My great pleasure to welcome Anterix and Tim Gray. Tim, thanks for joining us. I think you have a safe harbor you want to share.
Sure. So I mean, well, first, thank you and the Morgan Stanley team for inviting us. It's always great to be here in San Francisco at this conference. We will, of course, be making some forward-looking statements. So I just want to make sure that people do refer to our SEC documents for all the risks that are pertained therein.
Great. From our side, please see morganstanley.com/researchdisclosures. If you've got any questions, reach out to your Morgan Stanley sales representative. Tim, let's just take a big picture. For those who are less familiar with the Anterix story, perhaps you just give us the 30,000-foot view.
Sure. So we've got a chunk of 6 MHz of 900 MHz spectrum that we are using to support the utility industry in the United States, build out private wireless broadband, or LTE, networks to support grid modernization, and many other things that are going on with the changing utility industry in the United States.
Great. What have you done so far in terms of signed contracts?
Sure. So we've signed six different utilities in the United States with contract value of about $270 million. Of that, one of the exciting issues, it's a good thing that we deal with, is the fact that utilities want to capitalize cost and prepay their leases. So of the $270 million we've contracted, we've collected roughly $190 million to date, with another $80 million that'll be collected over the next several years.
Great. So you made a filing with the FCC the other day in conjunction with some of the electric utilities. You'd started off saying 6 MHz, but you're looking to potentially get to 5 by 5. Can you just give us a little bit of a background? How did this come about? You've talked about it in the past, but why now?
Sure. So there is a 10 MHz block excuse me, yeah, 10 MHz, a 5x5 block of 900 MHz spectrum, of which in May 2020, the FCC allocated 6 MHz , or 3x3, for use to change from narrowband uses to broadband uses. But in the Report and Order that they issued in May 2020, they did ask the question of, you know, when should we revisit this band and look at the opportunity to expand the broadband segment from 3x3 to 5x5? So that door was opened in that process.
And then through conversations with several of our customers and to-be customers, you know, there was just some thoughts around, you know, what does the future look like as we utilities start to see capacity demands grow and grow and grow over time with all the things that we're going to be adding onto these networks? We thought it was the right time, based on that feedback, to go back to the FCC with a petition to move forward voluntarily with, you know, incumbents and with utilities to change the band from a 3 by 3 to a 5 by 5.
Ye ah. And you mentioned it, but importantly, this time you have a lot of the industry players already, you know, supporting your case. So it's less likely to be adversarial, perhaps.
Right. Well, you never know. Let me throw that out there. But yes, so we had quite a few co-petitioners from utility, a couple of different from utilities, a couple of different industry groups. So, you know, we feel good about the general support that this is not, you know, a solely Anterix, you know, thing that we're asking for. But there are multiple entities who think this is a positive step forward for the FCC to make regarding the 900 MHz band.
So just the mechanics of it. Let's assume they did approve it, and we can come back to that. You know, what's in this extra four MHz right now, and what would you need to do to get access to that?
Right. Well, the two biggest holders in the 2 MHz right now are utilities. You know, several utilities had 900 MHz spectrum that they had gotten over the years. So we've got quite a few of those. And then the FCC itself. A lot of this spectrum was never across different markets in the United States was never applied for, so it's sitting on the shelf at the FCC. And one of the key questions the FCC will have to answer as they move forward, you know, is how they're going to deal with that spectrum that's sitting on the shelf as a part of this 5 by 5 equation.
In terms of selling it to you or your customers?
Exactly what those rules are going to be and how they're going to do it and how they would, you know, what mechanisms they're going to use to take it off the shelf, including compensation. So those are the things that we're going to that are going to be answered as a part of the process that we go through to be able to do that. But then there's, you know, lots of other entities that have some spectrum within the 2 by 2, you know, one of which is railroads, and then just a lot of other enterprise, you know, entities that will have to be moved outside of the band as a part of the process. But again, you know, one of the things that's going to be different about going to the 5 by 5 versus the 3 by 3 is it will be voluntary.
Yeah. Help us with the timeline here. It feels like we're going back into another process here. You know, the last one took a little while, but obviously you've moved a lot forward a lot since then. You know, if we get, you know, they have an NPRM or a Report and Order, is that the kind of the cycle of things we would expect here, or?
Yeah, we would think so. And we think it's probably, you know, roughly a two-year process. You know, with election season, you never know what kind of changes could take place that could drive some FCC changes that may slow things down. But we'll see how that goes as things play out. But again, as you mentioned, it's a really positive step for us to have multiple entities on this petition as we move forward. And we would expect in comment periods there to be some additional, you know, on the positive side as this process takes shape.
Good. And any initial response from the FCC? I assume you've been in contact with them all along. This shouldn't come as a surprise to them.
Yeah. I mean, as a part of this process, before you file, we've had conversations with the Commissioner's offices and down to the Wireless Bureau about what we were trying to do and how we were trying to look at answering the questions that they raised in the original Report and Order. So they're no surprise to the FCC that this got filed. But they've got their process, you know, that they've got to go through, administrative, you know, kind of just bureaucratic procedures that are just a part of any kind of rule change request that they'll go through. But hopefully we'll see within a two-year time frame this come to fruition.
Great. Well, at the start, you mentioned the need for grid modernization. You know, certainly when we were talking about data centers and, you know, there is, it's sort of clear how much work there is to be done and how much capital needs to be spent here. You know, having an updated communication system is a big part of that. Help us with what are the kind of big use cases you're seeing, and presumably the companies that you've already got contracts with, you know, can help educate and inform and encourage the rest of the ecosystem?
Yeah, absolutely. Let me take the second part of your question first. I mean, I think, you know, from my perspective, one of the best sales forces we have is our current customer base, who get up at conferences or at forums like this where they can talk about what they're doing, what positive things are moving forward, what their use cases are, what challenges they might be having in some of the things they're facing for building out a large-scale broadband network for the first time as an entity. All things that are great for them to be up on stage talking about, particularly when they also mention how great Anterix is as a partner. But that's really important for us because they all talk to each other. You know, they're monopolies. They share. They share a lot of information about everything they do.
So, you know, it's great to have utilities, you know, just as at Tech, which is their big show they had last week. There was a lot of, you know, sharing and participating. We had, you know, huge booth presence there with multiple utilities coming in and out and talking to us about what's going on, but also talking to each other, which we think is a really huge part for them, you know, to move forward. And so I think that's a real positive step for us. From a use case perspective, you mentioned it when we talk about grid modernization. There's just so much change going on in the utility space, whether that's in the power generation side where you see wind farms and solar everywhere right now. And so a lot of that traffic now is two-way instead of one-way.
So that's got to be measured and monitored as to where we're going to send power today. There's also the proliferation on the usage side of very specific use cases now that are, you know, newer with things that are being faced, you know, EV charging stations now that are going to have to go up, you know, pretty much everywhere across the country to make the changes that the country wants to make from an electric car standpoint, you know, data centers and where those are and how much data they or, not data, how much power they need to generate to run those on a daily basis.
So there's so much activity going on that needs to be monitored and is, you know, really data-driven that has to be have a specific set of networks up and running that they don't have today to be able to measure, you know, what's going on and where they need to send power and all those types of things. That's just, you know, kind of a broad umbrella with what's going on. But we've seen, you know, one of our customers, their main use cases around fire mitigation with specific devices that help, you know, depower lines before they hit the ground and start.
Is that San Diego?
Yeah, that's San Diego. Yeah, exactly. You know, others are doing cost-saving initiatives by shutting off old legacy systems. You know, and there's just a movement to increase, you know, safety, efficiency, security on their networks as things like cyber threats grow and grow. So that becomes another opportunity for utilities. And again, you know, going back to my first point, just the proliferation of devices that are going to have to be put on these networks to measure everything that's going on, the old legacy networks couldn't really handle all that well.
You sort of brought it up with security, but why go this route, private network? You got to build your own network versus calling up Verizon. You know, AT&T's got FirstNet. You know, they're talking about network slicing and so forth. And, you know, that's, you know, certainly one route. There's other people who are looking at private networks as well. But talk a little bit about the competitive environment and why Anterix?
Yeah. Well, first, let me talk about. There are some core tenets of what a utility really wants with their network. So command and control. You know, being in charge of it and not having to rely on others is a huge, huge part for them. The ability to decide where to put cell sites. You know, those are just basic questions. You know, there's no people in certain spots where there might be substations. You know, and so they want to make sure that there's a cell site there so they can measure the activity that's going on right now. Well, a carrier may not want to put a cell site there because there's just no people. And so that doesn't. It's not cost-justified from their perspective.
You know, they get to make decisions about how to harden their sites, you know, so that when an event happens, the site doesn't go down or it's down for only a limited amount of time. They get to prioritize when sites come back up when there is an event if it goes down, you know, versus relying on somebody else to go forth and do that. So those are some of the core things they want. And then one of the other pieces that's extremely important on the utility side is the ability to capitalize cost. There's such a benefit to them for the cost capitalization side versus having operating costs so that they're able to get that rate of return, go through the PUC process, and, you know, and the rate payer pays for that at the end of the day.
That is a very big process that each utility goes through on a cycle with their state PUCs and their regulators. You put all those pieces together, and those become very important and why private and working with us at 900 MHz has been so important. I don't want to downplay the carriers and the heft and scope of what they have. Could they play in this space? Absolutely. But, you know, I want to focus more on what we've built here and focusing on the core tenets that I talked about for utilities.
And so, you know, with us going out and kind of building a marketplace where these to drive these private broadband networks, building an Active Ecosystem, the Anterix Active Ecosystem, as we call it, with 100+ vendors now who've put time and energy and money into products that are going to work on a 900 MHz private broadband network are all very important things that we've helped put together to help these utilities move forward and build out these networks.
Because I think initially it was a leasing spectrum model, but they really want to buy solutions, right?
Yeah, they do. I mean, and these use cases are very important to them. And when we see, you know, different utilities come in with different thoughts and different use cases, it's great because that helps the next conversation with a different utility about what they could do when they're trying to solve for something very specific because somebody else has already done it. And so they can see that. And so I think that that becomes, you know, an important piece of that cycle that we go through in the education and sales process.
Great. So you recently updated your demonstrated interest bucket. Can you just help by defining, you know, what's the criteria there and just your overall pipeline, where that stands?
Sure, sure. So first, I'll say it's Demonstrated Intent. But so, you know, one of the things that we faced as an organization trying to think and put out some forward-looking guidance around, you know, when these utilities were going to sign is it's very difficult to, say, pinpoint exactly when a utility is going to finish its process on a private wireless broadband network and sign the lease with us and move forward with the rest of their build and all those other things. And so we wanted to be able to have a metric that we could put out there that would show how our customer base is moving forward in its process to get there at the end of the day and eventually sign a lease at 900 with Anterix.
So we looked at, you know, the customers that we had signed, the customers currently in our pipeline, at all the different steps that have to take place for them to get to A to Z. And so we have, you know, 20 different metrics. Some of them are public. Some of them are not. Or we score. And they're weighted depending on kind of how much that metric actually means. And once utilities hit a certain score level, that's when they go into the highest level of Demonstrated Intent. And so right now we've got, you know, 18 utilities in that category with a little over $1.1 billion of value, you know, that have done a lot of things, like, you know, have people appear on panels where they're talking specifically about what their future plans are.
They've done things like put out RFPs for whether that's equipment or spectrum or things like that. So it looks, you know, it shows that they are serious about moving forward. And that's just a couple of examples. There are more in our investor presentation on our website from an example standpoint if people want to take a look at that. And so that's the scoring process we go through just to show that the pipeline has customers in it who are advancing. We can't tell exactly when each one of those is going to sign and come out because they're now a signed contract, but they are moving forward. And so, you know, in the last quarter, we signed Tampa Electric and took them out of the Demonstrated Intent category because they were now a customer.
You know, that's the process that we go through on a quarterly basis and that, you know, it's something we spend a lot of time on making sure that we're getting those right and that, you know, the customers are moving forward on that scorecard.
How do you get an estimate of how big that contract can be? Have they already kind of signaled what they're talking about here, or?
Yeah. So we look at the fair market value for the spectrum in that specific geography, for that set of counties that we're going to lease or maybe in some cases sell to a respective utility, knowing that spectrum values are different, you know, in different geographies. And so we'll go through that process. But pricing is a conversation that takes place relatively early in the process. You know, it may come up again when folks like procurement want to, you know, have their conversation with you about, you know, how much they're going to pay for a spectrum.
But we have, you know, already looked at the comparables, the things we look at, whether it's things like, you know, the 600 MHz auction, recent 600 MHz sales transactions that have taken place, you know, the AWS-3 auction and other, you know, private transactions that have taken place from a spectrum perspective. All of that goes into kind of our basket of what we think fair market value is and have that conversation with the customer again pretty early.
Yeah. Probably good to, you know, get that, you know, be on the same page if there's going to be some issue with it.
Absolutely. And it's an important part of the business case that they've got to put together.
Right.
I mean, that's just one piece of an entire project. I like to give the example of, you know, the spectrum fair value for a prospective customer may be $75 million or $100 million, but the entire project that they're working through, their process on, could be up to $1 billion. And so it's a large-scale, you know, development of a capital project that they've got to go through, operating committee approval or operating company approvals, holding company approvals, talk to their regulatory team about. And so that's all part of a long process that they take to move things forward. So we want to measure the activities that show they're serious about moving forward as part of, you know, going back to Demonstrated Intent.
How does that measure compare to the three buckets that you've talked about, you know, for a long time now?
Yeah. I mean, so.
Because we're talking two and three, right?
Yeah.
There's some Venn diagrams going on here.
There is. We do have a Venn diagram in our investor presentation that shows that demonstrated intent covers pretty much all the entities in stage three of the pipeline, but some in stage two as well. And that is really where we are when we talk about phase one, two, and three in the continuum of, you know, the sales process, more of a sales process? Are we having contract conversations, you know, where papers are going back and forth? You know, all those people are going to be in phase III where that's happening, you know, and some other examples of that. But the phase III has continued to grow over the past several quarters. We've also had some entities move from phase one into phase two. Phase one is really just that exploratory stage. Phase two is when they're starting their process.
They're building their business case, and they're starting to have more and more conversations internally and with us about their eventual path forward.
Somebody can be in phase two. You feel really good they're ultimately going to do it, but you know they've got a lot of wood to chop, so they can't go from two to three.
Correct.
Just, yeah.
Correct.
What gets them, I guess, is the contract stuff.
Well, the contract is just one piece of it. That was just one example of what I was throwing out. But there's also, you know, have they? This is just an example. Not all of them are exactly the same, which, you know, just like all our deals haven't been the same, the process isn't exactly the same. You know, have they had conversations at the operating company level where the president, you know, the presidents or leadership of the operating companies understand and have signed off and those types of things will move them, you know, that's another thing that you would look at, moving people from phase II to phase III.
Remind us how big phase III is right now?
phase III is about $600 million.
Okay. Great. Is it fair to think, like, phase III is on the five-yard line or the one-yard line or what's?
I would say phase III is in.
In red zone, or?
Closer in the red zone. But some of the what you've got to do there is an inch at a time from even that point on because, again, these are still very large projects that have to go through a process there. And some days, you know, you're going to get an inch, you know, and you've won that battle for that day.
So, I know we've talked about this a few times, but I think in the past you had some explicit guidance about we're going to sign this much in contracted business by March, by, I guess, the end of the month or something like that. You know, what happened? You know, what are the kind of the buckets of things that have caused the delays? And you've hinted at some of them already, but.
Yeah. I mean, I think, you know, it just comes down to what I was just talking about. I mean, these are very large transactions that are going through large entities. And so they have, you know, a lot of things internally that they've got to figure out and work their way through. There is not a whole lot that Anterix can do to move that process along when you're talking about, you know, a billion-dollar project. We're a small piece of that. But what our sales team does, and that's very important, one of the key learnings that we've had is, you know, early on with a customer is to talk about what their processes are. Does the team even know what they are? That's internal to the organization. So we've got that mapped out.
And so everybody knows what's going to have to happen and how it's going to go. Timelines for that, though, are oftentimes very, very difficult to figure out. Other things we've seen happen, you know, CEO"s change. And so capital approval processes get changed in the middle of a deal that we think is really close to being finalized. And, you know, and so things like that happen and just, you know, kind of out of the blue. But we've also had, you know, where there are hiccups, where they have, you know, priority changes for the next three months where the wireless network gets put to the side for a second and they go, you know, fight, you know, a fire or whatever they've got to do over here for a couple of months, then they come back to the project.
And again, managing that and managing internal priorities is not something that, you know, Anterix is going to be driving.
How many of these need to go through a rate case, you know, to get some, you know, big dollars approved by the PUC?
Yeah. Well, first of all, just like I talked about, every deal is different. Every process that the utilities go through as far as PUCs is very different. In some cases, they go through it ahead of time. They'll go through the PUC process. Some cases, we've signed a deal where they haven't gone through that PUC process yet, and that's going to come later. So again, it all depends on utility by utility, state by state, and how they do things. And, you know, and they're the key drivers of how they want to manage that process. So, you know, I wish there was a one-size-fits-all answer to some of your questions, but because you're dealing with entities that are, you know, kind of big and bureaucratic in a lot of ways, they do things their own way and on their own timeline.
How do we get comfortable that the fact that we haven't had the same deal cadence as, you know, I think originally you projected that it's not some, well, this may be not the right solution, you know, I'm going to have the Verizon guys in here next week or whatever, that it seems like maybe you've had one person drop out of the 60-plus, but, you know, what gives, how can you give us confidence that there's not a kind of a, well, you know, this is really interesting, but, you know, we're going to need a lot more work before we decide to move forward?
Yeah. I mean, we are seeing, and it's demonstrated by the Demonstrated Intent score that we've got, utilities continue to take steps to move forward and eventually get to contract with us. And so, you know, we had one small utility that we were working with, a municipal, that dropped out of the pipeline. But a bigger IOU covers that service territory. So it's not like we lost that geography, you know, in what we were doing to move things forward. But we continue to make progress every day. And so there are wins that we have that, you know, don't show up with a signed contract on a day-in and day-out basis. But we're confident that, you know, the Demonstrated Intent number will continue to show additional contracts in the future.
It's just very hard for me and the rest of the team to predict exactly when and on what timeline that's going to happen.
What's your protocol for if you do sign a lease? I mean, we had letters of intent back in the early days and so forth, but will you issue an 8-K at the time, or will you wait until earnings? What's the kind of public dissemination?
The structure that we've used in general up to this point is, you know, having a press release and/or an 8K come out at the time that we do a signing. Most often, we've done a call to discuss it and answer specific questions that investors or analysts like yourself have that are covering us. You know, will we get to a point where we're not doing that? You know, maybe in the future. But I think, you know, for us, it's important with where we are in our life cycle to continue that kind of public dissemination pretty quickly after we've done a transaction.
Yeah. Well, we appreciate that. And just to be clear on the FCC filing, that shouldn't be a delay factor, or do you have anybody in the pipeline who says, you know, I need 5x5, so, you know, it sort of depends until we see what the FCC does because 3x3 doesn't work for me? And this ties in, I guess, to things like 5G.
Yeah. No. So that has not been the case. So let me talk about a couple of things. From a 5G standpoint, we have gone through very specific processes with the 3GPP Standards Board so that the 6 MHz of spectrum at 900 can be used for 5G. And so our team has gone through a pretty arduous process to move that forward. And then that's gone through their process. So as a standalone, the 3x3 will meet the standards for 5G. So, you know, I know people have asked that question before, and I think that's now kind of checked off and moved to the background as far as we're concerned. And no, we haven't had any customers or potential customers say, you know, we're not going to do anything until there's 5x5 here.
You know, as of right now, all the use cases that are being discussed easily fit into a 3 by 3, you know, the 6 MHz that we've got and those networks that are being built out. But, you know, people think, you know, especially in utilities where they're doing, you know, 10- and 20- and 30-year plans, what else is going to come from a, you know, usage and capacity standpoint that we may have to have the capacity to do at some point in time? And so that was part of the impetus for let's try to move forward with 5 by 5 now because, you know, they said 2 years probably on the FCC process, but you never know. And then there's a whole process of clearing out incumbents and all those types of things.
So, you know, getting out ahead of that game and getting that ball moving forward is a great thing for us to do now, and I'm glad that we did. But we haven't had any customers that said, no, we're not doing anything until you get that done.
Great. So we had T-Mobile here earlier. It looks like they may be auctioning off the 800 MHz spectrum if DISH is not going to exercise their option. Is that of interest to you? Could that be bought by somebody else who might deploy this in a similar strategy with the utilities? There's a bit more spectrum there.
A lot of questions I don't know the answers to either, there on what's going to happen with that spectrum and who's going to be involved in a potential auction as it moves forward. So it's probably highly unlikely that we would participate in the auction, but we are talking to a lot of players here who may be interested in, and we'll see how that plays out and what use cases specifically could that spectrum be used for. So we're watching that one.
Okay. Great. And another spectrum band, some of the utilities bought themselves with CBRS. I haven't heard much about that recently. I don't think it's sort of taken off the way that some people were hoping. But what are some of, you know, does San Diego have some? What are people doing with the CBRS? Is that something they're working in conjunction with your spectrum for some of their solutions?
Yeah. Exactly. So we've got a couple of customers who participated in the CBRS auction, San Diego being one example, you know, where they are planning on using, you know, both bands, you know, CBRS for some very specific capacity needs in certain spots where they want to have that kind of, you know, overlay. And so that's been very important. We've also worked with a couple of vendors to make sure that there are dual-band chipsets that can work with both CBRS and 900 MHz so that they overlay together. And keep in mind, you know, there's also unlicensed that's out there that, you know, some people take advantage of as well and probably will with these because there's not as much need for licensed in their specific territories. You know, so it's, you know, it's a piece of the puzzle as we move forward.
I think, you know, everyone does realize the fact that it's not the greatest spectrum for, you know, a big wide-area deployment, and it's more, you know, specifically for, you know, small-area capacity needs.
Office buildings or something like that?
Yeah. Office buildings, campuses, substations, you know, and things like that where it can be a very specific use case.
Great. So if we turn to the OpEx side of the equation, can you just help us with how you see that evolving over time, where you are on retuning and just the kind of run rate, SG&A, et cetera?
Sure. So from an OpEx spend standpoint, we'll be, you know, roughly continue to be over the next couple of fiscal years in the $40-$45 million range. No significant change from anything that I've talked about before from that perspective. From a clearing standpoint, excuse me, we have gotten done with about 70% of the country, both from a cost standpoint and an incumbent standpoint. And so just looking at the pure 3x3 piece of it, you know, we are well on track with where we thought we'd be, both cost and timing. You know, then that's always one of the levers that we can push up and down. I think next year, you know, probably in the $20-$25 million range on clearing.
When you say next year, you mean year to March of 2025?
Yes. Through our fiscal year that ends March 2025.
2025?
Correct.
$25 million?
Yes.
$25, yep.
Correct. Yes. You know, and you know, one of the things that we'll continually monitor now when we think about the retuning process is the 5 by 5 piece of it. You know, do we want to find if we're moving someone into the 2 by 2 and then moving them again, do we want to avoid that? I think, of course, we do. So we'll look for ways to think through moving people potentially out of the band.
Okay. So some of the initial retuning was into the 2x2?
Yeah. Yeah. Exactly. Exactly. So that's something that we've got to think through.
Hello again.
Yeah. Think through. But I would say there's been less of that than I thought there would be because we have actually, when I think back to our original estimates, we've done way more purchases of spectrum than straight retunes as a part of this. So when you make that purchase, you're moving someone completely out of the band and they're gone. So, you know, there are less incumbents in the two by two than there were at the beginning part of this process, even with us moving some people into it. So, you know, we feel like we're in an advantageous position, but there's still a lot of hard work that's going to have to be done there.
So that's a $60 million-$70 million kind of cash outflow a year on that side?
Correct.
Okay. And so how do you think about, you know, using the proceeds coming in, keeping a cash balance, and then returning capital to shareholders?
Yeah. I mean, we look at keeping, you know, roughly $40-$50 million on the balance sheet from a cash perspective is where we want to be. And anything kind of coming in that drives what we call an excess of that, our plan, as we've talked about, with the most part of that is to return it to shareholders through share buybacks. And so it's our intent to continue to do that. We did announce in September our second share buyback program at $250 million. And the last quarter we reported on that ended 12/31/2024, we had spent about $8 million. And we continue to be active in purchasing our shares, particularly at, you know, today's price levels.
Okay. Great. And that reminds us of, I think you touched on, you've still got $80 million to receive over the next couple of years. Is that right?
Yeah. Correct. So out of $270 in contract proceeds, we've collected about $190. And so in the FY25, again, ending March of 2025, we've got roughly $15 million of contracted to come in. The rest of that $65 million is going to come in in the couple of years after that, just based on the way that the deals were structured when they were done. But we expect to have, you know, more additional proceeds from new contracts that we'll be signing in FY25, TBD on amounts and numbers of deals. But I'm looking forward to talking more about that and some of the details are. But all of that to say, you know, I expect, you know, on each quarter moving forward, us to be active in our buyback program.
Let's take a hypothetical $100 million deal. What would be the kind of typical structure of the payments? I sign the deal today. You want $25 million within three or six months and the balance two, three years later. What's the right way to think about it?
Yeah. And again, you know, as I've said now a couple of times, they're all different. The way they'll need to talk about the way we model it from our perspective. We expect roughly 20% the first year, 30% the next two years, and then 20% the year after that to get to that 100% level. All of them are going to be a little bit different. All of them coincide with delivery.
So 20, 30, 30?
20.
20. Okay.
Yeah. All of them coincide to when the utility wants to have spectrum delivered to them, you know, kind of with their buildout because they've got some used and useful criteria that they've got to meet where if they go through the PUC process, they've got to start, you know, the spend that they are doing. Customers and consumers need to feel the benefit of that pretty quickly. So sometimes they want to delay getting a spectrum piece until they can have the network buildout done. So that's the way we look at over a 3-4-year period in which we would collect the cash. Some will, you know, there's going to be a little bit of a longer tail. Some will be a little bit shorter. And it'll all depend deal by deal. But that's generally how we look at it moving forward.
You've done one spectrum sale. Is that right?
We've done two.
Two.
2. Yeah. So we did San Diego Gas & Electric and LCRA. Both of those were what the FCC designated as complex systems. We always knew when the Report and Order came out that complex systems, because they don't have to mandatorily retune, would be there'd have to be some creativity in putting together those transactions. I think, you know, a sale was a part of that. But we've also, you know, done some deals with some complex systems where we haven't done a sale. So, you know, those are all going to be, again, a little bit different.
If we look at that $1 billion, I mean, is that going to be 80% leasing, 80/20, 90/10, 100% leasing?
I think the significant majority of it will be leases, but I'm not going to rule out any additional sales. Yeah.
It's whatever, $50-$60 million on average. I think you've said there's, you know, I don't know if they're elephants, but there's a couple of hundred, you know, three-digit type contracts in that bucket, right?
Yeah. Absolutely. There are. You know, there are several just large utilities that have a lot of POPs, particularly valuable MHz POPs, where the spectrum is just worth a lot more. And so that would drive, you know, what we see as several nine-figure deals within the pipeline. But again, the average transaction, you know, is right around $60 million with half the pipeline above it and half the pipeline below it. And so we'll continue to see deals being done at a variety of different sizes.
Great. Talk to us about, you know, moving beyond the kind of IOUs. Where are you in your kind of pipeline and going forward on that?
Well, I mean, you know, so just let me talk about one of the transactions that we've done within the last year, which is LCRA, the Lower Colorado River Authority, you know, so a quasi-government entity, not an IOU. A significant set of their use cases were on the water side, not on kind of the electric utility and a lot of water monitoring with the Colorado River in Texas and all of that. So, you know, there are use cases that are coming from even outside of kind of the electric utility realm. We're also, you know, talking with different enterprises about potential opportunities here. The sweet spot for us, for all the reasons that I've talked about, is on the electric utility side.
Great. Well, just in the last couple of minutes here, I think we were talking early on about the challenges of GAAP accounting. And, you know, you have to amortize your upfront lease payments over whatever it is, the 20 years or whatever. So there's really a kind of very big difference there. But how should investors value Anterix? What's the right framework? I think early on, we'd done a sort of a per POP spectrum value. You know, in theory, you can do a DCF valuation as well, make some assumptions about the conversion of the pipeline. But then there'll still be some spectrum left over. So if you can just walk us through the.
Yeah. No, it really is a cash flow story, Simon, you know, because there are challenges when you look at revenue. You know, sales don't flow through revenue. There's a gain that takes place there, so that doesn't flow through revenue. You know, revenue gets, on the way we recognize it, gets diluted by time. Over a 20-year, 30-year contract, you know, it's such a long period of time; the revenue growth in and of itself is not, you know, going to be significant. So it's really the cash flow that we can bring in on a year-in and year-out basis. Looking at what we believe or even you believe in your models, we can turn into contracts and then how that's going to flow through from a cash flow perspective.
You know, this year alone, as I talked about, we've received over $106 million, you know, and we are returning a pretty significant portion of that back to shareholders.
Remind us, so your cash balance at the end of last quarter?
At the end of last quarter, it was $62 million.
$62. Okay. Okay. Thank you, Tim. Appreciate time and appreciate you joining us today.
Thank you, Simon. Again, thank you to you and Morgan Stanley.
Just one question. We were just listening to T-Mobile talk about spinning up a network for Formula One in Vegas and through the teams and things like that. What's to stop another, you know, like a T-Mobile from doing the same thing, the way they're just talking about doing it?
You know, the carriers all have big national networks and the size and scope of those where they potentially could. But some things would have to get solved around, you know, the OpEx to CapEx question for utilities. That's super important, you know, because they'd rather not pay by the bit or by the byte. On an OpEx perspective, they'd rather capitalize all those costs. And I talked about some of the other core tenets that they've got around controlling the network themselves. You know, so those are some of the key things that would have to get worked out. But could they? Yes.
Great. Thanks a lot.
Thank you.