Uniti Group Inc.

Hello, and welcome to Unity Group's second quarter 2023 conference call. My name is Tawanda, and I will be your operator for today. A webcast of this call will be available on the company's website, www.unity.com, beginning today, and will remain available for 14 days. At this time, all participants are in listen-only mode. Participants on the call will have the opportunity to ask questions following the company's prepared comments. The company would like to remind you that today's remarks include forward-looking statements, and actual results could differ materially from those projected in these statements. The factors that could cause actual results to differ are discussed in the company's filings with the SEC. The company's remarks this morning were 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 the generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's current report on Form 8K dated today. I would now like to turn the call over to Unity Group's Chief Executive Officer, Kenny Gunderman. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining. Starting on slide three, Unity posted another quarter of solid operating performance, and as a result, we're reiterating our consolidated full year 2023 revenue adjusted EBITDA and AFFO outlook. Our consolidated core recurring revenue grew 4% during the second quarter from the prior year, while our Unity fiber core recurring revenue grew 5%. Our lease-up revenue categories continue to reap terrific results with non-wireless wholesale, enterprise, and dark fiber lease-up revenue growing at 7%, 15%, and 25% respectively during the quarter. We also signed a new 10-gig upgrade agreement with one of our major wireless carriers during the quarter. The agreement covers approximately 1,100 lit backhaul sites and extends the contract term from a blended term remaining of less than a year to now seven years. As you will recall, we signed a similar agreement with another of our major wireless carriers in the third quarter of 2022, which also covered approximately 1,100 sites and locked in 10 gig pricing for eight years. On a combined basis, these two agreements have resulted in a slight overall net price increase. Including the returns I just mentioned, the approximate average remaining term of our entire lit backhaul portfolio is an impressive approximately five years. Our scaled national network and exceptional network performance allows us to negotiate bespoke agreements with our wireless carriers, providing steady returns and minimizing churn. With our industry-leading 0.2% churn and no legacy services weighing us down, we believe our runway for mid-single-digit growth is long. As slide 4 demonstrates, this growth will be disciplined and, we believe, profitable. Our substantially underutilized fiber network acquired largely through sale leasebacks versus complicated company acquisitions is helping drive our shared infrastructure economics. Our anchor plus lease up model is working, driving cumulative cash flow yields today of 24% and more than threefold increase from the anchor yield on these projects. Turning to slide five, we continue to grow our 138,000 route mile network, and we added approximately 1,700 route miles during the quarter. Only approximately 20% of our available network is lit today, and as we've mentioned before, we own Dark Metro fiber in about 300 markets nationwide, which represents terrific capital and margin-efficient growth potential for enterprise, wireless backhaul, and small cells. We continue to believe that the wireless carriers will eventually need to densify these non-tier one markets, and Unity is well positioned for that growth in the future. Slide six shows that the majority of our revenue is wholesale in nature, which comes with longer term contracts, lower churn, and less required overhead for execution. As a result, our business and underlying performance are less susceptible to macroeconomic conditions, and we're diversified across numerous use cases for fiber and customer segments. As an example, even though wireless carriers are spending less this year than last year as a group, that decline is more than offset by buyers such as hyperscalers, internet providers, and fiber-the-home providers. Turning to slide seven, scale matters in fiber, especially with a wholesale-heavy business like ours. Having an own national network is a meaningful competitive advantage for Unity, and our ability to deploy dark fiber and wave services present Unity with a unique low risk growth opportunity with minimal competition. As an example, we recently announced that we signed a 20 year long haul dark fiber IRU agreement with a global internet provider who is an existing customer. The total contract value of this deal is $35 million and utilizes approximately 1800 route miles of existing owned fiber. We believe we had minimal competition for this deal given our unique robust network. We expect these routes will be delivered to our customer throughout the second half of 2023 and into 2024. Slide 8 illustrates our balanced approach to bookings between Anchor and LeaseUp. Consolidated bookings were up 20% in the second quarter when compared to the prior quarter, while wholesale bookings were up over 50%. The interest in our network has never been higher as our sales funnel remains very strong and underscores the growing demand for fiber. But as a reminder, wholesale bookings can appear lumpy given these deals are typically larger and fewer in quantity. For example, the 20-year dark fiber deal I mentioned earlier represented over 30% of wholesale bookings in the quarter. It is not uncommon for one wholesale deal to materially impact bookings in a single quarter from a timing perspective. Turning to slide 9, our enterprise strategy is highly disciplined and regional in nature. As you can see from the map, we're only offering enterprise services in approximately 30 metros concentrated in the southeast, which has very favorable demographics. In fact, the southeast has accounted for more than two-thirds of all job growth across the U.S. since early 2020, almost doubling its share prior to the pandemic, and is home to 10 of the 15 fastest growing American large cities. Our local brand is very strong in this region, helping to contribute industry-leading enterprise churn of around 0.7%. Although enterprise sales represent about 5% of our total revenue today and will likely always represent a minority percentage, it remains a critical element of our lease-up strategy. With no significant debt maturities until 2027 and given our organic growth runway and continued steady performance, Unity is positioned to patiently execute during these uncertain economic and credit market conditions, while providing a virtually fully funded growth plan aside from future debt refinancings. With that, I'll now turn the call over to Paul.

Thank you, Kenny. Good morning, everyone. I'd like to begin by reviewing our second quarter performance, followed by an overview of our current 2023 outlook. We had another solid quarter at both Unity Fiber and Unity Leasing, highlighted by 4% consolidated recurring revenue growth during the quarter when compared to the prior year. As I'll cover in more detail in just a bit, our 2023 outlook for consolidated revenue, adjusted EBITDA, and AFFO remains unchanged as we expect to end the year within the previous guidance ranges provided. Finally, I'll conclude with additional commentary on our current balance sheet and capital structure. Please turn to slide 10, and I'll start with comments on our second quarter. We reported consolidated revenues of $284 million, consolidated adjusted EBITDA of $228 million, AFFO attributed to common shareholders of $91 million, and AFFO per diluted common share of 34 cents. Net income attributed with common shareholders for the quarter was approximately $25 million, or 11 cents per diluted share. At Unity Leasing, We reported segment revenues of $212 million and adjusted EBITDA of $207 million, representing growth of 3% for each in the second quarter of 2023 compared to the prior year period. Accordingly, Unity Leasing achieved an adjusted EBITDA margin of 97% for the quarter. Turning to slide 11, our Growth Capital Investment Program continues to provide positive results for Unity. Over the past eight and a half years, Our tenant has invested over $1 billion of tenant capital improvements in our network. Unity continues to invest its own capital in long-term value-accretive fiber, largely focused on highly valuable last-mile fiber. Collectively, these investments have resulted in 24,000 route miles of newly constructed fiber and 24% of the legacy copper network being overbuilt with fiber. Based on the investments made to date and our expectation that Windstream will utilize most, if not all, of the GCI program, We expect that nearly half of the legacy copper network will be overbuilt with fiber by 2030. During the second quarter, Unity Leasing deployed approximately $96 million towards growth capital investment initiatives, with the majority of the investments relating to the Windstream GCI program. These GCI investments added 1,600 route miles of fiber to Unity's own network across several different markets. As of June 30th, Unity has invested approximately $700 million of capital to date under the GCI program with Windstream, adding around 18,200 route miles and over 1 million strand miles of fiber to our network. These investments will be added to the master leases at an 8% initial yield at the one-year anniversary of Unity making such investment. They are subject to a 0.5% annual escalator and result in nearly 100% margin. The investments we have made to date will ultimately generate approximately $57 million of annualized cash rent and increase the overall value of our network. At Unity Fiber, we turned over 363 lit backhaul, dark fiber, and small cell sites for our wireless carriers across our southeast footprint during the second quarter. These installs add annualized revenues of approximately $3.4 million, an over 50% increase from the prior quarter. We currently have around 890 lit backhaul, dark fiber, and small cell sites remaining in our backlog that we expect to deploy over the next few years. This wireless backlog represents an incremental $8 million of annualized revenues. At Unity Fiber, we reported revenues of $71 million and adjusted EBITDA of $25 million during the second quarter, with core recurring revenue up approximately 5% from the prior year period. Both revenue and adjusted EBITDA during the quarter were impacted by lower than expected non-recurring equipment sales and installs and ETL fees. As we have mentioned before, the exact timing of our non-recurring revenue can be difficult to predict and thus can fluctuate from quarter to quarter. Unity Fiber net success base CapEx was $31 million in the second quarter. We also incurred $2 million of maintenance CapEx during the quarter. Please turn to slide 12 and I'll now cover our updated 2023 guidance. We're revising our guidance primarily for the impact of transaction-related and other costs incurred to date. Our outlook excludes future acquisitions, capital market transactions, and future transaction-related and other costs not specifically mentioned herein. Actual results could differ materially from these forward-looking statements. Our current full-year outlook for 2023 includes the following for each segment. Beginning with Unity Leasing, We continue to expect revenues and adjusted EBITDA to be $850 million and $825 million respectively at the midpoint, representing adjusted EBITDA margins of approximately 97%. Revenue and adjusted EBITDA each include $32 million of cash rent associated with the GCI investments and $23 million relating to the straight line rent associated with the Windstream Master Leases and GCI investments. We now expect to deploy $288 million of success-based CapEx at the midpoint of our guidance, of which $250 million relates to estimated Windstream GCI investments. The $18 million increase from our prior guidance is due to higher GCI investments and accelerated capital requirements associated with the lease-up in our dark fiber leasing business. As a reminder, the $250 million of GCI is the maximum annual amount we would be responsible to fund. Turning to slide 13, We still expect Unity Fiber to contribute $314 million of revenues and adjusted EBITDA of $123 million at the midpoint for full year 2023. We continue to expect core recurring revenue growth of 5% from the prior year. However, even though our sales funnel remains extremely strong, we are seeing some delayed buying decisions from certain wholesale and enterprise customers, which could slightly impact our recurring revenue growth estimate for the year. We also expect revenue and adjusted EBITDA at Unity Fiber for the remainder of the year to be more heavily weighted in the fourth quarter versus the third quarter. To be clear, we still expect consolidated revenue to be at or above the midpoint of our current outlook. We also still expect ETL fees in 2023 to be approximately $15 million compared to $24 million in 2022. Net success-based CapEx for Unity Fiber this year is still expected to be $115 million at the midpoint of our guidance. Turning to slide 14, for 2023, we continue to expect full year AFFO to range between $1.38 and $1.45 per diluted common share with a midpoint of $1.41 per diluted share. As a reminder, AFFO in 2023 will be impacted by incremental interest and diluted shares relating to our recent convertible and secured note refinancings. On a consolidated basis, we still expect revenues to be $1.2 billion and adjusted EBITDA to be $925 million at the midpoint. Our guidance contemplates consolidated interest expense for the full year of approximately $517 million, which includes a $10 million write-off of deferred financing costs and $32 million of early repayment premium in the first quarter of this year related to the redemption of our seven and seven eighths senior secured notes due 2025. Corporate SG&A excluding amounts allocated to our business segments is expected to be approximately $30 million, including $7 million of stock-based compensation expense. Our weighted average diluted common shares outstanding for full year 2023 is expected to be around 290 million shares, reflecting the full year impact of the incremental diluted shares relating to the accounting of the recently issued convertible notes using the if converted method. As a reminder, guidance ranges for key components of our outlook are included in the appendix to our presentation. Turning now to our capital structure. At quarter end, we had approximately $452 million of combined unrestricted cash and cash equivalents and undrawn revolver capacity. Our leverage ratio at quarter end stood at 6.0 times based on net debt to last quarter annualized adjusted EBITDA. On July 28th, our board declared a dividend of 15 cents per share to stockholders of record on September 8th, payable September 22nd. With that, I'll now turn the call back over to Kenny.

Thanks, Paul. As I mentioned earlier, we continue to focus on driving high margin recurring revenue while targeting disciplined mid single digit top line growth. Slide 15 demonstrates the investments we are making in our fiber network will lead to a more sizable and valuable fiber business over the next several years. We also expect the end of 2025 to be the inflection point where we become free cash flow positive after dividends and we expect to generate cumulative free cash flow of over a billion dollars during the five year period ending in 2030 if we maintain our current dividend and approximate level of annual capital spending. This trajectory, along with our predictable organic growth outlook, would lead to a substantial deleveraging, resulting in net leverage between four to five times and roughly doubling the size of our fiber business by 2030. Before turning it over to Q&A, I'd like to briefly comment on the recent press reports about lead sheeting cable within the telecom industry. Similar to the rest of the industry, Unity is taking this issue very seriously. Based upon what we have learned thus far, there appears to be no reason to believe that these cables pose a health or safety risk to employees or the broader public. For Unity specifically, the networks that we operate actively are all fiber-based, and therefore our employees are not in contact with lead cabling. In coordination with our sale-leaseback tenants, including Windstream, We're currently estimating the amount of lead sheeting cable being used today in our copper networks represents less than 1% of the total copper route miles that we own. Based on what we know today, we believe any cost of remediation would be de minimis. We will continue to investigate and monitor this issue very closely, along with our industry partners, and will report any material unity-specific developments as they arise. With that, operator, we're now ready to take questions.

Thank you. Ladies and gentlemen, to ask the question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gregory Williams with TD Cohen. Your line is open.

Great. Thanks for taking my questions. And thanks for the insights on the toxic lead cables. That was helpful. My first question is on the M&A landscape, Kenny. If you can describe what you're seeing and hearing. It doesn't sound like there's a lot of deal flow here, but are conversations picking up or staying the same as either buyer or seller? And then just Looking at the lease-ups, it looks like the mix came a little bit lower at 64%. Is that just the variance as usual? Is there anything here to call out? Was there a pick-up in greenfields on purpose? Thanks.

Hey, Greg. Yeah, on M&A, we're big believers in it, as you know. We've done a lot of M&A over the past number of years, I think, successfully. We continue to think that there's a conglomerate discount in our stock. If you look at how we think the market's valuing the windstream MLAs, for example, they're putting a 15% to 20% yield on that income, and we think it should be yielding inside of where secure debt is trading for the ILEC community. And so we think there's a big discount there. you know, $5, $10 a share of value right there alone that's not being reflected. And so we're looking at M&A, and as I mentioned last quarter, getting our financings done behind us was an important ingredient for helping us have a runway to really focus on it in a patient manner, either as a buyer or a seller. And so to that end, I think there's good conditions and there's bad conditions. Good conditions meaning we've got a nice runway to be patient, our business is performing very well, and there's a clear line of sight to a go-it-alone strategy with the business performing and capital spending falling off in the next few years, so there's a substantial amount of free cash flow coming into the system. So having that ability to be patient is critically important to executing on good M&A. But with that said, the credit markets continue to be challenging, and I think that's pretty obvious. And so that's one of the things dampening M&A at this point. I think you see it industry wide and certainly within the telecom industry, and it's no different for us from our vantage point. But that can change overnight, frankly. And so we continue to be very engaged with both strategic and financial parties within the industry, and that's not going to change in the coming quarters. And Paul, you want to comment on the lease-up?

Yeah, on the lease-up percentage, I think, Greg, I would just characterize that as normal fluctuations from quarter to quarter. It's based on the bookings that we're bringing in. No change in strategy or shift to more anchor deals. We're still very focused on a good mix, but a mix that's dominated by lease up going forward. So just normal fluctuation.

Got it. Thank you.

Thank you. Please stand by for our next questions. Our next question is from David Barden with Bank of America.

Your line is open.

Hey, guys. Thanks for taking the questions. So a few, if I could. Kenny, the tower industry, specifically American Tower most recently, talked about abrupt slowdowns in wireless carrier network services-related requirements. I think you kind of touched on it in your prepared remarks, but if you could elaborate a little bit on how we should think about Unity's exposure to what might be kind of a material slowdown in wireless carrier activity as it relates to densification and network development. The second question I had was, and I haven't had a chance to ask this, so I'm interested in your view here, because on the lead cable issue, there's really two pieces to it, right? There's the cost of the remediation, potentially, if it's required, and that's one thing. And then there's the other thing, which is the you know, the X factor, the ambulance chasers, the people that come after everybody hoping to make a buck. And I'm interested in kind of how you wrap your arms around that piece of it. And then the third piece is just, you know, from a fundamental standpoint on the book to bill, you know, are you seeing any delta as we kind of progress through time? on kind of how wholesale and non-wholesale bookings are converting to the retail revenue business. Thank you.

Good morning, David, and thanks. I'll try to hit all these, but keep me honest. Yeah, on carrier spending, I mentioned it in our prepared remarks that we – We expected spending to be down this year coming into the year, frankly. I mean, we tend to get a 6-, 9-, 12-month early view into carrier spending just given our day-to-day interaction with them. It's never perfect, and it can change quickly, but generally we get that early view. And so when we gave guidance at the beginning of the year, we had expected bookings for the wireless carriers to be down 50%. compared to 2022. So, that was baked into the cake when we gave guidance. And so, as a result, we're not changing any outlook for this year, and that's not going to impact guidance. I think that the slowdown is different for the various carriers. You've got some who had a hard push to meet some imposed deadlines, you've got others who are reaching the end, or closely, almost reaching the end of 10 gig upgrades, and you've got others who are changing capital allocation policies. And so it's really not an industry, I wouldn't characterize it from our vantage point as an industry theme so much as carrier specific changes. And they all just seem to be happening around the same time. And with that said, we don't think this is a systemic slowdown. It's going to pick back up. There's still a lot of investment that needs to be made in these networks, including just traditional backhaul to towers, fully lighting and deploying spectrum, but then also eventually densifying more of the markets around the country. I think there's a lot of money that's been spent in the Tier 1 markets on small sales, As we've mentioned many times, we think that trend is going to happen in the Tier 2 and 3 markets, and we think that spend, we're just scratching the surface on that today, and I think when that comes, there's going to be a big opportunity for Unity. So longer term, the carrier spending is going to come back, and I don't know exactly when that's going to be, but it's going to come back. The one point I would add to that, David, and we've mentioned this, a number of times, but we're diversified across different customer segments and use cases for fiber. That's one of the reasons why the slowdown in carrier spending this year is not impacting our mid-single-digit growth. Over the past couple years, including this year, wireless bookings have represented somewhere between 10 to 15 percent of total bookings for us. It just suggests that we're diversified across a lot of different use cases. Yeah, on lead cable, I think you're right. There's the above board remediation challenges that may exist. We think, like I said, that those should be de minimis, but then there's also, I'll use your term, the ambulance chasers. I think what's important from our vantage point, and I think the rest of the industry has embraced this as well, is that we just have to take this issue very seriously. We have to prioritize the health and safety of our employees and the public and really lean into this with regulators, state and local officials, respond to any requests that we get, be very transparent, and ultimately we think the facts will speak for themselves. It kind of feels like we're moving out of the hysteria phase around it and now more into the education and learning phase. And frankly, we think that's going to be very revealing to people. Again, we have no credible evidence that these cables pose a risk or a material risk. And then we'll move into the remediation phase, if you will call it that. And I don't Again, based on everything we're seeing, we don't consider this to be a material issue. We're not going to be a leader in setting the discourse around this. We're going to be a fast follower. We're going to follow what AT&T and Verizon and the trade associations are saying. We're not directly exposed to it ourselves, as I mentioned in our prepared remarks, but we're going to continue to monitor it very closely and interact very closely with the industry and with our sale leaseback tenants, including Windstream and so forth. On the book to bill, that's an area that we don't talk about a lot, but it's a real, I think, core competency of ours. We continuously have a mean time to deliver below 90 days, 100 days, below 90 days. That's our target, and we continuously deliver on that. Obviously, on some projects, that's a much longer cycle if you're building Greenfield or if you're building Virgin Network, if you will. It could be 120, 180 days in some cases. But when it comes to lease up, which is an increasing part of our business, as we've talked about over the past number of quarters, you're able to light things much more quickly. And ultimately, that's what keeps us continuously below that 90 days. With that said, and Paul mentioned in his prepared remarks, we have started to see over the past couple of quarters or so some slowing in decision-making among customers. The funnel remains very, very strong. I think if you looked at our enterprise funnel, it's really as big as it's ever been, and our wholesale funnel is also very strong. So the demand is there, and things are working their way through the system. But getting those customer signatures has just been slower. But we don't consider that to be anything, again, systemic. I think it's just a period of time that we're in right now. So at the end of the day, things are going to normalize, and our mid-single-digit growth outlook hasn't changed. In fact, as Paul mentioned, you know, I think revenue for the year is probably trending a little bit above midpoint of our guidance range, so we feel very good about it.

All right, Kenny, thank you. Yeah, no, I appreciate that commentary, especially on the lead stuff, the fact that, you know, we've passed the hysteria phase and we're in the learning and education phase, you know, on our way to the fixing it phase. I think that that's important, you know, to kind of figure out where we are. Thank you.

Thank you. Please stand by for our next question. Our next question comes from the line of Mike. Your line is open.

Thanks and good morning. I'm just curious for your latest thoughts on what you think the most optimal corporate structure for Unity is as you look at the assets and performance and the different opportunities and the different pieces of your business. And then just one other on the lead question, in terms of the exposure that's identified, do you think that that could change over time higher or lower as more work is done? And do you have an update on the amount of cable miles relative to the percentage that was disclosed? Thanks.

Hey, Michael. Yeah, on the corporate structure, we had a robust discussion about this on our last quarterly call. We continuously look at our corporate structure, our capital allocation policy. It's something we do every quarter with the board, and we continue to believe that the REIT status is appropriate for Unity. I think our business model policy kicks off very predictable, steady growth and cash flow. And as a result, returning that dividend to the shareholders is something that we think is important and the board continues to support and our business model supports it. We've talked about very transparently that we're in a unique period of time right now where we're cash flow negative because we're investing very heavily in the business, especially in the fiber to the home part of our business. But we're also at a point where we're about to inflect to becoming very cash flow positive. And so very logical questions from stakeholders arise, including is it appropriate to be paying a dividend during this heavy investment period on one end of the spectrum all the way to the other end of the spectrum of should you be considering raising the dividend or even setting a dividend policy that suggests raising the dividend. And so we think having a good transparent discussion about all those topics is important and therefore we put our comments out last quarter and we've had some very good interaction with stakeholders over the past number of months regarding those comments, but continue to think that that's the appropriate corporate structure given our mix of assets today. We also mentioned it in our prepared remarks. It didn't get a lot of attention, but we think there's a lot of strategic value to the REIT status. As we mentioned, we were one of the first fiber companies to become a REIT. Subsequent to that, the rules changed that made becoming a REIT a little bit harder. We think there's strategic value to that corporate structure. On the Michael, on your second question, I wouldn't want to say whether we think the number of lead cable exposure will be higher or lower, but what I would say is that less than 1% that we use, I think it's a conservative number. I'll put it that way. So we feel like that's a that's a reasonable way to think about it. And I don't see us changing that phraseology, if you will, on a go-forward basis. And I think that leads to your last question about the mileage versus the percentage. We do have a mileage number that we've developed on our own and also communicated with Windstream about. And it's what leads us to believe that that less than 1% number is conservative, but we're just not prepared to give that number publicly at this point.

Thanks very much.

Thank you. Please stand by for our next question. Our next question is on the line of Frank Luthan with Raymond James.

Your line is open.

Great, thank you. On the comments on the delays on the enterprise part of the business, how would you characterize that? Is that just sort of normal things we're seeing everywhere else where there's an extra couple levels of approvals, or do you think there's any risk that some of these projects don't go forward? And any broad themes as to what's sort of driving that? Thanks.

Yeah, Frank, I don't think there's any broad themes. I think it's really customer specific. We ask that question repeatedly of our sales leaders and sales team and get the same response. You go down the list and customer A, the delay is for this reason. Customer B, the delay may be for that reason. So similar to my comments about carrier spending being down for the year, I think a lot of that is specific to each carrier as opposed to industry-wide. So it's an important question. It's one we consistently ask to make sure that there's not tweaks in the business that we need to make or tweaks in our go-to-market approach, but we don't think any of that, any of the decision-making calls for changes to the business or tweaks, if you will. I really, more importantly to your point, are we seeing things fall out of the funnel in an abnormal way? And the answer is no. In fact, the funnels continue to grow, and it's one of the reasons why we feel confident about the second half of the year and, again, even potentially trending towards the higher end, or I'd say over the midpoint of guidance on revenue. Because the demand is there. It's just a question of converting it to sign deals and getting it turned up.

All right, great. Just a quick follow-up. Where are you on sales hiring this year? Are you finding it easy to find and retain talent, or more challenging? How should we think about growing the sales force?

Yeah, we've made a lot of progress. I'd say our wholesale team, you know, those are the whale hunters, or if you will, I'd say that team's fully staffed. On the enterprise side, and on the wholesale, if there is an opening in that team, we tend to fill it very quickly. You know, that's just more of a relationship type of sales function, and we've got a lot of industry veterans with a lot of relationships, and so filling that team tends to happen very quickly from our standpoint. On the enterprise side, I think as I mentioned before, we churn people out of that team pretty deliberately. If they're not performing, we churn them out in a disciplined way, and so replacing churn plus adding to the team is a constant focus of ours, and we've got people entirely dedicated to that. And over the past, I'd say, quarter or so, we've made a tremendous amount of progress. And we're adding to that team in a very disciplined but steady way. And that's what's contributing to that 15% a year, year-over-year enterprise growth. And the bookings are equally strong, and the funnel is strong as well. So it's a constant battle to – find good talent and to bring them on and train them and get them up to being productive. But I think we're very good at it, Frank, and excited about continuing to push that forward. All right, great. Thank you very much.

Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of Simon Flannery with Morgan Stanley. Your line is open. Morning.

This is Alana on for Simon today. Can you remind us whether 2025 is still where you expect free cash flow to inflect? And then secondly, can you speak to anything you're seeing with DISH? I know last quarter you mentioned they remain active, but are you seeing any changes there? Thanks.

Ilana this is Paul I can take the first question and maybe maybe Kenny can take the second question on on dish but yeah the quick answer to your question is yes 2025 we still see that as an inflection point for free cash flow and part of that is just continuing to execute execute on our our growth plan mid single-digit growth you know it's Kenny talked about in his comments you know it's very predictable given And our visibility to that is very good given our funnel and our sales force and the demand for our products and services and the breadth of use cases for our products and services, as Kenny said. But the bigger part of that journey to free cash flow positive here over the next year to two years into 2025 is just the mechanics of our commitments to Windstream with regard to the settlement expenses that fall off in the middle of that year in 2025 and GCI commitments start to ratchet down in terms of the total annual capital commitment over time and the revenue from those GCI investments steps up over time. So that is positive for our cash flow and helps us to get to that 2025 inflection point. So that's still our plan.

Yeah, Alana, on DISH, we don't like to comment too much on specific customers with much detail. But I would say, you know, and I mentioned earlier that we expected wireless bookings to be down 50% this year versus 2022. A big part of that is that 2022 was a tough comp because bookings from DISH were so elevated in 2022, just getting ahead of the network spend that they needed to make. And so... As a result, bookings there are lower this year. But with that said, I think that's expected based upon the deadlines and timelines that they had to meet. So with that said, I think activity with them remains very robust and really as expected, as predicted.

Thank you. Maybe one more quick one. Have you made any traction or any updated thoughts on your diversification, maybe away from one stream or anything else we should be thinking about there?

Yeah, I would just refer back to my comments at the beginning regarding M&A. I think we continue to... focus on it. It's a core competency of ours. And we've had periods of time when we've been very active and periods of time when we've been very patient. And right now we're in the latter category with respect to what the market perceives anyway. But behind the scenes, we're very active. And that's always going to be the case for us. So it's a core competency and it's something we're going to continue to focus on.

Thank you.

Thank you. I'm showing no further questions in the queue. I would now like to turn the call back to Kenny for closing remarks.

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

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