeah.
Yeah, go ahead.
Oh.
Sorry.
It's okay, we're good. So just hypothetically-
Yeah
If you were to cut the dividend, what would you spend that money on?
Well, you would have... You know, you would want a compelling case for what you spent that money on, right? So, you know, either deleveraging or investing in the business, I think those are things that are positive reasons potentially for cutting the dividend. You know, we're free cash flow.
As we've talked about, we're in a free cash flow negative position for the next couple of years, so cutting the dividend would help with liquidity and meeting all our capital allocation obligations, for sure, and would likely not go to deleveraging in any meaningful way in the interim, just given, you know, it's not—it wouldn't be a large size if you're talking about $50 million a year. It wouldn't make a large dent in that. So, I mean, I think if we cut the dividend, we would be using it, you know, to make sure we can maintain the current level of investment in the business and satisfy our obligations with investing in the GCI program and that sort of usage.
Okay.
Yeah.
But you're not constrained right now on just regular investment in the business. I mean, I guess I was wondering, would you rather spend it on delevering, potentially, you know, taking debt out below par, that would be accretive? Or, you know, is there sort of like something on the M&A front that would be a better return on capital than-
I think-
Investors, rather-
Yeah
Than just paying out the dividend that obviously the market doesn't seem to be giving you credit for?
Yeah, I think those are—those could be good uses of funds from that, but we'd have to go, you know, within our needs for our current capital allocation and those priorities as well, so yeah.
I mean, just kind of like, maybe you could, you kind of touched a little bit on this, the cadence of getting to free cash flow positive-
Mm-hmm. Yep
From where we are today, you've targeted by the end of 2025, right? And so there's some moving parts. There's the settlement payments at $100 million for the Windstream bankruptcy settlement on an annual basis. I think that those end in 2025.
2025. Yeah, mid-2025, yeah.
So that piece is $100 million that drops out. Then there's the GCI program-
Mm-hmm
And that's topping out, I think, at 200 and-
This year, we're expecting it to be about $250 million, and that'll that really tops it out. The annual levels step down over time. Next year is $225 million is the cap, and then it steps to the year after that. It steps to $175 million, and then eventually down to $125 million. Windstream has the ability to roll over unused portions from previous years, but if they use the full $250 million this year, there's virtually nothing left to roll over.
Right.
It would kind of step down to those annual caps. Yeah.
So we'll get by the fourth quarter of 2024, we're run-rating at about a $100 million benefit from reduced settlements, probably run-rating at a $75 million improvement from lower GCI investments, with an eye towards that stepping down yet again.
Yep, yep.
So that's 175, and what then, then there's two other pieces, right? There's the organic CapEx-
Mm-hmm
Which has been, you know, a lot of development for, I guess, anchor builds for customers, which, you know, theoretically will step down through time as those businesses ramp up.
Yep.
Can you just remind us the amount of CapEx step down that you need from the organic business and the amount of organic growth from the business to fill the hole that gets us to fourth quarter free cash flow positive?
Yeah, it's and there's one other piece from the Windstream that you didn't mention.
The return
Which is the rent from GCI payments. So as we make more investments, there's an 8% yield on that, so as we make more of those investments, there's a one-year delay between the investment when the investment is made and when the cash from payments from Windstream start. So those ramp up, so that shrinks the gap a bit more. Our expectations and our projections in terms of that path of free cash flow is really kind of continuing the operational trajectory for the rest of the business, just kind of at where it is today.
You're talking about mid-single-digit growth for the Uniti Fiber business, a capital intensity coming down, but not because we're lowering the nominal level of CapEx at Uniti Fiber, but because we're continuing to grow that business. So we expect CapEx at Uniti Fiber to stay about where it is today. So in that $110-$120 million on a net basis CapEx. So continuing to invest in the Uniti Fiber network at the same level we are today, growing the top line, that capital intensity comes down. You know, we were at 50%+ capital intensity at Uniti Fiber a couple of years ago.
Now, it's down to about in the 40% range, and we would expect that to kind of continue to come down towards 35%, maybe even a little below that, over the next few years. But most of that is from growing the top line, not from reducing the nominal level of CapEx.
When you say that the steady-state level of growth for the fiber business is 3%, have you been realizing 3% year-over-year revenue growth in the fiber business recently?
So in on our recurring revenues, we have. So recurring revenues have been growing in that mid-single digits level year-over-year. Where we've had some variability really has been in our one-time revenues. So this year... So, and one-time revenues can be more lumpy. So from last year to this year, we went from about $25 million in ETL payments from the Sprint consolidation as they're decommissioning towers, down to $15 million of ETL payments from, you know, from that consolidation, so-
ETL stands for Early Termination-
Termination Liability.
Ah, liability.
Liability, yep, yeah. Some people say ET- ETF, Early Termination Fee.
Yeah.
But ETL is just another way to say it. So, and then one-time equipment sales and one-time installation, you know, some of that has moved around a little bit. We've also embedded in that monthly recurring growth has been, you know, some headwinds in the wireless business in terms of the Sprint consolidation, again, and some reterm activity with wireless carriers. Although, we've announced a couple of major reterms of our wireless backhaul portfolios with two major providers, about two-thirds of our tower base that we've now retermed at between the two deals at about the same monthly recurring level out to 2030.
So a lot of the wireless reterm activity is now behind us because we've done some master reterms to push those, you know, those deals way out into the future. But there have been some headwinds in terms of the Sprint consolidation and some of those reterms that have provided some headwinds, but even with that, we've been growing the recurring base of revenues year-over-year in that mid-single digits space. So we want to continue to do that, continue to deliver that growth, and we can, we can do that with the same level of CapEx that we have that we're putting into that business today.
So we, you know, we kind of hear from different fiber services providers.
Yeah.
Everybody's kind of got their special sauce.
Yep.
You know, the Cogents of the world talk about the slower-than-expected return to work.
Mm-hmm.
And so they've been kind of eking out, you know, between 0%-1% growth in a post-pandemic world versus what they used to be, like, growing at 10%.
Yep.
You know, the Lumen of the world, you know, are kind of struggling to kind of get to growth along any vector.
Yep.
But, you know, their argument is, you know, they need to retool the sales force. And frankly, the decision-making processes from their target customer base haven't really re-accelerated-
Yep
As a function of every-
Yep
Maybe related to Dave's comments about return to work, just we don't know what we're engineering to optimize for.
Yep.
So, you know, hearing a fiber services company like yourself target 3% growth, you know, in excluding the termination fees and the whatnot, how does Uniti feel comfortable making that as a base case expectation?
Yeah. Well, I think we're delivering that today, and we continue to see strong demand from our customers. So you take, for instance, our enterprise business. We're growing those revenues double-digit year-over-year, this year over last year and last year over the previous year. Wireless bookings are down, and we projected wireless bookings going into this year to be down significantly from 2022. We had about a 50% expectation for a decrease of about 50% in those wireless bookings. But we've been filling that gap with other wholesale demand on our national network and our metro networks.
I think one of the things from our perspective that allows us to do that is that—like, so take our enterprise business, for instance. It's a very targeted set of products and services, very you know, mission-critical fiber infrastructure products, dark fiber, high-capacity transport, DIA, dedicated internet access. And we're very targeted in the markets that we're providing those services and very targeted to the—even the customers that we're targeting for that. We're targeting customers that our fiber passes, where we've got the ability to bring our own fiber into those into those businesses. And we think that gives us a competitive advantage in terms of our ability to serve those customers' needs.
Our penetration rate of the enterprise customers that our fiber passes today is low to mid-single-digit penetration rates of the customers that we pass. So there's a lot of headroom for additional growth there, and we're finding a lot of success in targeting those businesses along our fiber. As we build fiber to new enterprises, we're passing additional enterprises and expanding the addressable market that we can serve there. So that's a formula that's been working well for us. We've increased the size of that enterprise sales force from 25 to 30 a couple of years ago, to 40-45 reps today. So, you know, we think we've got a lot of headroom to continue to deliver that kind of growth and deliver those kind of bookings.
Our bookings in that space have kept pace, even this year, with decision cycles maybe getting longer, a little bit longer with decisions. You know, with customers being a little bit more cautious, we've been able to continue to book enterprise revenue at about the same level that we booked it last year. And so, and one of the things that we're seeing, even with... and we are seeing some longer decision cycles, especially in wholesale, the wholesale markets. But, what we're seeing is our funnel level, our demand level has never been stronger in terms of the number of the volume of deals that we've got coming through, the number of quotes that we're putting out.
And so, we're seeing real demand there, so we're confident that demand is going to continue to materialize. Even if it materializes a little slower, we're confident it's going to continue to materialize.
Can you go back just real quick?
Yep.
When you said that you're, you know, obviously, the majority of your business is wholesale.
Mm-hmm.
That kind of, I think, is an anchor tenant for some of the outlook for growth. Maybe not so dependent on, on, you know, that, the network planning, but you just mentioned wholesale being a little slower even. If the wireless guys are kind of retreating a little bit as an incremental driver of demand-
Mm-hmm
Who's backfilling that demand that makes you comfortable that-
Yeah. So we're getting demand from other wholesale carriers, from the hyperscalers, that's coming in to backfill a lot of that demand that the wireless players are maybe leaving a void there.
Okay. And so then, you know, the way you guys have described the fiber business in the past, it's-
Mm-hmm
You know, I think it's something like an anchor tenant build is a six-seven-
Yep
-% type of yield.
Yep.
And then once you've kind of got the asset in the ground, then you can kind of co-locate on it.
Yep
Bring incremental business.
Yep.
Those returns can be mid-teens, you know, or even better. So I guess my understanding, you kind of mentioned that you're going to continue at the current cadence of investment, which presumably means that it's kind of a continued cadence of anchor builds and revenue growth is going to be a combination of what comes from those 6%-7% yields and then those higher yields. And as that mix increasingly shifts towards the higher yielding co-location revenues, margins should be creeping up. Is that something directionally we can expect in kind of the 2024, 2025 and beyond horizon? Or is there a reason, because we need more salespeople, we need these other things going on, we're gonna have to reinvest some of that incremental return back in the business?
Yeah, no, I think from an investment level, I think we—you know, what we're seeing from—in terms of lease up is really superior returns in terms of what we're getting from our markets. So 50%+ yields on average is what we're getting in the lease up in our market. So that's really, really stellar returns, and we're gonna, you know, we want to continue to do that. And like I said before, we've got the headroom to continue to do that in our markets, given our penetration rates there. So we're gonna continue to make those investments.
The shift has largely been made in terms of our business, in terms of shifting from those anchor builds that we were doing two or three, four or five years ago, to more of the lease up now. So I think you're gonna continue to see the same sort of mix that we're doing today, kinda as we go into the next couple of years. But as we stack that revenue on, it is accretive from a margin perspective. So, you know, our margins are up, you know, have been, from an EBITDA perspective, kind of the high 30s to 40, 40% margin we've increased to in recent quarters.
I would expect that to continue to creep up a bit as we continue to add that more, more accretive lease-up type revenue that's really high margin on to the network.
So, maybe shift gears a little bit-
I'm talking about Uniti Fiber-
Yeah
In this case, right? Not on a consolidated basis, margins are much higher.
Right. That's why I was just gonna shift gears-
Yeah
to the largest part of your business.
Right. Right.
So, the sale-leaseback part of the business, obviously dominated by the Windstream lease. How is the relationship with Windstream these days?
No, we're on an operating level operating very, very closely with Windstream, and that's going, that's going really well. We have to coordinate in on a, on a number of things on, you know, really almost a daily basis, right? So those things are GCI, we're having to work with each other. You know, they, they... We underwrite those deals, they present the business cases in terms of the markets that they want to invest in, which we approve, and then as those expenses come in, we're working closely with them to, to work through all those expenses and determine what's eligible for, for, reimbursement under the GCI program and making those reimbursements. So that requires a lot of coordination.
And then, you know, we now have the ability, and a core piece of our business strategy going forward is leasing fibers, and even lighting fibers and providing wavelength services on the reversion fibers that we got back from Windstream and as a part of the settlement in 2020. So we now have the ability to-
That's a piece of that 3% growth that we were talking about.
To lease, the 2.2 million strands that reverted back to us in 2020, and we built a business group about... And that's where some of that demand that-
Mm-hmm
I was talking about to fill the wireless void is coming from-
Mm
As we ramp up that business. But those fibers are—they're still a triple-net lease, right? And Windstream is still maintaining those fibers. And so, you know, we have to coordinate together as we look to serve our non-Windstream customers on those fibers, to make sure that, you know, they're being maintained and we can, you know, fix any problems that arise on, you know, on the fiber portion of the network, expediently. So that requires coordination on a regular basis with Windstream. And all that's going, I would say, going well. For sure, there's been public dialogue, that, you know, hopefully has quieted down a little bit, maybe, maybe not.
But there's been public dialogue and there's, you know, it seems like that, that our two companies are a long way apart on, on some larger, more strategic things. And there are some definitely some differences of opinion there. But I think overall, the relationship works, works well for, for the day-to-day operations aspects of, of what we've got to do to both be successful in running our businesses.
So, these days, I only ever-
Mm-hmm
Get to see Tony and crew once a year down in Boca at ONUG Ohio conference.
Yep.
I don't know really the inner workings. I know you guys share a lot of their financials.
Yep.
With respect to where your GCI dollars,
Mm-hmm
Are going, is it, is it into backhaul fiber? Is it into fiber to the home? Like, what are the assets that you're getting for your dollars right now?
Yep. So in large part, GCI is targeted at overbuilding the Kinetic copper network with fiber. And we think that's critical for the value of that network going forward to Windstream and, you know, then conversely, to us as well, as the owner of those assets, and leasing those to the operator of those assets. So we think that investment in the fiber to the home business and overbuilding the copper network with fiber is the right strategy and a critical strategy for that business. So those dollars are largely going into that. GCI is not available for extension into new markets. It's not available for maintenance. It's available for really the improvement of the existing network, which is, like I said, largely copper overbuild.
Mm-hmm. So I've got a... This is a complex question, I guess.... but it's something, for instance, we've been talking about a lot with the Canadians in particular. TELUS, for instance, who's overbuilt 80% of their copper network with fiber.
Mm-hmm.
AT&T has talked about, you know, their very strong fiber initiative and the implications it has for copper, is that, you know, that we're decommissioning copper. And is there any of the copper that Windstream has that's part of the Uniti portfolio, or is it just fiber?
So Windstream, I mean, the network that Uniti owns, that we lease to Windstream is both copper and fiber, right? So as copper gets overbuilt with fiber, then that copper, you know, could be decommissioned, could, you know, continue to stay in use. It's only about, well, about 40%-50% of the copper network will be overbuilt with fiber per the GCI program.
Mm-hmm.
you know, the run rate that we're going and the commitment that we've made to do that.
Mm-hmm.
So that would get us to close to 50% of that network being overbuilt. So there'll still be a substantial amount of copper in that network. And you don't need a 100% fiber network to deliver higher bandwidth and better speeds. You've got to get fiber to the key nodes. You've got to get it closer to neighborhoods.
Mm-hmm.
But don't necessarily have to have a fiber drop at every home.
Mm-hmm
You know, to drive higher bandwidth services to customers. But there'll still be a fair amount of copper in that network, even after the GCI investment that remains.
Obviously, Windstream is spending its own capital in addition to your capital. But to the extent that the combination of the dollars you're giving them, especially the dollars you're giving them, to the extent that that's being used to overbuild copper, Windstream's paying you two rents, right? They're paying you within the $650, they're paying you rent on the copper that was part of the original lease deal, and then when you put fiber on top of that copper-
Mm-hmm
You charge them another 8%, so they're paying you rent twice. How do you see that working itself out when we get to the lease conversation at the end of the day?
Yeah. So that's not the way, that's not the way you would value and look at that network from an appraisal perspective, which is how, you know, more than likely we're going to come to valuing that network.
Mm-hmm.
The appraisal process looks at the value and sets the value of the network by the, you know, the... You know, they look at a number of things, including the, you know, the income approach, a replacement value approach. And so what you're looking at and what you're quantifying is the value of that network to Windstream in terms of the income that it can produce and that, and, you know, Windstream, it may have copper and it may have fiber, but it's not charging homes for a copper and fiber, right?
Correct.
They're, you know, those things are driving towards, you know, a singular income. And the replacement value, as we invest more and more fiber into that network, the replacement value of that network goes up as well. So it's I don't think you can look at it that way in terms of, you know, they're leasing a copper line, and now there's a fiber line on top of the copper line, so we're charging them twice. We're charging them for the value of that network and running and operating their business.
Mm-hmm. Yeah. Oh, I don't want to say no. Okay.
Oh, it's.
Go ahead
It's your favorite topic, Dave, but it's on the lead sheath cable.
Yep.
So under, like, the older legacy assets that are part of the assets under the lease, under the terms of this triple net lease, if there was a requirement or just voluntarily you wanted to replace that lead sheathing with fiber assets, is that Uniti's responsibility, or is that Windstream's responsibility? And then, to the degree that they're, seems like all the carriers are saying that they're working with the EPA.
Mm-hmm.
Are you guys having those conversations, or is Windstream having those conversations?
Yeah. So, under the triple net provisions of the lease, an environmental remediation is a responsibility of Windstream as the tenant on the network. So technically, by the letter of the lease, it's their responsibility for remediation. But obviously, you know, any expense that Windstream is taking on is important for us as well because it affects the health of their business. So it's definitely something where, you know, we would look to work with them, you know, on that in terms of assessing it, in terms of, you know, thinking about how we would remediate anything that would need to be remediated. But technically, under the triple net lease, remediation of environmental issues would fall to them under the lease. Yeah.
Okay. So maybe with the wrapping up, we've got a few minutes.
Mm-hmm.
I think, you know, Kenny, you know, as your standard bearer-
Yep
As your CEO, you know, has made an argument that when you kind of look at Uniti's stock-
Mm-hmm
It just doesn't, the stock price doesn't make sense.
Right.
Because-
Right
You know, to my point earlier about the dividend, you have to pay the dividend. You can't get rid of the dividend. You could lower the dividend, but it would still be there.
Right.
It would have to go back up, even if you did lower it.
Yep.
And so, you know, he's expressed a view that maybe if the market isn't gonna organically reward Uniti for the value you guys believe you've created, inorganic ways would be the way to forward.
Yep.
Now, obviously, interest rates have moved dramatically, and, you know, the world looks different from a financial standpoint. Is inorganic something that's still on the table in the current rate environment, or do we have to wait for a rate environment to change before, you know, people's weighted average costs of capital become-- land in a place that makes doing these kinds of deals attractive?
Yeah. I think deals can still get done now. I think there's a bit more stability in terms of, I mean, interest rates are still high. That still figures into the math of how evaluation works and, and, you know, prices people are willing to pay and the cash flow that assets can generate. So obviously, that figures into prices and deal multiples and that sort of thing, for sure. But I think deals can get done. But it's definitely harder to do deals in this market. So I certainly don't wanna suggest that it's not. It's more difficult. It's more difficult to get financing, and get deals financed, but it's not impossible.
So I think, I think deals can get done, I think, there's still strong interest in quality assets. And, you know, we've mentioned recently that, you know, we're continuing to have conversations and continuing to think about M&A. And we think, you know, there are opportunities there, but it is harder, for sure.
You know, I think the last point worth mentioning is so, you know, I think late last year, early this year, you guys have basically, you know, cleaned up the balance sheet from a maturity standpoint.
Yep.
You know, yes, you're operating at a free cash flow deficit, but you can manage that.
Yep.
You've got really until probably 2027 before, you know, something needs to be addressed.
Right.
And so you've created a runway here-
Yep
Where there's a lot of time to pick your spots, as you know, along that strategic path, if that's where you choose to go.
Yep.
Is that fair?
Yeah. No, I think that's, that's very fair. Yeah.
Okay. Well, then, I just wrapped it up for us. Thank you very much, guys. Thanks, Paul, for being here.
Yeah.
Bill, thank you, everybody, for coming.
Yeah.
Appreciate it.
Thank you.
Thank you.
Thank you, Dave. Yeah, thanks, everybody.