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Uniti Group Inc. (UNIT -2.64%)
Q2 2021 Earnings Call
Aug 05, 2021, 4:15 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Welcome to Uniti Group's second-quarter 2021 conference call. My name is Carmen, and I will be your operator for today. A webcast of this call will be available on the company's website at www.uniti.com beginning August 5, 2021, and will remain available for 14 days. At this time, all participants are in a listen-only mode.

Participants on the call will have the opportunity to ask questions following the company's prepared comments. The company would like to remind you that today's remarks include forward-looking statements, and actual results could differ materially from those projected in these statements. The factors that could cause actual results to differ are discussed in the company's filings with the SEC. The company's remarks this afternoon will reference slides posted on its 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. Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's current report on Form 8-K dated today. I would now like to turn the call over to Uniti Group's chief executive officer, Kenny Gunderman. Please go ahead, Mr.


Kenny Gunderman -- Chief Executive Officer

Thank you. Good afternoon, everyone. Joining me on the call today is Paul Bullington, our interim CFO. Uniti reported another strong quarter of results at both Uniti Leasing and Uniti Fiber.

Demand for our fiber infrastructure remains very strong fueled by growing tailwinds within the communications infrastructure industry. The demand -- this demand was evidenced by consolidated new sales bookings of approximately $1 million in MRR, representing a sequential increase of over 80% from the first quarter of this year and one of the highest quarters ever for consolidated bookings at Uniti. Slide 4 of our presentation illustrates Fiber is the mission-critical connective tissue for virtually all current and future broadband delivery. We're seeing an acceleration of the virtualization of our society with 5G mobile broadband, fiber-to-the-home, fixed wireless, satellite, and other technologies enabling greater usage of video conferencing, e-learning, telemedicine, and remote work environments, all resulting in an overall continued surge in broadband traffic.

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Turning to Slide 5. Uniti is one of the largest independent wholesale fiber providers in the country. And our dense, world-class fiber network is at the nexus of each of these trends. In fact, 90% plus of all the business we're generating today, including lease-up, is wholesale in nature, and we expect that to continue in the future.

We have a growing portfolio of small cells, connected buildings, macro towers, and homes passed. And the need for more investment by our customers in 5G networks and other technologies is also growing. For example, our wireless carrier customers are particularly active in an effort to keep their underlying infrastructure ahead of the explosive growth in mobile broadband. These carriers are increasingly looking for 10 gig upgrades on our macro tower backhaul circuits while simultaneously continuing to push for backhaul to new macro towers and CRAN small cell deployments in our metro markets.

These investments provide Uniti with the unique opportunity to expand our networks with anchor economics, setting the foundation for attractive future lease-up and further validating the shared infrastructure benefits of fiber. Our nonwireless carrier customers, such as the FANG Group and national MSOs, are also active as they expand their cloud-based services. Their insatiable demand for high-capacity, long-haul routes, in particular, continues to accelerate. Our residential- and enterprise-focused carrier customers continue to be active in driving broadband to more and more consumers.

Our dense metro networks today passed 250,000 buildings, and we're aggressively building deeper into commercial parts and neighborhoods through fiber-to-the-home and fixed wireless builds. Over the past three years, we've built almost 10,000 route miles of new fiber, and we expect that number could increase significantly over the next three years. We've amassed this valuable and hard-to-replicate portfolio in only six years through our proprietary M&A efforts and organic sales strategy, and our portfolio is growing every day. As evidenced on Slide 6, Uniti is demonstrating the economics of an attractive shared infrastructure model that continues to drive meaningful returns.

As a reminder, Uniti believes that a healthy mix of wireless and nonwireless bookings and installs represents the most effective way to drive optimal profitable economics. Uniti acquires or builds new fiber largely for our wireless customers with attractive long-term anchor cash flow yields in the mid- to high single digits. We're also successfully adding additional tenants with very high margins and minimal capex, resulting in a cumulative cash flow yield today of approximately 18%, an almost threefold increase from the anchor yield and all within the past five years. Turning to Uniti Fiber during the quarter.

Small Cell revenues grew 27% from the prior year while enterprise revenue grew 16%, demonstrating that we're choosing good anchor markets to expand our network in a disciplined manner and that we're executing well on follow-on lease-up. Uniti Fiber sales bookings in the second quarter were approximately $0.8 million of MRR, an increase of almost 70% from the first quarter at our highest level of bookings in over a year. In terms of mix, 65% of our sales bookings came from nonwireless customers. Almost 40% of lease-up of MRR sold over the past 12 months occurred in the second quarter alone as we continue to ramp up our lease-up efforts within our Southeast markets.

Uniti Fiber sold $0.6 million of MRR during the second quarter with 75% of gross installs related to nonwireless opportunities, 20% related to wireless, and 5% related to bandwidth upgrades. Importantly, for the first time in Uniti's history, our time to install new circuits has dropped below 90 days. This is a terrific accomplishment that really helps improve customer satisfaction, as well as profitability for the company and as a result of largely selling on-net services to our customers. Turning to Slide 7.

At Uniti Leasing, we continue to actively market over 3 million strand miles of fiber that is available to lease to third parties. Our sales pipeline today stands at a little over $1 billion of total contract value, which translates to about $65 million of potential annual recurring revenue, reflecting the continued significant interest from our wholesale customers. Over 70% of the deals utilize fiber we acquired as part of the settlement with Windstream, and our success is the result of less than one year of actively marketing this fiber. We continue to be successful in monetizing our portfolio of assets and, to date, have executed on opportunities that represent total remaining revenues under contract of $805 million with an average contract term remaining of over 14 years and incremental cash flow yields of approximately 11%.

Turning to Slide 8. Our growth capital investment program continues to yield positive results. As a reminder, our tenant has invested over almost $1 billion of tenant capital improvements in our network over the past six years, and that investment is expected to continue. Uniti has now begun investing its own capital on long-term value-accretive fiber, largely focused on building highly valuable, last-mile fiber, including in commercial parks and fiber-to-the-home.

Collectively, these investments have resulted in around 20% of the legacy copper network being overbuilt with fiber and almost 10,000 route miles of new fiber constructed. Both of those numbers are expected to increase materially in the coming years. We believe our GCI program is an attractive investment for our stockholders, providing a secure, near-term cash flow yield while simultaneously future-proofing our network for renewal. With that, I'll now turn the call over to Paul.

Paul Bullington -- Interim Chief Financial Officer

Thanks, Kenny. Good afternoon, everyone. As Kenny mentioned earlier, we delivered another strong quarter of results at both Uniti Fiber and Uniti Leasing. Our guidance remains mostly in line with prior outlook.

However, we are tracking ahead of plan year to date, and we now expect adjusted EBITDA and AFFO per diluted common share for full-year 2021 to be closer to the high end of our guidance range due to the strength of our second quarter and the expectation that strength will continue into the second half of 2021. However, we are not adjusting the midpoint of our 2021 outlook as there remains the possibility that some contractual revenue could slip into the first quarter of 2022. During the quarter, we closed our strategic opco/propco transaction with Everstream. As part of the transaction, we recorded a pre-tax book gain of $28 million relating to the partial sale of our Northeast operations and the sale of certain dark fiber IRU contracts.

The gain is excluded from both adjusted EBITDA and AFFO. Please turn to Slide 9, and I'll start with comments on our second quarter. We reported consolidated revenues of $268 million, consolidated adjusted EBITDA of $216 million, AFFO attributed to common shares of $103 million, and AFFO per diluted common share of $0.41. Net income attributable to common shares for the quarter was $49 million or $0.20 per diluted share and includes the $28 million pre-tax gain on sale I mentioned earlier relating to the -- related to the Everstream transaction.

At Uniti Leasing, we reported segment revenues of $196 million and adjusted EBITDA of $192 million, up 6% and 5%, respectively, from the prior year. Accordingly, Uniti Leasing achieved an adjusted EBITDA margin of 98% for the quarter. The year-over-year growth reflects straight-line rent recognition under the Windstream MLAs and GCI investments subsequent to our settlement agreement, the dark fiber IRU contracts we acquired from Windstream, as well as annual lease escalators. During the second quarter, Uniti Leasing deployed approximately $50 million toward growth capital investment initiatives with almost all the investments relating to the Windstream GCI program.

These GCI investments added around 1,600 route miles and 56,000 strand miles of valuable fiber to Uniti's own network across 13 different states. As of June 30, Uniti has invested $177 million of capital today under the GCI program with Windstream, adding around 5,000 route miles and 178,000 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 Uniti making such investment. They are subject to a 0.5% annual escalator and result in near 100% margin.

The investments we have made today will ultimately generate approximately $14 million of annualized cash rent. At Uniti Fiber, we turned over 150 lit backhaul, dark fiber, and small cell sites for our wireless carriers across our Southeast footprint during the second quarter. These installs added annualized revenues of approximately $1 million. We currently have around 1,200 lit backhaul, dark fiber, and small cell sites remaining in our backlog that we expect to deploy within the next few years.

This wireless backlog represents an incremental $10 million of annualized revenues. Uniti Fiber revenues of $72 million during the quarter were in line with our expectations. As I mentioned earlier, we closed the Everstream transaction on May 28, and the results from our Uniti Fiber Northeast operations that were sold as a part of the transaction will no longer be included in our financials from that date. The impact in the second quarter from the sale of the Northeast operations was approximately $2 million in revenue and $1 million in adjusted EBITDA.

Adjusted EBITDA of $29 million during the quarter was higher than expected due to lower operational and maintenance costs. Adjusted EBITDA margin for the quarter was 41%, representing a 480-basis-point improvement from the prior year due to the lower cost I just mentioned and our continued emphasis on higher-margin recurring revenue. Uniti Fiber net success-based capex was $37 million in the second quarter, consistent with our expectations. We also incurred $2 million of maintenance capex or about 3% of revenues.

Please turn to Slide 10, and I will now cover our updated 2021 guidance. We are revising our prior guidance primarily for the impact of the gain on sale of operations and income tax expense related to the Everstream transaction, the impact of transaction-related and other costs incurred to date, and revised estimates of interest expense. Our current 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 2021 includes the following for each segment. Beginning with Uniti Leasing. We continue to expect revenues and adjusted EBITDA to be $784 million and $766 million, respectively, at the midpoint, representing adjusted EBITDA margins of approximately 98%. Revenue and adjusted EBITDA each include $26 million relating to the straight-line rent associated with the Windstream master leases and GCI investments.

Our outlook reflects $210 million of net success-based capex at Uniti Leasing at the midpoint of our guidance, of which $200 million relates to estimated Windstream-GCI investments. Most of these markets are similar to our own Tier 2, Tier 3 markets, providing Windstream with substantial growth opportunities over time. As Slide 11 highlights, non-Windstream revenues and adjusted EBITDA continued to grow at a healthy pace and are expected to be about $55 million and $42 million, respectively, up 27% and 17% from 2020 levels. This includes the assets and dark fiber IRU contracts we acquired from Windstream, where the revenue is diversified across multiple third parties, and the dark fiber IRU leases that are part of the Everstream transaction.

Turning to Slide 12. We expect Uniti Fiber to contribute $305 million of revenue and $118 million of adjusted EBITDA, representing a margin of 39% this year at the midpoint of our guidance, which is a 300-basis-point improvement from last year. As we pointed out on our earnings call last quarter, Uniti Fiber's outlook is impacted by the sale of our Northeast operations as part of the Everstream transaction and the winding down of our noncore construction business. Adjusting for the impact of these two items, revenue and adjusted EBITDA for 2021 at Uniti Fiber are expected to increase by 6% and 10%, respectively, from the prior year.

Net success-based capex for Uniti Fiber this year is still expected to be $125 million at the midpoint of our guidance. Turning to Slide 13. For 2021, we continue to expect full-year AFFO to range between $1.61 and $1.65 per diluted common share with a midpoint of $1.63 per diluted share. On a consolidated basis, we expect revenues to be $1.1 billion and adjusted EBITDA to be $852 million at the midpoint.

Our guidance contemplates consolidated interest expense for the full year of approximately $397 million, excluding any deferred financing cost write-offs and premiums paid relating to early repayment of our debt. Reported interest expense in 2021 will include an additional $44 million relating to the write-off of deferred financing costs and premiums paid on the early repayment of our 8.25% senior unsecured notes and 6% senior secured notes due 2023. Corporate SG&A, excluding amounts allocated to our business segments, is still expected to be approximately $42 million including $10 million of stock-based compensation expense. We continue to expect weighted average diluted common shares outstanding for full-year 2021 to be around 263 million shares.

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 $574 million of combined unrestricted cash and cash equivalents and undrawn revolver capacity. Our leverage ratio stood at 5.6 times based on net debt to annualized adjusted EBITDA.

On August 3, our board declared a dividend of $0.15 per share to stockholders of record on September 17, payable October 1, which is our current estimate of the maximum amount allowed under our current debt agreements. I'll now turn the call back over to Kenny.

Kenny Gunderman -- Chief Executive Officer

Thanks, Paul. Turning to Slide 14. Before opening up the call for Q&A, I'd like to take a moment to comment on Uniti's public market valuation. We get questions regularly from investors and analysts about how we think Uniti should be valued given the unique nature of parts of our business.

We believe there is a material disconnect between how the public market values Uniti's equity and our intrinsic valuation. We believe our scale, high-performing fiber business, which includes Uniti Fiber and non-Windstream operations at Uniti Leasing should demand a 15 to 20 times cash flow multiple based upon substantial public -- private market comps. Our attractive economics, which includes 95% recurring revenue, monthly churn of 0.2%, meantime to deliver of less than 90 days, companywide net success-based capital intensity of 30%, and cash flow growth of 5% to 10% are evidence of the quality of our platform relative to other fiber businesses. Using the midpoint of this range, our remaining business is being valued at a 14% yield or roughly seven times cash flow multiple.

This seven times cash flow multiple compares to an 11 to 12 times implied cash flow multiple from the valuation we received in 2015 as part of the original spin-off from Windstream and the refreshed valuation we received in 2020 in connection with Windstream's emergence from bankruptcy. Both of these valuations were performed by separate and independent third-party valuation firms. Further, Windstream exited bankruptcy at a roughly 3.75 times cash flow multiple. And when combined with an 11.5 times multiple for our infrastructure, the resulting blended multiple of six and a half times is in line with other publicly traded ILECs.

This valuation is only a jumping-off point as market-based comps suggest even greater upside since our lease streams have never been disrupted and have repeatedly been proven as a priority payment. In closing, the value and strategic interest in 5G, fiber, small cells, and now fiber-to-the-home has never been greater, and Uniti represents a unique portfolio of all of these infrastructure assets. With that, operator, we are now ready to take questions.

Questions & Answers:


Thank you. [Operator instructions] First question is from Phil Cusick with J.P. Morgan.

Phil Cusick -- J.P. Morgan -- Analyst

Thanks, guys. Two, I guess, Kenny, to start. You know, if you -- if the company believes your shares are cheap, then what's the next step? Do you -- are you willing to borrow to buy some shares? Or do you consider selling assets to buy shares? Or do you engage with a private equity company? Certainly, there is a lot of private equity chasing fiber assets today. What do those conversations look like?

Kenny Gunderman -- Chief Executive Officer

Hi, Phil. Yeah, those are all the right questions and, frankly, some of the questions in the dialogue that we hope to spur from this page and this framework. But yes, look, we've said for some time that we think we're undervalued. We've said for some time we think the portfolio of our assets and just the core predictable performance of our underlying operations are underappreciated.

So, we've continuously thought that and look for ways to unlock that value. I think for sure, we need to continue to execute and continue to grow both organically and inorganically. But I think, especially in this environment where there's just -- the industry is awash with capital, we also have to look for other ways to lock in value as opposed to just talk about it theoretically. And I think, you know, there are a number of different ways to do that.

I mean we could look at securitization of the leases. We could look at monetizing a portion of the leases through JVs or selling interests or other things, including some of the things you mentioned. So, these are all things that we're leaning into. But with all that said, we think it's very important for our investors, especially our public market investors, to understand a framework for looking at value for Uniti.

And then we can all haggle over what the right assumptions are, but having the right framework to look at it because we do get a lot of questions about a good way to look at it. And given the unique nature of our business, we think leaning into this a little bit more now is the appropriate thing to do.

Phil Cusick -- J.P. Morgan -- Analyst

OK. And then on the operational side, well, I guess, it's not -- but we've talked a number of times in the past about deal pipeline. There's a lot going on. And I think this is the same question I may have asked three months ago.

But, you know, you've talked about, hey, it took a year last time to get things up and running. That's kind of been nearly a year at this point. What's the status of that pipeline? 

Kenny Gunderman -- Chief Executive Officer

Yes. Phil, you beat everybody else to that question, so thanks for asking it. And nothing's changed in our strategy. 

Phil Cusick -- J.P. Morgan -- Analyst

Somebody was going to. 

Kenny Gunderman -- Chief Executive Officer

We're still not quite to the one-year anniversary of the emergence. So, I would just encourage our investors to be patient. We're still working very hard on developing the funnel, and I would encourage investors to look back at our track record of being disciplined, not setting artificial deadlines. But at the end of the day, being very successful with executing on acquiring assets and businesses at attractive multiples despite a frothy market.

And also, at the same time, finding ways to monetize noncore assets at very attractive premium multiples. So, I think we've got a good track record. We've been able to demonstrate it over a six-year period. We've not set artificial deadlines, but we're working very hard at it, and we've got a very nice funnel that's developing -- continuing to develop.

Phil Cusick -- J.P. Morgan -- Analyst

Thanks, Kenny.


Thank you. Our next question is from Frank Louthan with Raymond James. Oh, your audio, Frank. please, check your audio, we cannot hear your question.

Please requeue in the Q&A. I'm going to continue with the next question from David Barden from Bank of America. 

David Barden -- Bank of America Merrill Lynch -- Analyst

Hi, Kenny. Thanks for taking the question. So, I guess I got two, one kind of big picture, one small picture. So I guess I'm going to follow up on Phil's question.

So, I mean if we reverse engineer this, right, you guys went through this process with Windstream and the courts and got the lease kind of certified in fact as a lease for their core assets. In a lot of ways, I view it as kind of a super senior secured kind of security. And you've kind of litigated it to the degree, $692 million at a 10% yield is, you know, basically $7 billion. The fiber business is effectively free inside Uniti today.

And so, I mean, the bigger picture question is, why are these two businesses one business? Like why do we separate them and just kind of create value right away rather than kind of waiting to do a private negotiation with a private entity? Let's just break it apart. And the second question is related to the pipeline on leasing that you guys shared. In the footnote, it says there's $18 million of the roughly $65 million and annualized revenue is related to one particular IRU deal. What is the value of that IRU deal versus $1.1 billion in total pipeline revenues that you guys disclosed? Thanks.

Kenny Gunderman -- Chief Executive Officer

Yes. David, on that second question, we'll probably come back to you on that one. I'm pretty sure I know which one it is, and I think Paul does, too. But in terms of the specific numbers, we'll come back to you on that.

But it was one of the large anchor IRUs that we sold when we first took over the network, and it was with one of the large national MSOs. In terms of your first question, again, I think those are all the right questions and good observations and some of the things that we're thinking about. I do think these two businesses together do make sense, however, that the network that we lease to Windstream provides a substantial amount of valuable fiber and capacity for Uniti Fiber. We use that network, and we're leasing it up through Uniti Leasing.

And in a lot of cases, the networks that we're selling are network solutions that -- where we're selling some Uniti Fiber. We're selling some of the Windstream fiber that we got in the settlement. We're selling some of the fiber we got from Sapphire. So, there's strategic value in keeping all of this together.

But at the same time, some of that can be accomplished through other means if there were some value-accretive ways to separate or to lock in some of these values. So, all things we're thinking about. And I think you're line of thinking in terms of the value and sort of getting Uniti Fiber for free, so to speak, at these prices is right. 

David Barden -- Bank of America Merrill Lynch -- Analyst

Kenny, if I could follow up just with one more. So we heard over the course of the last couple of weeks, you know, Crown talking about how carriers had kind of pivoted from small cell densification to more macro C-band deployments and we're reallocating capital, actually defunding small cells to fund more kind of macro geographic builds. And also, we heard from SDA that DISH is actually doing a much more broad geographic build than simply the Las Vegas market announcement that they made earlier. And obviously, you have a strategic relationship with them.

Are you seeing an acceleration in the activity level, either in terms of conversations, funnel, contractual signings, that sort of thing contributing to this kind of record or new record monthly recurring revenue billings in the quarter? Or is that still to come?

Kenny Gunderman -- Chief Executive Officer

Both. I think the first, our -- we're expecting an acceleration in the second half of the year on bookings. A lot of our expected -- we're expecting a pickup in general at the beginning -- in the second half of the year. So, that was something we expected coming into the year.

But DISH, we've been extremely active with DISH, frankly much more so than I thought and I think even what our sales folks thought coming into the year, and it's accelerating. And I think it is macro-related, no small cell activity, but macro-related, as you alluded to, and we expect that to continue at least for the foreseeable future. On small cells, again, we don't have a huge, small cell portfolio. It's growing.

You know, it grew at 27% this quarter year over year. So, growing off a small base. And as we've always talked about, and you know, David, we believe when small cells do come to our markets, we're going to have a first-mover advantage there in the Tier 2-ish and 3-ish markets. So, we expect that.

But with that said, we have seen some of the carriers pull back on small cells and reprioritize macros in return, and that's C-band-related. It's 10-gig upgrade-related. But we don't -- we haven't seen -- I wouldn't say we've seen small cells fall out of our funnel. I think they've just been pushed out in terms of timing.

Now of course, that always means there's greater risk to them staying in the funnel. But at least for now, we're not taking anything out of our overall forecast. They've just been pushed out in terms of timing.

David Barden -- Bank of America Merrill Lynch -- Analyst

Got it. OK. Thanks, guys.


Thank you. Our next question comes from Frank Louthan with Raymond James.

Frank Louthan -- Raymond James -- Analyst

Great. Thank you very much. One quick thing in the quarter. Did the asset sale have any -- I assume have any impact on revenue and EBITDA in the quarter? What was the timing of that? And then is there -- what do you think about opportunities with any of the RDOF companies, some of the start-ups there to be part of their builds? Do you think that's going to be an opportunity for you guys going forward?

Kenny Gunderman -- Chief Executive Officer

Hi, Frank. Good to have you back. And I'll take the second one, and then Paul can take the first. But yes, I think a number of our current customers, whether it be sale-leaseback customers like Windstream or CableSouth or others, our RDOF recipients, large RDOF recipients -- and we think what that means is greater investment in the edge of the network, and therefore, greater need for the middle mile and ultimately the backhaul on our network.

So we -- and we've already seen that. I mean, I think it's going to lead to just greater traffic coming from those customers on the network. We've also seen for noncustomers -- companies who were RDOF recipients who are currently not customers, we've been having some good dialogue with them about them using our network as jumping-off points for their RDOF builds because as you know, many of these builds are in more rural areas, and that's where a lot of our network goes. So it's a great jumping-off point for many of these customers.

I can't give you a sense yet, Frank, for how big of an opportunity it is for us. But I do think it's an opportunity, and I certainly don't think it's a competitive threat. We -- on the margin, we may have some fiber or some additional competitors in certain markets, but I think the benefit to us outweighs the additional -- outweighs any competitive threat. Paul, do you want to comment on the Everstream question?

Paul Bullington -- Interim Chief Financial Officer

Yes. Sure, Frank. Yeah, I'll take that. So yes, the sale of our Northeast operations, Everstream, did have an impact on the quarter.

It closed on May 28. So, it basically had one month of impact on our financials, and the dollar amounts at a $2 million impact on revenue and a $1 million impact on adjusted EBITDA.

Frank Louthan -- Raymond James -- Analyst

All right. Great. And one quick follow-up. You mentioned edge and so forth.

Would you guys ever consider building small edge data centers as part of your network where you branched out into towers at one point? So is that something you would consider for growth as part of your infrastructure portfolio? Or should we just pretty much think of you guys more on the fiber network side going forward?

Kenny Gunderman -- Chief Executive Officer

Frank, we are considering that. And as a reminder, look, we still have macro towers. We're obviously building small cells, and we're actually developing -- have developed a prototype and even a business case around what you're calling as data centers. We call them something different, but it's really just pods at the edge of the network, and that's a result of our carrier customers asking for it in certain markets.

And so, again, I can't give you any sense of how big of an opportunity that is. But when you think about it, we're in a market with the fiber network. We've got boots on the ground. We're a natural extension -- a natural extension of that network is adding some pods on the edge that, in effect, serve as edge data centers.

So that is something that we're doing, and I think something that we'll probably see more of in the coming quarters and years.

Frank Louthan -- Raymond James -- Analyst

All right. Great. Thank you very much.


Thank you. Our next question comes from Simon Flannery with Morgan Stanley.

Simon Flannery -- Morgan Stanley -- Analyst

Great. Thank you very much. Just following up on the RDOF. You've got a lot of money set aside in the infrastructure bill, Kenny.

I was wondering if you see any opportunities around leveraging some of those funds over the next several years. And then on the MRO, it was nice to see the bookings coming through. To what extent does that largely run on your existing network? Or is there much capex need associated with those new bookings?

Kenny Gunderman -- Chief Executive Officer

Hi, Simon, on the first question, I think, yes, so we're proponents of the infrastructure bill, at least the part related to communications infrastructure are excited about it. I think it's another tailwind in our industry, where there's just bipartisan support for $50 billion to $100 billion of additional investment in fiber. And we think a lot of that is going to be directed toward more rural areas or suburban areas, which, again, is where our network is. So, we're not going to be direct recipients of that funding, or at least we don't think so unless something changes, but we don't think we will be.

But we will be a derivative recipient through our customers and our customers' investment for the reasons I said earlier related to RDOF. So, we just think it's another example of the continued sort of steady pace of federal and state subsidy for investment in our space, which we're a beneficiary of. On the bookings question, and I'll comment and Paul can jump in, but it's a mix. It's a very strong quarter, very strong, frankly, start to the third quarter based on early numbers I've seen for July.

And it's a good, healthy mix of wireless, including wireless anchor builds and wireless lease-up in addition to enterprise and regular wholesale. The vast majority of that is on our existing network and/or it's being built off of our existing network. So if we're building new fiber, it's going to be connected to the existing network. So it's coming in at very, what we consider, attractive incremental yields.

And we demonstrate those yields early on in our presentation, the initial anchor yields of 5% to 10% and then getting up to the near 20% blended yields. We continue to see that in our book of business and our new bookings that are coming on. 

Simon Flannery -- Morgan Stanley -- Analyst

So, what does that do to capital intensity in the fiber business?

Kenny Gunderman -- Chief Executive Officer

I think -- 

Simon Flannery -- Morgan Stanley -- Analyst

I mean into '22 and beyond?

Kenny Gunderman -- Chief Executive Officer

Yes, it's going to continue to decline as we forecasted. We are still managing that number down. So what we're -- the bookings levels that we're currently at and, frankly, that we see continuing are going to be a mix of those on-net greenfield builds and near net, and it's all going to result in what we think is a steadily declining capital intensity.

Simon Flannery -- Morgan Stanley -- Analyst

Thank you.


Thank you. And this concludes our Q&A session for today. I would like to turn the call back to management for his final remarks.

Kenny Gunderman -- Chief Executive Officer

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


[Operator signoff]

Duration: 41 minutes

Call participants:

Kenny Gunderman -- Chief Executive Officer

Paul Bullington -- Interim Chief Financial Officer

Phil Cusick -- J.P. Morgan -- Analyst

David Barden -- Bank of America Merrill Lynch -- Analyst

Frank Louthan -- Raymond James -- Analyst

Simon Flannery -- Morgan Stanley -- Analyst

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