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Edited Transcript of UNIT earnings conference call or presentation 7-Nov-19 9:15pm GMT

Q3 2019 Uniti Group Inc Earnings Call

Little Rock Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Uniti Group Inc earnings conference call or presentation Thursday, November 7, 2019 at 9:15:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Kenneth A. Gunderman

Uniti Group Inc. - President, CEO & Director

* Mark A. Wallace

Uniti Group Inc. - Executive VP, CFO & Treasurer

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Conference Call Participants

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* Brett Joseph Feldman

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Frank Garrett Louthan

Raymond James & Associates, Inc., Research Division - MD of Equity Research

* Joshua Matthew Frantz

BofA Merrill Lynch, Research Division - Associate

* Reed Kern

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Welcome to Uniti Group's Third Quarter 2019 Conference Call. My name is Kathy, and I will be your conference operator for today. A webcast of this call will be available on the company's website at www.uniti.com beginning November 7, 2019, and will remain available for 14 days. (Operator Instructions) 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 the 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 website, 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 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's Group Chief Executive Officer, Kenny Gunderman. Please go ahead, Mr. Gunderman.

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [2]

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Thank you. Good afternoon, everyone, and thank you for joining. Before I review Uniti's operational results for the third quarter, I'd like to reiterate some of Uniti's priorities during this volatile period relating to Windstream bankruptcy. We've been scrutinizing our portfolio of assets and operations with an eye towards selling or deemphasizing businesses that we believe are an impediment to achieving a full communications infrastructure valuation. We believe the true value of our core operations, strategy and assets have been underappreciated and our efforts at optimization will help highlight this value as we move into 2020.

Slide 4 of our investor presentation highlights these priorities. First, our main initiative is to drive high margin, low churn, recurring revenue in all of our business units. We've sold numerous assets at attractive valuations, including the Latin American tower business and our U.S. Ground Lease business.

Today, we're also highlighting that we are deemphasizing some existing operations that do not fit our core strategy, such as hardware sales, non-strategic construction and our residential CLEC business called Talk America, all of which are low margin, volatile and largely nonrecurring businesses.

Further, lit ethernet services continue to transition to longer-term dark fiber and small cell contracts, leading to much more predictable revenue. Second, we continue to secure attractive long-term anchor builds or orders with high-quality customers such as national wireless providers, data and content providers and multinational carriers that facilitate building mission-critical communications infrastructure.

Many of our existing major dark fiber and small cell builds are nearing completions, and we have begun to selectively add new anchor orders, which I will discuss later. Importantly, we're continuing to accelerate the lease-up of that infrastructure with enterprise, wholesale, E-Rate and government customers at attractive cash flow yields and substantially less CapEx.

The similarities between anchor and lease-up economics among our fiber, towers and leasing businesses are very strong, and we will continue to highlight those as we move forward. Third, our highly proprietary M&A efforts continue. Despite lofty private market valuations, we continue to source and execute on attractive bolt-on acquisitions and sale-leaseback transactions that add valuable infrastructure and customers to our portfolio.

We will continue to develop this funnel, execute on it selectively and prepare to accelerate our activities when this period of volatility recedes. Lastly, we continue to focus on favorable resolution to the Windstream bankruptcy, which we believe will result in meaningful improvement in the credit quality of our overall customer base and a mutually beneficial resolution of our lease dispute.

Slide 5 demonstrates the effect of our optimization efforts thus far. Virtually, 100% of Uniti's revenue will be recurring going forward with almost 90% of that revenue having monthly churn of less than 0.5%. We believe these initiatives will better -- will achieve better revenue diversification and higher margins for our businesses as well as improve the overall quality of our customer base and cash flow over time.

I'll now turn to an update on our operational results. Uniti Fiber sales and bookings in the third quarter were approximately $0.5 million of MRR, approximately 75% of our bookings in the third quarter came from local enterprises, governments, schools and wholesale, while the remaining 25% came from the 4 national wireless carriers, mostly for dark fiber backhaul small cells. We continue to expect non-wireless bookings to comprise the majority of our normal course bookings going forward as we continue to ramp the lease-up of our networks, including those dark fiber small cell networks that are nearing completion by the end of this year and into early 2020. We also expect to continue to have large anchor bookings periodically that include wireless backhaul, small cells or Uniti Leasing awards. In fact, our fee activity remains very strong for both small cells and backhaul from our wireless carriers as they continue to roll out 5G networks.

For example, in October and not reflected in our third quarter bookings, we signed a contract with a major wireless carrier to deploy 800 combined macro backhaul and small cell sites across our Southeast footprint, adding $500,000 of monthly recurring revenue once all sites are delivered over the next 3 years.

This is a tremendous win for Uniti from a national wireless customer for which we currently provide a full suite of 5G infrastructure services, including backhaul, small cells and towers. In addition to the $6 million of new annual revenue from this contract, the fiber network is highly synergistic with our existing network and will provide substantial lease-up potential for many years to come.

Uniti Fiber's installed $0.8 million of MRR during the third quarter in line with the prior quarter. Year-to-date, we've installed $2.3 million of MRR, up 18% from the same period in 2018. During the third quarter, 46% of gross installs related to nonwireless opportunities, 36% related to wireless with 29% of total gross installs coming from dark fiber backhaul and small cells, and 18% related to bandwidth upgrades.

Excluding revenue that churned as a result of selling our Midwest operations to Bluebird and Macquarie, total churn for the quarter was 0.6 million, resulting in a monthly churn rate of 1% for Uniti Fiber. Disconnect churn was 0.8% for the quarter, primarily driven by lit backhaul disconnects. As we've mentioned previously, we expect this churn to be slightly higher in the third quarter when compared to the second quarter due to increased churn from lit backhaul converting to dark fiber and E-Rate churn related to the renewals of several contracts. Some of the churn related to lit backhaul sites converting to dark fiber that was expected to occur in the third quarter is now expected to be realized in the fourth quarter.

However, we do expect churn in the fourth quarter to be consistent with this quarter. As a reminder, although the dark fiber sites that are replacing the lit backhaul sites are installed at a lower MRR, the contract length of those dark fiber sites is approximately 20 years versus the average remaining term of approximately 4 years for the lit backhaul sites, resulting in a net increase in total remaining contract value and substantially more predictable cash flow.

Turning to towers. In the U.S., we now expect to complete the construction of approximately 240 towers in 2019. The lease-up of our tower portfolio with additional tenets continues to be a priority and we expect our lease-up activity on U.S. towers to ramp as we enter 2020. As I mentioned last quarter, we now have MLAs in place with 3 of the 4 major wireless carriers, which reinforces our belief that wireless carriers are looking to diversify their vendor relationships in the tower industry and it further highlights the value of our multiproduct infrastructure offering, including fiber, small cells and macro towers.

At Uniti Leasing, we continue to see momentum in pursuing additional lease-up opportunities that utilize our existing fiber network. We're actively working several opportunities with a well-diversified customer base of wireless carriers, MSOs and content providers. For example, we signed a 20 year MLA with a domestic carrier in the third quarter to increase or to lease long-haul fiber along 2 diverse routes on our existing network representing total contract value of approximately $17 million.

Lastly, mediation negotiations with Windstream and its creditors are still ongoing and remain confidential. We will provide an update as soon as possible on the process -- as soon as the process allows us to discuss it publicly.

With that, I will turn the call over to Mark

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Mark A. Wallace, Uniti Group Inc. - Executive VP, CFO & Treasurer [3]

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Thanks, Kenny. Good afternoon, everyone. We reported another solid quarter as we continue to execute well at our priorities for this year. We have made good progress towards the completion of our major dark fiber and small cell projects at Uniti Fiber with most scheduled to be delivered near the end of this year and 3 scheduled to finish in early 2020.

We are increasingly turning our attention to leasing up those anchor builds with both wireless and nonwireless customers. Second, we closed on the sale/leaseback and fiber acquisition with Bluebird through an opco/propco partnership with Macquarie Infrastructure Partners during the quarter. As part of that transaction, we completed the sale of Uniti Fiber's Midwest operations, while retaining ownership of the existing fiber network.

This transaction should serve as a construct for future opco/propco transactions. It also demonstrates along with the recent sale of our Latin America tower assets and our U.S. Ground Lease business, another instances where we've been able to recycle capital at attractive valuations. And last, as Kenny mentioned, we continue to work through the Windstream bankruptcy in mediation process.

Turning to Slide 6. We reported consolidated revenues of $264 million, which is up 4% from the same quarter in 2018. We achieved consolidated adjusted EBITDA of $203 million, up 2% from the same period in the prior year. AFFO attributable to common shares was $99 million and AFFO per diluted common share was $0.47.

Net loss attributable to common shares for the quarter was $19 million or $0.10 per diluted share and included just over $15 million of transaction, integration and Windstream bankruptcy and litigation-related costs. With that overview, I'll start with a review of our third quarter -- or I'll start with a review of our third quarter for each business unit and then discuss our updated guidance.

Turning to Uniti Leasing, with the third quarter, our Leasing segment revenues were $180 million with adjusted EBITDA of $178 million. Non-Windstream revenues and adjusted EBITDA was $7.2 million and $6.3 million respectively and will represent a growing share of Uniti Leasing revenue over the next several years as we execute on the opportunities in our sales funnel. As a reminder, the Bluebird transaction includes a 20-year initial term [as] lease with an initial cash yield of 9.6% and over $20 million of annual cash rent.

Our sales funnel at Uniti Leasing continues to grow and now represents about $365 million of total contract value or approximately $17 million of annual revenues. The opportunity set at Uniti Leasing remains well diversified across international, domestic and regional carriers as well as cable and content providers. As we have emphasized before, Uniti Leasing represents a proprietary business strategy within the communication infrastructure space that allows fiber networks to be positioned for the most productive use.

In addition to attractive initial yields, these transactions can be structured with multiple growth drivers to enhance returns over the entire lease term.

During the quarter, Windstream made approximately $40 million of improvements to our network with their capital bringing the cumulative amount since our spin-off to just under $730 million of tenant capital improvements.

Moving now to our fiber business. Here in the quarter we turned over approximately 420 dark fiber and small cell sites for wireless carriers. The installs were across multiple markets, including Alabama, Florida, Georgia and Louisiana and added annualized revenues of nearly $3 million during the quarter.

Uniti Fiber reported revenues of $78 million and adjusted EBITDA of $31 million, achieving adjusted EBITDA margins of 39% for the quarter. While core revenues and margins were consistent with our expectations, non-core revenues consisting of equipment sales and construction services were lower-than-expected by approximately $9 million. As Kenny mentioned earlier, we have made a decision to deemphasize lower margin products and services that are nonrecurring and nonstrategic to our fiber business. Uniti Fiber net success-based CapEx was approximately $40 million in the third quarter. We also incurred $3 million of integration CapEx related principally to our off-net savings initiatives. Maintenance CapEx for the quarter was approximately $2 million or 2% of revenues. Uniti Towers reported revenues at $3.3 million and near breakeven adjusted EBITDA for the third quarter. Towers CapEx was approximately $21 million during the quarter. We completed the construction of 55 towers, which was 11 more than previously expected due to increased development activity with our anchored tenant. For the first 9 months of 2019, we've completed 198 towers in the U.S. bringing our completed and in service tower count at quarter end to 628 towers.

We currently have approximately 225 additional towers in various stages of development. Our tower portfolio currently spans across 32 states, while our tower business is presently a relatively small part of our overall company, nevertheless it is one where we have a first-class team, investment-grade anchored tenants and can create substantial value.

Please turn to Slide 7, and I'll now cover our current 2019 outlook. Our updated outlook for 2019 revises our prior guidance principally for the following items. First, the impact of closing the Bluebird transaction 1 month earlier than anticipated. Second, transaction cost and other income reported year-to-date and three, other business unit level revisions. Our outlook excludes future acquisitions, capital market transactions and future transaction integration and Windstream bankruptcy and litigation related cost, except those specifically mentioned herein. Our current outlook anticipates that Windstream continues to make timely payments of all rent due under our master lease. Our outlook is subject to adjustment based on events arising during Windstream's reorganization proceedings and related litigation, the timing and closing of acquisitions, any future capital market transactions, market conditions, finalization of purchase price allocations, related acquisitions and other factors.

Actual results could differ materially from these forward-looking statements, a reconciliation of our current outlook to our prior guidance is included in the presentation materials posted on our website today.

Our current full year outlook includes the following freight segment. Starting with Uniti Leasing, we now expect Uniti Leasing 2019 revenues and adjusted EBITDA to be $716 million and $710 million respectively at the midpoint. This is a $2 million increase from our prior guidance due to the incremental TCI revenue and the early closing of the Bluebird transaction. 2019 non-Windstream revenues and adjusted EBITDA are expected to be $28.7 million and $24.7 million respectively. Subsequent to the Bluebird transaction, annualized non-Windstream related revenues are expected to be $45 million.

Moving to Slide 8., we now expect Uniti Fiber to contribute $322 million of revenue, $130 million of adjusted EBITDA and achieve adjusted EBITDA margins of about 40% for the full year at the midpoint. Revenue at Uniti Fiber is $12 million lower than our prior guidance, primarily due to 2 items. First, about $10 million of the change is related to the non-core equipment sales and construction services that we are discontinuing. And second, we experienced a 3- to 5-month delay in delivering certain segments of an Air Force base contract where completion is now expected in the first half of 2020. The delay resulted from the Air Force base having to negotiate for the right to build one of the fiber segments, which in turn delayed commencement of construction.

While adjusted EBITDA is approximately $3 million lower than our prior guidance due to the flow-through margin effect of these items, adjusted EBITDA margin has improved about 50 basis points. We now expect our net success base CapEx for Uniti Fiber in 2019 to be about $150 million at the midpoint of which about 25% will be directed to dark fiber and small cell projects. Of the 7 dark fiber and 7 small cell projects currently under construction, we still expect all of these to be completed by year-end except for 3 dark fiber projects and 1 small cell project that should finish early in 2020.

In aggregate, upon completion, we expect these projects to have an initial anchor cash yield of approximately 6%. We now expect Uniti Fiber's net success based capital intensity to decrease to about 45% in 2019 and then trend towards the mid-30% range by the end of next year. We also expect integration CapEx and maintenance CapEx for 2019 of approximately $12 million and $8 million respectively.

Turning to Slide 9. For 2019, we expect tower revenues to be about $15 million and reported adjusted EBITDA near breakeven this year. We expect Uniti Towers to complete construction of about 240 towers in the U.S. this year with capital expenditures forecast range from $95 million to $105 million that will result in Uniti Towers having 670 completed towers in the U.S. at year-end.

Turning to Slide 10. For 2019, we now expect full year AFFO to range between $2.07 and $2.12 per diluted common share with a midpoint of $2.10 per diluted share.

On a consolidated basis, we expect revenues to be nearly $1.1 billion and adjusted EBITDA to be $817 million at the midpoint. We expect weighted average diluted common shares during the full year 2019 to be approximately 202 million shares. As a reminder, guidance ranges for key components of our current outlook are included in the appendix to our presentation we posted today.

As a -- on Slide 11, we have provided a tabular reconciliation of our prior guidance to our updated 2019 outlook, which summarizes some of my comments this afternoon.

Turning to our balance sheet. At quarter end, we had approximately $198 million of combined and restricted cash and cash equivalents. Our leverage ratio at the end of the third quarter stood at 6.3x based on net debt to annualized adjusted EBITDA. On November 5, our Board declared a dividend of $0.22 per share to stockholders of record on December 31, payable January 15. Following the payment of this dividend, we have distributed the maximum amount allowed under our fourth credit agreement for tax year 2019. We continue to expect our Board will reconsider our dividend policy as key developments in the Windstream's reorganization process occur and in context of a longer-term business strategy and financial profile.

And with that, I'll turn the call back to Kenny.

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [4]

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Thanks, Mark. I'd like to close by reemphasizing some of my opening comments regarding our priorities and the quality of our strategy and portfolio of assets. Slide 13 is an example of how Uniti continues to execute on its proprietary M&A pipeline. [A&S] is a very strategic bolt-on acquisition in the heart of our Uniti Fiber footprint as an attractive valuation. During this volatile period, we've intentionally focused on smaller acquisitions as we said before. However, the opportunity set remains robust, including additional bolt-on transactions as well as sale-leaseback opportunities.

Turning to Slide 14. The quality of our portfolio of over 6 million strand miles of valuable owned fiber, 1,600 small cell locations, either in service or in our backlog and 628 macro towers is highly underappreciated. We are one of the select few providers of all 3 critical components that are enabling the 5G revolution and as a result, the opportunity set for us is tremendous for sustainable growth for many years to come. Our infrastructure provides substantial, highly predictable revenue and cash flow with material lease-up potential at attractive margins. When compared to other publicly traded communications infrastructure REITs as shown on Slide 15, many of our characteristics compare favorably, and we believe that there is a substantial valuation discount implied for Uniti due largely to the Windstream bankruptcy. The initiatives that I described earlier will only drive further improvement in many of these key metrics.

With that, I'd like to open it up for Q&A. Operator, we're now ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Mr. Frank Louthan from Raymond James.

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Frank Garrett Louthan, Raymond James & Associates, Inc., Research Division - MD of Equity Research [2]

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Just wanted to get a sense for how customers are feeling currently, what are you hearing on the sales front with the -- with everything on Windstream, is that still not really an issue? And then I've got a follow-up.

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [3]

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Sure, Frank. It's Kenny. Yes, look, I think not a huge change from prior quarters. I think there's a -- we were very proactive about being communicative with customers, getting out in front of them, particularly those bigger customers of ours and explaining the situation, and I think that was very helpful. And we've continued to be clear and transparent as we possibly can be along the way. So I think that's all been helpful. The big win that I've mentioned with one of our big wireless carrier customers in October is an example of how there's still a lot of confidence out there among our big customers on our ability to execute. So that's a good indication and just the increasing level of growth in our nonwireless bookings is an indication that there's -- that we'll continue to make progress there. So with all that said, there's obviously our names in the news a lot so there -- I think there is some impact. Hard to quantify but for the most part, I think, we're continuing to power through.

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Frank Garrett Louthan, Raymond James & Associates, Inc., Research Division - MD of Equity Research [4]

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All right. Great. And walk us through the capital intensity decline. What's sort of driving that and then what areas are you going to be focused on with your capital as we look into 2020 and beyond?

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Mark A. Wallace, Uniti Group Inc. - Executive VP, CFO & Treasurer [5]

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Yes. Frank, this is Mark. So the capital intensity decline is really, as I mentioned, it's really the completion of those 14 projects that we've been tracking out for a while. All but -- as I said, all but 3 of the dark fiber, one of the small cell projects will finish by the end of this year and then the balance of those will finish in early 2020. So as we've said before, all of those projects we inherited as we acquired acquisition. So one thing that drives it down is that we'll be able to manage the numbers of those large anchor builds that we're interested in taking on any one period of time and then also after that, then our real key focus that we're turning our attention to now is leasing up both those anchor builds as well as unutilized capacity across the balance of the Uniti Fiber footprint.

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Operator [6]

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Your next question comes from the line of Mr. David Barden from Bank of America.

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Joshua Matthew Frantz, BofA Merrill Lynch, Research Division - Associate [7]

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It's Josh in for Dave. In the past, you've talked about being a part of FirstNet. Can you give us an update there? And how far along do you think that build is in general? And then how much of that do you think could possibly go to the small cell business? And then second question, are you seeing any particular carrier being more aggressive on small cells or is it kind of split across the board?

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [8]

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Josh, it's Kenny. Yes, so on FirstNet, we were very active there, and I wouldn't want to comment too specifically on it because we try not to comment on specific customers. But I'll just say, we're very active there across the board and many of our big wireless customers are customers for whom we're doing all of our infrastructure offerings, including traditional backhaul, small cells and macro towers. So I'll leave it at that. With respect to small cells, it ebbs and flows in terms of which carriers are more active at any given time, in our markets at least. But I would say across the board, we're seeing activity from particularly 3 of the 4, which has been pretty consistent for us over the past 12, 18, 24 months. So pretty steady they're at.

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Operator [9]

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Your next question comes from the line of Mr. Philip Cusick from JPMorgan.

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Reed Kern, JP Morgan Chase & Co, Research Division - Analyst [10]

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This is Reed for Phil. Two on the small front -- small cell front too, if I may. First, could you break out the amount of small cells that are on average is in the backlog? And then second, could you maybe compare and contrast the level of competition in Tier 2 and 3 markets versus the [NFL] cities, what is Uniti's market share look like there? And to what degree are carriers or other customers you're serving opt into [self perform]?

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Mark A. Wallace, Uniti Group Inc. - Executive VP, CFO & Treasurer [11]

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So I'll take the first question. This is Mark. On the small cells, there's 1,200 on air and there's 450 in the backlog.

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [12]

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Yes. So I'll take the question on competition. So the vast majority of our markets are Tier 2, 3 or 4 markets, and I would say that one of the principal reasons where we like those markets, we've targeted those markets, continue to target those markets is because the level of competition from scale, national fiber providers is limited. And so, we really do have a competitive advantage in many of those markets. And I think that competitive advantage is only going to grow over time particularly as -- and many of these markets today, you don't see a lot of small cell deployment. But as we've said, we really think the small cell opportunity is coming in those markets in a bigger way as carriers begin to saturate the bigger markets and then eventually move into the Tier 2 and 3 markets. And when that happens, we will be there with networks that are dense and have a big time-to-market advantage over any others. So real big fans of the Tier 2 and 3 markets and really like the competitive dynamics there. And look, with respect to market share, it's hard to gauge market share but I would say in the markets where we have existing network or in markets where we are -- that are in our core operating footprint. We definitely win a disproportionate share of the opportunities and in many cases, if we don't win it, it isn't because we were outbid or for some other -- for some reason like that, it's just not -- it would be more of our own choice frankly on not pursuing it. So I just leave it at that and say it's a disproportionate share of wins in our core markets.

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Operator [13]

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Your next question comes from the line of Mr. Brett Feldman from Goldman Sachs.

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Brett Joseph Feldman, Goldman Sachs Group Inc., Research Division - Equity Analyst [14]

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I just want to talk a little bit about some of the plans around the nonstrategic operation and I'm looking at Slide 5 where you were kind of showing the current outlook versus the adjusted. I just wanted to clarify, first of all, some of these nonstrategic operations like the equipment sales or the construction, is there a potential to sell any of that? Or is that just you're kind of halt operations? What's the timelines, in other words, at what point would all of these revenues be out of the run rate? And then if we can just think a little more broadly than that, how about other parts of the business? The tower business, the fiber business, I understand that there is some compelling elements to these businesses, but are you open to maybe continuing to refine the portfolio and get to the point where you really are predominantly if not only a leasing or opco/propco type of company?

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [15]

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Yes. All good questions, Brad. So first of all on the nonstrategic operations, these are all essentially businesses that we acquired through M&A. So when you're building a business largely through M&A, you don't always get things that are what you consider core and you pick up other things. So for example, Talk America as you know was the residential CLEC that we took as part of the Windstream spinoff that the other businesses, hardware and the non-core construction were (inaudible) other acquisitions that we made along the way. And these are not bad businesses but they just don't fit what we're really trying to achieve from a readable income and predictable recurring cash flow perspective.

So with that said, directly to your question, I think there is an opportunity to sell/monetize some of the assets, and we are as you -- we are actively evaluating that but I wouldn't want to set any high expectations in that regard. So we're evaluating it, but I think more likely you'll see each of these rundown most likely during the course of 2020 for sure. And by the way, on hardware, just to make sure we're clear on that one. We're not going to exit the hardware business entirely. We're just exiting the portion of it that we view as nonstrategic and in some cases, there are customers who are on our fiber network that takes multiple products or services from us, we will continue to offer hardware sales to them as part of a portfolio approach. But as a stand-alone individual products, it will be substantially [sized].

So I think I got all the questions except the last one in terms of just looking at other assets. Look, I'd say that we have built a very attractive, we think best-in-class fiber business, especially if you combine Uniti Fiber and Uniti Leasing. We think we have a fantastic small cell business. We think we have a fantastic tower business, one of the fastest-growing tower companies in the country with the best-in-class team. And they're all core to our business and they're all highly synergistic with each other, and we're seeing that those synergies grow every day. And as a REIT, we're long-term holders of assets. But having said that, we're in the business of trying to create shareholder value and in a world where public market valuations great -- I'm sorry, private market valuations greatly exceeds public market, we are open-minded to opportunities to recycle capital where it fits our strategy, and we've done that in the past with selling Latin American towers and the Ground Lease business and even the Midwest operations of the [community] fibers network there, but retaining the network. So ultimately, Brad, to your last point in terms of focusing more on leasing -- traditional leasing versus operation, that's clearly the direction that we're going in, and we'll continue to focus on that.

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Operator [16]

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No more questions in the queue. Please continue, sir.

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Kenneth A. Gunderman, Uniti Group Inc. - President, CEO & Director [17]

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

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Operator [18]

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