Anterix Inc. (ATEX)

Fireside Chat

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Jul 10, 2024

Thank you, everyone for joining this fireside chat this afternoon. We're really happy to host Anterix, ticker is ATEX. It's a company that, you know, kind of falls under the telecommunications sub-sector, is certainly, you know, related to our coverage list and kind of where we're going in terms of looking at grid-related names. You know, with that, I'd like to just kind of give a quick run of show. We'll hand the call over to the Anterix team for an introduction, then we'll move into Q&A. If you have a question, during Q&A, you can ask it via the chat Q&A box on the Zoom screen, or email me or your sales broker here, we'll get the question asked. You know, the total runtime should be about 45 to 60 minutes today. Again, with that, really happy to host Anterix, and I'll hand the call over to Robert Schwartz, Anterix's CEO, for a quick introduction. Fantastic. Thank you, Sean. Pleasure to be here today. As you mentioned, I'm Anterix's President and CEO. I have Timothy Gray here with me, our CFO, and Christopher Guttman-McCabe, our Chief Regulatory and Communications Officer. It's a great time to be talking to you on the heels of our recent announcement of our Oncor transaction, our seventh major customer, in just about four years since we've had the ability to deliver our key service. Let me step back for a minute and just kind of talk about the who we are as Anterix and the reason for being in this critical time in the energy sector. You know, we're helping utilities build a new digital foundation for the future of our nation's electric grid. You know, what does that mean? We own a proprietary scarce asset of radio spectrum, 900 MHz radio spectrum across the nation. Something that you mentioned earlier that, you know, we're a telecom company at our roots. We're founded by the founders of Nextel. We built the nation's first wireless service nationwide. You know, before AT&T, Verizon, T-Mobile, all the services you know, there was Nextel's national network that supported critical infrastructure, importantly, with a differentiated service and a long-standing relationship with key sectors, including the energy space. Using that knowledge and capabilities, we've now built a team that now I think is outnumbered by our utility capabilities and experience set because we have this spectrum, and what we're doing is we're helping utilities build very valuable, private, secure, resilient communications networks that many are calling kind of the third grid of the energy sector. Because the necessity to have resilient, private, secure communications for so many of the changes that are occurring within the sector that you could teach us even more about than we could talk about on this call today, given all the research we've seen from you. The needs, the list continues to grow. I mentioned cybersecurity, decarbonization, distributed energy, now with growing demand for energy across so many new use cases. All of those elements of the transitions that are occurring within the energy sector require much greater situational awareness, much greater control. As we emerge into this digitalization of the grid, that requires a level of connectivity and communications and broadband connectivity and secure broadband connectivity. That means sensors, controllers, monitors, things that are allowing us to have greater awareness, to create better efficiency, to prevent, you know, catastrophes. Unfortunately, they're happening at a growing clip, unfortunately, like what's going on in Houston as we speak. It's allowing us to really be ready for the data revolution that's occurring already. The use of artificial intelligence, the use of the ability of collecting valuable data, and I differentiate because today there's data sets that I kind of call data puddles, right? In the world of data lakes, where the goal of every IT organization is to bring together as much information as they can, and from that be able to analyze and make powerful decisions. That's not a landscape that utilities have the advantage of having today because of the legacy networks historically they put in place for so many of the communications requirements. Now that we're making available our nationwide spectrum, and we do so, our standard model is we're leasing long-term to utilities. Those are 20, 30-year leases with major IOUs, and we've done so. We'll talk about the 7 that we've signed on and the more than 30 that are in our pipeline now. We're allowing them to build on and operate their own Private LTE networks. Now, each of those networks is their own discrete, controlled asset, importantly that they're capitalizing through their approach with their rate cases, but at the same time, they're part of a nationwide network of networks. And as we're making greater penetration in the nation, that's really our objective. And I made the reference to our Nextel roots as important because we're coming at this from not as a one-off transaction, we're trying to sell, you know, widgets to customers. Instead, we've taken a holistic approach, and we've really taken a collaborative approach, where our objective, our bold objective, is to be the de facto provider of this kind of capability, but humbly to the utility industry. As we're working with all of the key parties, from the federal and state regulators, the industry associations, the government entities, including the national labs, we're really driving a broader understanding of the essential nature and why there needs to be a centralized coordination of the way this gets rolled out across the nation. I mentioned the 7 utilities that we've signed on so far. We can go through the names, LCRA, Ameren, Evergy, SDG&E, Xcel, Tampa Electric, and Oncor most recently. In total, that's about $375 million of contracted proceeds. Those proceeds are being paid upfront in those long-term agreements over the first several years, because that's advantageous both for us, to be frank, but more importantly for our customers and their need to put that into their rate cases as they capitalize these mission critical networks. To date, I know, Sean, you've monitored our last quarter. You know, we still have $186 million of that capital to be collected. Those are signed contracts to be collected. We ended the quarter with $60 million of cash in our balance sheet. We're debt free. We have a very unique business model and capital structure where we're, you know, in an all equity world, and we're using that cash already, and Tim will talk about it later, to buy back equity at a fairly regular clip. For us, the expansion vectors for here are continuing geographically across the nation, and we'll spend some time talking about, you know, the continued demand we see. As you know better than us, this is an industry that works hand in hand in lockstep. Once we start breaking into this critical mass, we're seeing more and more interest, both nationally but interestingly regionally. Oncor was our third utility in Texas. We now have over 80% of the counties in Texas that are licensed to our customers. We're seeing this neighborhood effect, as I'm calling it. You know, we have Ameren and their neighbor, Evergy. We have, you know, expansions happening in other places, where we have other customers. For us, we see the viral aspect in a positive way of the growth of this network. It has the network effect. You know, Metcalfe's Law, which says that every time you plug another valuable thing into a network, it makes the network more valuable for everybody. For important use cases like mutual aid, where you can have interoperable communications, simple idea, but today in Texas, different utilities are on different old, you know, old school, private narrowband communications, and they can't interoperate and talk to each other. When they're dealing with mutual aid situations like in Houston today, unfortunately, they're having to get paper manifests to figure out how they help each other and roll back to a parking lot to communicate in person versus having real-time broadband communications to be able to be more efficient and therefore be more resilient as a utility to bring services back to protect, at the end of the day, their consumers. Let me pause there. I don't know, Chris, if you want to add anything else. Yeah in your seat. Thanks, Robert Schwartz, and Sean and team, thank you. The only thing I'm gonna add is a reference back, Sean, to how you framed this discussion. You know, Robert Schwartz, Timothy Gray, Natasha Vecchiarelli, and I, and the rest of the team at Anterix, we see ourselves sitting at the absolute intersection of what you framed. You know, obviously at our core, we have wireless roots, but our heart and soul is in the utility sector, and we're really focused on the new realities, as Robert Schwartz referenced, for the utility sector. The clean energy revolution as part of the move to decarbonize the integration of distributed and oftentimes renewable energy resources. Addressing the reality, as Rob referenced, of new, more frequent, more intense weather patterns, more frequent, more advanced cyber incursions, you know, the call to electrify everything, the integration of data centers, you know, integrating, again, artificial intelligence, not just for society as a whole, but for utilities specifically. You can go on and on. Machine learning, cloud and edge computing, all of those really are going to reside on a broadband communications capability. What we're doing for the first time is providing utilities with a wireless component to that, a private, secure, wireless broadband component that allows them to take the intelligence out to the edge so that they can compute or communicate that information back and then act upon it. You know, we really do see ourselves and our company at the epicenter of that new evolution, we've created an ecosystem of 115 really cutting-edge companies, many of them, you know, a bunch of them you cover. Also a community, as Rob referenced, of senior level utility advisors who are helping us really get a sense of what their needs are. It's all focused on that intersection of secure, advanced, private wireless communications combined with really advanced evolution of the utility grid. Okay, that's great. I guess, like, to start to kind of level set everyone, can you maybe give us a little bit of the background in terms of Anterix's ability to acquire the 900 MHz spectrum that it has, and then sort of the evolution of the decision to then go target utility customers and kind of critical rulings around the FCC that allow, you know, has carved that opportunity out for you as a company? Sure. Absolutely, Sean. It's a great question. Really to fast-forward our, you know, our long history, it's really a great time to be talking to energy investors because, you know, we did start, as you mentioned, you know, almost a decade ago, believe it or not, with an idea which we acquired this spectrum. It was owned by Sprint. It's actually spectrum that we had put together at Nextel. Nextel was bought by Sprint. It was being underutilized, narrowband channels. That means you could only use it for sort of legacy two-way radio-like uses. We went to the FCC in a process that took a long time. This is, you know, really what I think of one of the many core competencies of what we have. The FCC, the regulatory, the inside the beltway issues of understanding how to take underutilized communications assets and spectrum specifically, take them through this regulatory car wash, if you can call it that, to get an FCC ruling. That was about 4 years ago, May of 2000, when we got our final Report and Order. We'll talk about kind of the growing groundswell from utilities that supported that really drove the launch of our understanding and the demand side for us to commit to the utility space. This is spectrum that can be utilized for any purpose, you know, per the FCC licenses. You know, it could go into Verizon's network, it could go into, you know, a global satellite network. We chose, as we looked at it, when we looked at all the demands that are happening, right? The idea of private broadband networks was a very nascent concept, but something that we saw that there was going to be continued growth of industrial demand. From an Exadel background, we served a lot of those industrial sectors, and we spent a lot of time understanding the difference between each of them and the demand side, both who had the need for it the most, and importantly, obviously, who had the ability to pay for the market value of the spectrum. Spectrum is very much like real estate, you know, it exists throughout the nation. The value of it varies just like an acre of land, you know, in New York City versus, in, you know, Dubuque. The aspect of the history and pricing and value of this was something we understood well. The first value equation for Anterix was taking it through this FCC process to convert it from being used for narrowband and allow for it to be used for broadband, that was an important value capture for us. Upon the heels of that four years ago, we set out then to drive relationships with utilities, Ameren being our first, the pioneer that stepped forward to understand the essential need. Ameren had remarkably over 20 different disparate wireless networks when they did the assessment. They literally used to call it their spaghetti chart. When you look at the layout of all these things through Illinois and Missouri that they were doing, each time they had a problem, they put out a new wireless system to solve it. They had an AMI system, they had a two-way radio system, they had a SCADA system. You just keep layering these on top of each other. The cost justification of moving forward for them alone was just on the reduction of all of the OpEx and importantly, removal of these legacy networks that are going to migrate onto their broadband network that will now be secure, right? Cybersecurity, as you know well, is a growing issue for these utilities. Both the risks and costs of some of the cybersecurity incursions that have already happened, we heard about those in this FBI testimony recently, in Congress. There's many more that have happened that we haven't publicly heard about. What we're seeing as a demand side, that's a big part of what's growing for the need for this spectrum. We own the spectrum nationwide in the full U.S. and all the territories. Our objective is to continue to monetize the spectrum. As I mentioned earlier, we've done so on about $375 million. We have probably over $3 billion of continued pipeline opportunity on this spectrum asset to give you an idea of the magnitude of the asset on our balance sheet. That asset can be valued based on prior transactions. For those who aren't familiar with spectrum, the FCC has held auctions for spectrum in the past. There have been a number of private transactions that are publicly available as information. When we have these discussions about spectrum value with utilities, there are, you know, bookends as we think of it, with market values, and that's how we drive to fair market value to conclude these kinds of transactions. Importantly, we're just looking forward. We also now have a filing at the FCC, which we've had broad support from utilities and the industry for expanding our spectrum band. We currently have 6 megahertz. We call it 3x3 because there's 3 send, 3 receive, but that's 6 megahertz. We have an application in now to expand to 10 megahertz, which is the full band around which we've been sent in with our 6 megahertz. The good news is that we've seen tremendous support, utilities, industry associations, vendors, because now that we have this broad ecosystem, as Chris cited, and we have customers current and prospective, they all want to see an expansion strategy. Importantly, just to transition that, it really defines the role that Anterix is playing. This isn't about being a transaction company where we bought a spectrum for this price and we're flipping it for that price. This is about the nationwide network that we're building, the foundation of which is the spectrum. Upon that, we're then building important things where Anterix continues to keep this capability evergreen. I've lived through the wireless revolution since the early nineties. You know, we used to just make phone calls, then we added text messaging. Now we're doing so many things that are just application layers being added. Our job is to bring this ecosystem together to solve the critical issues of utilities. Chris cited, we have this utility strategic advisory board, one of my favorite meetings that we have all year round, which is when we bring together C-level leaders across our existing customers, importantly, some prospective customers, to talk about the challenges and the way that they want to drive the usage of Private LTE. It's not us dreaming in a, in an R&D center about wouldn't it be great if we could find customers to do something. They're telling us, you know, we must have better mutual aid capabilities. We need to manage the borders between these utilities. We need better cybersecurity applications. Those we're connecting up directly with our Ecosystem Program, where we have those over 115 companies. We have a separate, and within it, a cybersecurity collective as an example, with eight companies that are just driving incremental cyber capabilities for this kind of private LTE network. LTE as a technology is, this is the standardized global technology that all of your phones use, what every carrier around the world uses. We're now following the innovation curve of the global cellular market, which is a huge advantage versus a lot of the legacy systems utilities had that were one-off technologies, many of which honestly have hit dead ends. Migrating instead to something that's a standardized broadband pipe, and now it's about integrating valuable applications into that pipe. That's what we're focused on for utilization of the spectrum. Okay. You, you sort of touched on it with Ameren, but was just hoping you could maybe explain or go into a little bit more depth around, like, the current environment. If you're a utility today, what might you currently be using? You know, what are some limitations like that? Is it only, you know, you're only receiving data back, you're not able to send data? What other options are available to them? Is it, you know, in the public space, what are their options? Are there any other private providers of networks out there? Sure. Sure. To start at, in, my colleagues have covered it now, I think, I did start to talk about some of the Ameren situation. To talk more broadly, you know, the existing systems, and utilities have been very innovative. They're really some of the first industrial users to adopt the use of private networks. This is not a new idea for utilities to use private networks. This is an evolution of the private networks they've operated for decades and for so many different things. Historically, those were individual networks for single use cases, and that was the approach. You know, that you needed to put out a new meter system, you went and put a rate case forward for AMI 1.0 for smart meters, and you put out a mesh communications network to support really reading meters for billing, right? Those systems have been pushed further as far as they can go with what really is a trickle of data that comes out of those meters. It's amazing what data has been utilized, that data's been utilized for to try and do some analytics and decisioning. The majority of the important assets in the network don't have connectivity, right? In a lot of places, a tree falls on a line, and that line falls. They only know that occurred when the neighbors call on their cell phones, and then the truck rolls around the neighborhood looking for where that line was broken. In the communications world that we lived in, having built a nationwide network, we can see every asset everywhere from, you know, the centralized cell towers out to the devices in your hand, that if any of those points fail, we know instantly, and you can deal with repairing that. That's the resiliency that utilities need, especially in this rapidly changing environment. What happens is really, it's a pervasive deployment of low-cost standardized sensors, and those could be on transformers to do predictive analytics. Those could be, you know, thermal cameras in substations. Those can be controllers that can eventually be flying drones to be able to do things to, for safety to take some of the human element out of the riskiest parts of the network. There, these are all applications. Just like on your phone, you continue to download new applications to do new, interesting, and valuable things. We're working with this ecosystem to drive this breadth of capabilities into it, that some of them are improvements of current systems, but a lot of it is actually new access to things that weren't previously available. Ameren, you know, was deploying the thousands of new reclosers and teleprotectors, and they couldn't get to communicate to these things. They were manually being operated in places, rolling trucks to be able to deal with outages. Instead, now, if you have, you know... This particular band that we own, 900 MHz, it's called low-band. It has really got some of the best physics of any spectrum available. What that means is that with a single cell site, you get the broadest coverage. There's a cost economics of that. You put an antenna up on a high tower, and you can reach for miles with that. That says that every asset within that area can have a low-cost monitor to understand exactly how it's operating. As we go into a data-intensive AI world, the ability to be able to collect all that data and use it across the lines of different systems, right? Historically, we had, you know, AMI billing information in one database. We had SCADA information somewhere else. We have, you know, the two-way radio system communicating. When we can put all that data into a pool and can be assured that it's high quality and be assured that it's secure, the ability to do analytics and decision-making on that is very valuable, and that's kind of the ultimate opportunity for us to drive with the systems. Okay. Again, like, just to kind of touch base, though, in terms of today, like, who are you competing against when you go to sell to a utility today? Is it a larger public network provider or just kind of? So- frame that up for me, if you can. We take it two ways. Honestly, our biggest challenge in getting utilities to yes is just change, decision-making. You're seeing this across the companies that you provide research on across the sector, that these are entities that were built to really protect the system exactly as it was for as long as possible. Now suddenly, there are such demand drivers that are rapidly changing the way in which it's happening. The decision-making is. I talk internally about, you know, our biggest competitor is inaction. The good news is I think we've really turned the corner. The realization today that utilities must put out broadband communications networks, private, secure for so many cases. We have, you know, utility CEOs, we have industry leaders talking from the podiums at many of the national events from, you know, EEI and DistribuTECH about the essential nature, those who have committed and why this has to happen. We have an EPRI paper that's been published recently talking about this. I'm focusing on that, Sean, because I want you to realize from a competitive standpoint, that's the piece that we see as the biggest challenge is impacting that change. That being said, from a competitive standpoint, absolutely the carriers have a valuable business providing services. Public carrier services are very different. You know, there's it's kind of the old Ford comment of any color you want as long as it's black. The idea here is that this is a bespoke system that is private, and private means a lot in a security standpoint, private means a lot in a control situation for the utilities to have control of it, and it means a lot for them in a financial return standpoint because this is a system they're investing in and capitalizing in. Private alone is really a big part of the justification. They deploy it where they want it, how they want it. Remember, they've got assets, as you know, in places where there isn't wireless coverage. While there are alternatives and there's other spectrum bands, none that are focused and dedicated just to this use or that are in this beachfront property space where we are. Okay ... we haven't seen the, you know the competitive threat to date has been pretty light. It's really been about how do we drive and help utilities collectively drive forward, in moving into this 900 MHz ecosystem. Okay. Can we talk about the go-to-market strategy? Obviously, you know, this has been kind of a longer process for you all from Ameren, but it seems to be accelerating more recently. Just, you know, kind of the process of selling to utilities and then some of the things you've done around standing up an association to help kind of move the conversations forward, and then also the ecosystem. You know, I guess the thought process would be, you know, sometimes utilities tend to move rather slowly or things are changing more quickly than they can appreciate and adopt. You know, what are you doing to kind of move that conversation forward and how does that look for you all today? Go ahead. Hey, Rob, why don't I start on that one and then hand it back to you and to Tim. You know, Sean, as Rob referenced, we specifically obviously chose the utility sector, and we realized when we did that that we were gonna really have to build the marketplace. As you referenced, Sean, we actually created a trade association, Utility Broadband Alliance. We founded it, we stood it up, we helped to finance it, and then a couple years ago we actually set it free and it went back to the, you know, to be independently run by the utilities. We also created the ecosystem. All of this was designed so that what we were doing at Anterix was much more than just a spectrum offering. We were helping to address needs of utilities, and we were providing a solution set. We look at it that way. We look at it more like, yes, it's gonna take a utility sort of a while to get through a large capital intensive project like integrating, standing up and deploying Private LTE. What we try to do is give them that justification. A core element of it is, as Rob referenced, the ability to capitalize the spectrum, capitalize and obviously also put into the rate base, the spectrum, the infrastructure and other components of the build. It's also to really justify both internally to the leadership of the utility, but also to policymakers the absolute value of this investment. You know, that takes some time, but we are confident that we're obviously on the right pace with 7 utilities across 15 states. When you combine the deployment of those 7 utilities, they are much larger than any sort of non-nationwide wireless carrier. We are finally getting really significant scale across those 7 utilities. As Rob had referenced, our goal is to really develop and deploy a network of networks. Integrating ultimately these utilities, having 80% of the counties in Texas gives you a good visual description of that. You know, that's our goal. Yes, it obviously it takes some time, but it is extremely valuable for Anterix, for our shareholders, for our customers, for our ecosystem members. You know, we see it as the right approach, then we see scale benefits beyond that, as Rob referenced, from a collection and aggregation and action upon data, but also driving scale and scope in everything from, you know, tower access and equipment access, but also research and development. Yes, definitely it takes time. These are big contracts. These are big investments. We, you know, we recognize that it takes some time. We're set up, as Rob referenced, zero debt, you know, very nimble company, getting close to 100 employees. We're set up to really tackle this, unlike any other product service in the wireless space or in the utility space that I'm aware of. Yeah. I think, Chris, the one other thing that's important to note is the size of our pipeline. Yeah. We've got over 60 utilities in that pipeline with a value that's in excess of $3 billion. Our sales force is focused on driving those utilities that are within our pipeline that roughly represent 90% of the value of what we think our spectrum is worth to get through their process. They bring resources to bear to help the teams that are working in each one of these utilities on their path forward on building out a wireless network. That being said, the other part of our sales force, quite frankly, that's almost more valuable than our own internal resources, is the customers that we've already signed. When they're out there sharing information, as you know, they talk to each other, they go to all the same conferences, and the successes that our customers are now having by deploying these networks and putting use cases to work, is they're talking to each other. Other utilities are learning from their brethren about what's working well for each one of them and what a great partner Anterix is in making that all come together. That's the focus of our real sales effort, is continuing to move those processes along, because these are very complex projects for these utilities that do take time. We want to support that as much as possible. Okay. That's a good segue. You brought up the pipeline, you know, the $3 billion+ in pipeline. There's a couple good slides in your presentation in terms of how you break down pipeline and the critical, you know, pieces like where they fall in the funnel. Maybe we could just spend a few minutes discussing that in terms of, you know, how you move customers through the pipeline and, again, just, you know, the size of the pipeline and what you think that represents relative to maybe the total market opportunity that's out there. Like, is your pipeline still small relative to the total that could be out there, or is that a significant piece of what's available in the U.S.? Sure. Let me start on that. You know, we talk about our pipeline in 2 ways. One is the phases of the customers, kind of a traditional sales funnel aspect, and we disclose on a quarterly basis kind of updates on that to give a perspective. As Christopher Guttman-McCabe referenced, these are large and time intensive transactions. Sales cycles are long. You're well familiar with that from other companies I'm sure that you cover. With that, we've created really another way to look at it. We call that Demonstrated Intent. That's a series of 20 measurements that measure things in which utilities have done that we believe have begun to demonstrate their intent that they are planning to move forward with a Private LTE opportunity. In combination, when you have enough of those, and we have a top echelon in our highest Demonstrated Intent scores, because it's a quantitative weighted 20 factors that we add up. We have about $1 billion in that top category. It's something we measure and report on. We actually use it as an internal system we use for our own sales measurement and incentives that we've decided to start publishing because it's challenging when you have a lumpy business like ours, and you get, you know, 9-figure deals like Oncor that we just announced in, there can be a period of time between that and the next transaction. That's the nature of it. Every day, we're seeing measured progress through these ways in which utilities are demonstrating intent. That could be, you know, standing up on a podium in one of those events like I talked about, someone who's not yet a customer but is talking about their intention to move into Private LTE. It could be the level of conversations that we're having and getting into contract discussions with them. There's a whole series of things, some that are public, some that are private, that we use to measure that. I think, you know, overall from a pipeline standpoint, we talk about that our pipeline is, you know, in the $3 billion range currently. You can segment that into, you know, the Demonstrated Intent categories. We can segment it to those that are moving down through the funnel. The total addressable market for us for spectrum monetization, importantly, is that on top of that, which is important, and we're putting more and more effort into this, as customers are starting to build their networks and are starting to. Just like, you know, when you bought your iPhone, and you had 3 applications, and now you look at your phone, and you have pages of applications, they're starting to have greater needs. I think you asked a question earlier about, you know, the ways in which these customers, what's driving them to yes. Often it's a very specific need that can't be addressed otherwise. Take an example of San Diego Gas & Electric, right? One of our important customers is, you know, a Sempra company, as well as Oncor, our most recent customer. San Diego separately made their own decision based on the need for a very low latency, very fast speed communications network to prevent wildfires, wildfire mitigation. They have a program that they call Falling Conductor Program, which basically says if something happens to a line and it breaks, you know, in a storm, or in some bad situation because, you know, vegetation or otherwise, there's about 1.4 seconds before that broken line hits the ground. In that time frame, they wanna be able to depower that segment, and they've effectively developed the technology with Schweitzer Engineering Laboratories that does just that. They put sensors on the line, they can measure the current that it stops flowing. They can turn off that power and prevent it from being a live line by the time in that 0.4 seconds before it hits the ground. That's wildfire prevention, importantly different than detection. There's a lot of good, you know, technology. They have cameras and things to see when fires have started. This is about stopping a fire before it has a risk of even beginning. You can imagine the value of that use case if you stop a single wildfire. That was the pinnacle of their needs. Very quickly as they went down the process to find this communications network to enable this kind of use case, because in the traditional world, it was you have one use case, you build a communication system just for that use case. They said, "Well, we've got all this new distributed energy. We've got battery storage, we've got wind, solar, other things. Can we connect those assets in a cheaper, faster way?" They are. They've got battery storage connected. They're using it to have greater intelligence of, at any given time, where power is being generated in this new distributed energy world, and where it's being consumed, importantly. We're gonna see greater penetration of communication sensors into meters. We're having a growing groundswell from our customers, current and future, about can we use these broadband networks now to serve the AMI 2.0 equation as well. Architectures are being developed. We're having leading vendors like Itron that have announced a line of meters that work, that are Anterix active, that work on our Anterix networks. We just came from the EEI event, you know, just a few weeks ago, their annual convention in Las Vegas. Nvidia's CEO spoke there, and the following morning, you know, we had meetings with them and some other leading technology companies about how do we get this level of compute power, Nvidia chips, to the edge. You know, their vision, they've invested in companies to try and drive an Nvidia chip into the meter. It's not even appropriate to call it a meter. It'll be an edge compute box that will have metering as an application but will do so many more important things both in front of and behind that meter with that compute power. The realization of Nvidia and others is you can't do that without a broadband connectivity path. You can't put that level of compute and capability without connectivity to be able to see and control a decision off that data that's being happening at the edge. Those are the kind of current and future use cases that we're seeing driving demand and driving our customers through this large scale pipeline. The number of use cases just continues to grow, just as a last point on it, right? You know, we started, Ameren had 14 different use cases when they, as our first customer, and they justified. We now have lists of dozens of use cases that utilities are currently using and even more that our ecosystem vendors are driving. Again, just like that LTE phone that we all carry, every time you add an application, there's very low marginal cost. It's greater return on this investment in networks, the spectrum of which is a minority of the cost of building it, but an essential piece of unlocking that value. Okay. Like, in terms of the contracts that you're signing, like general terms, like durations, escalators, what's the right way to think about sort of like what the average contract is gonna look like with customers in terms of duration and the ability to reprice that in the future? Like, what's the pricing mechanism? Is it based off of megahertz pop nationally or something? Like, how do you think about that? Great question. megahertz pop is kind of the back of the envelope for those who aren't familiar with. We take, you know, the total megahertz you have, in our case, six megahertz, and the population and kind of divide one by the other, and you get kind of a back of the envelope ratio to say this is about what spectrum could be worth in that particular county. That's important. Our licenses are by county, we customize the footprint to a utility's footprint, and that's a important value that they get from working with Anterix. Chris Steiner, do you wanna elaborate on that one a little further? Yeah, I'd probably throw it to Tim as well. I mean, the fact of matter is, we've said this, what we see is, we price our contracts at what we call fair market value, and it's kind of the sort of down the fairway between two of the more recent auctions. The goal is, and we don't really focus on price per megahertz pop, although, Sean, we do know that a lot of folks sort of measure us by that, but that's not really specifically how we look at it. We want to make sure at the end of this that there's really fair market value for Anterix and our shareholders and also a really a fair market value for our customers because, as Rob referenced, the leases are 20 or 30 years, often with extensions beyond that. Even with the sales contracts that we've had, we want a long-term relationship with these utilities. Everything we're doing is designed to create a long-term relationship with our customers. You know, the goal isn't to scratch out every, you know, every dime on the front end, right? It's really designed to have something that is absolutely fair market value, absolutely beneficial to our shareholders, also absolutely beneficial to our utility customers, creates an opportunity for us, as Rob referenced, to be able to provide products and services as we go forward to the extent that those are needed. Tim, anything else? I'll just say, you know, we have done seven transactions to date. Four of them have been leases that range from 20 to 30 years. Each one of those has multiple renewal periods built onto the end of it. You know, that's not included in the amount that we announce when we announce the contract value. There is additional upside to that value when then we hit that time period. Also keep in mind that on those long-term leases, we're getting paid up front. We're getting paid in the first several years of that deal, even though it is a 20 to 30 year transaction. For us, it's very much a cash flow story in being able to bring those proceeds in earlier. As Rob mentioned earlier, you know, we've signed about $375 million in deals. We've already roughly collected half of that, and still with another $186 million to be collected from deals that we've already signed. You know, from a cash flow standpoint and a cash flow story, we're in very good shape. I do want to come back to that, to the financials, in a second. Like, in terms of the ability to sign a deal, bringing cash to today or three years from now, that's a 20-year lease, right? I guess looking ahead, how do you see Anterix, you know, deriving revenues from that lease? Like, is the selling of additional products and services related to the ecosystem and kind of carving out fee-based revenue off of, you know, customers using ecosystem partners? How do you think about that in the future? Yeah. Precisely, right. The leases themselves, 20, 30 years, you know, typically 10-year renewals, multiple 10-year renewals on top of that, the residual value's there. Then obviously the geographic expansion of, of the rest of our spectrum. I kind of talk about it as kind of vertical expansion. If you think of spectrum as a horizontal expansion, vertical is getting into services and products. We're really being pulled into this both because of the way we put up the ecosystem initially to demonstrate the valuable use cases, but we're being asked by utilities to continue to offer them capabilities to kind of fill in the white spaces, help add value to these devices. If you just think simply about, you know, we're visiting utilities, and they're out doing the exact same assessment and testing of which device do I hang on a pole. You know, what's the best way to negotiate a lease for a commercial tower for me to hang something on there? How do I get a lower cost communications module that includes these needs? These are all examples of things that we're working with our partners, importantly our ecosystem partners, to develop better capabilities. We're really using the scale and scope of the nationwide utility network. You know, we're used to being a nationwide wireless carrier. Utilities, while they're big footprints, they're pretty tiny when it comes to the scale of purchasing that they could do individually from any of these key vendors. You know, SIM cards, the very simple idea of a SIM card, that's something that you're dealing with, you know, a couple of companies around the globe that do that in such scale with existing carriers that they can't, you know, even return the phone calls to individual utilities sometimes. We're bringing that scale and scope. I see it as adding value 3 ways. First to the customer, That offers a better value equation for them than if they were to go out on their own to try and do it. The second is to the vendors in our ecosystem, to our partners, that we're becoming a channel for them to have access to all these current and future customers, it makes their process more efficient. Lastly and importantly is capturing value for our shareholders as well. Those are kind of the three legs of the stool of the product expansion, which we honestly have a long list of areas that we're focused on. We're gonna continue to be talking more about that. We're not yet at the point where we wanna put out kind of the scale of the dollars of what it is, but we're wildly excited about that as an expansion area for us, and we're putting a lot of time and effort into driving it. Last point of that is it's relatively capital non-intensive. Doesn't require a lot of capital in the kind of examples that I gave you. A lot of our existing resources are driving those things out of our ecosystem. Clearly we have an ability to continue to drive it and grow larger if we see bigger opportunities and return for our shareholders. We have a pretty high bar on the kind of business model we have today that Tim described. We sign a lease, the vast majority of that flows through to the bottom line because, you know, the cost structure that we have in place, it's cash flow. It's a cash flow story for us. You know, revenue- Yeah is not that different than cash flow at the end of the day, minus our OpEx. It's a pretty clean and simple model to understand today. We'll only go into things where we know that are gonna either add value in those three ways I talked about, or that are essential to help continue to drive spectrum acquisition. Okay. Yeah. No, that's great. Also just to kind of frame this up, the lease for a customer, the lease cost relative to the total cost of moving to a private network, you're a portion of the spend, right? Can you frame up what portion of the spend you are? Yeah. From a network build-out, we're roughly 10%-30% of the total cost of that network build-out. That's gonna depend on the value of the spectrum, as well as their geographic size, how many cell sites they need to put up and that type of thing. That's gonna drive that kind of the overall cost pool. You know, for example, you may have a billion-dollar network build-out of which the spectrum cost is, you know, somewhere between $75 million-$125 million, a very, you know, relatively small portion of the overall cost that the utility is gonna see, which is one of the reasons why these projects take time to move through their internal processes, is because they're such very large projects, and it's not just that spectrum lease that is getting approved within the utilities. The other thing strategically what Tim is saying is that because spectrum is the unlocking piece of the puzzle, you can't build these networks unless you have access to the spectrum. It puts us on the front end of the thinking of these utilities, and once the transactions are done, like Oncor, it puts us on their side of the table to help them as a partner with, you know, with their economics locked in to be able to figure out how to build value out of these networks for the next multiple decades. It's a great position to be in for us to be able to drive this continued expansion of value for the customer and value for our shareholders. Like today, those are professional services you're providing to the utilities. Are you billing extra for that, or that's just part of the lease agreement today, like when you're doing the consulting on the front end? To date, we've included it. Okay. Really it's been part of a learning process to, we're using it as a way to help better understand the customer, the customer's needs, so that as we develop these incremental products, that we're filling a pent-up demand. They're asking us for those things. So we're at the table identifying where the white spaces, where the gaps are, where the needs are, and we're best positioned to be able to help bring forward using our ecosystem partners the solutions. Okay. Turning to financials kind of for the last few minutes, obviously it's a cash upfront story. Generally speaking, like, you know, you receive cash year one and year three, or can you frame that up for us, how you're structuring the contracts? What minimal, you know, your cash obligations as a company are on an annual basis, like how you're managing expenses moving forward. Sure, yeah. A couple things there. On a, on a typical lease, we'll see, you know, within the first three to four years of that lease, we'll see all of the payments come in from that customer. That enables us to, you know, be that cash flow story that I talked about. Last year, in our fiscal year that ended in March of 2024, we collected over $106 million from our customers, which enabled us to have over $50 million of free cash flow, of which we turned around and then spent $24 million buying back shares of our stock. Our board, you know, enabled us to put forth a new share repurchase program in September of last year for $250 million based on the confidence of us being able to continue to deliver cash flow and then return to our shareholders via that program. You know, what then happens is, from a GAAP perspective when you think about, you know, how it flows through from a revenue perspective, on those leases, that revenue's gonna be amortized over the life of the lease. You know, 20 to 30 years, you're gonna see that pro rata recognition from a revenue perspective. Of course, that's very different than what the cash flow profile is. Secondly, we've also done some sales. Those sales transactions are not going to flow through the revenue line item, but they're going to flow through as a gain when the spectrum gets delivered. We're still getting payments very quickly on this Oncor transaction that we just did. You know, $102.5 million, we're getting all of those proceeds within 2 years of signing that transaction. We're going to get that money very quickly. But once we do deliver all that spectrum, that will go through as a gain on the P&L. It won't flow through the recurring revenue line item over a, you know, like we would do for a lease. There's a little bit of a difference on how some of those things flow through. At the end of the day, it's less about the GAAP revenue, quite frankly, than it is about the cash flow that we continue to drive. From a spend perspective, to follow up on your, the second piece of your question there, we run, you know, somewhere roughly $40 million-$45 million on OpEx each year to support the organization and to continue to monetize the spectrum asset that we have. We've also got another kind of what we call, you know, our internal CapEx, which is the cost to clear the spectrum to move incumbents out of the three by three as the FCC allocated it in that 2020 Report and Order to move them out of the band so that we can have a free and clear three by three to provide to the customers. That cost is borne by Anterix. You know, we've estimated we'd spend, in 2020, for the life of being able to clear all those customers, about $120 million-$150 million. We're on time. We're on track with what we've been able to do there. We've cleared roughly 70% of the customers within the band, and it's gone really well according to plan. That spend as we move forward is gonna start to drop off. You know, we've spent anywhere on an annualized basis from, say, $15 million to almost $30 million. That's really driven by customers, and where we can clear those incumbents in advance. But we're gonna see that spend over the next couple of years start to drop off significantly. Really it'll just be that ongoing OpEx. Okay. Like, how much of the OpEx spend is related to the kind of sales process of this? Like, you know, at some point, this is a much longer conversation, but at, like, some point, you'll sort of, like, reach penetration, right? Do you Like, how do you Yes. You'll have brought in cash, so then how do you manage, you know, the tail, basically? I'll give you the qualitative answer, then Tim can get into. Yes. quantitative one. Right. You know, we run a pretty lean and mean sales team, if I could say that. Our team on average probably has, you know, 15, 20 years plus of experience of selling communication solutions, you know, AMI and other things into utilities. It's a, as you said, it's a very long sales cycle, but this is relationship selling. Importantly, we're not selling widgets. We're really driving relationship building. We talk about kind of our top-down and bottom-up strategy, or top-down about the work that we're doing, helping utilities everywhere in, you know, from the FCC to the DOE, to, you know, literally in, you know, the legislation that came out for federal funding. You know, we're driving language to support spend, you know, capital availability for broadband. When you, when you talk about sales, we're not an ordinary kind of company, as Chris said. While we have a traditional team that is, you know, responsible account by account, all of us are driving the development of this industry-wide movement as we see it, of driving broadband for the nation's energy structure. One thing worth saying, I'm gonna say our newest salesperson facetiously, we're honored to have. In January, we announced a new board member joining as our Vice Chairman, Tom Kuhn, who's the former Chair, I'm sure you're aware, the CEO of Edison Electric Institute after more than a three-decade career there. Tom is now, you know, to me, it's a sign of where we are as a company that he joined us as much as he likes us, really because, as he said, you know, Tom could've been on the board of any company in the world, probably any Fortune 50 company. Instead he, as he says regularly, the need for what we're doing to solve so many of the challenges that as he sat in the seat at EEI, that's what we're driving. When I joke about a salesperson, the idea is that we know from all the way at the highest levels of government and leadership at utilities, all the way down to the trenches of those who are deploying and managing the communications networks. It takes that broad of an effort to move a utility from. Understanding private LTE to making a decision to move forward. We've got a very broad strategy on how we do that. Long answer, you know, we see ourselves all as part of that process, to be frank. Tim, you might have any. Yeah, yeah. financial perspective. The only thing I'm gonna add to that is when you look at our organization, our spend really is gonna be like a bell curve from the spectrum leasing business, where as we get more and more penetration, we'll be able to peel some costs out of the organization. We're still relatively early in our life cycle with plenty of spectrum left to monetize. Hopefully as we move down that and through that process, we'll need less resources to be able to get further and further down the, up the penetration curve. Okay. Yeah, that's kind of what I was asking. Like, I assume, like, as you reach penetration, you start to manage more for cash. Absolutely Just, like, how do you prioritize, like, obviously, you have the buyback in place, but, like, why the buyback versus, like, a special dividend or something else? Like, what's the kind of rationale there from the company? Yeah. We continue to look at all different ways to return that cash flow that I've talked about back to our shareholders. Spend a lot of time talking about it with our board. We feel like right now with where we are, and quite frankly, where the stock price is and market capitalization are, is best way for us to return that capital is to buy back shares of our stock. We've been very active doing that. Again, you know, as I mentioned earlier, we put a $250 million program in place in September, really built on the confidence of continuing to drive, you know, customer signings and cash flows. That's gonna be our number 1 priority to return that cash. That's not saying, you know, a dividend or special dividend or those types of things are off the table, but it's just today when we look at it, that's the best use of the way to handle that excess cash flow. Tim, why don't you give the right numbers? I mean, we've bought back more than 1 million shares out of 19 million. Is that right? We're. Yeah. That's roughly right, Chris. Last year we spent about $24 million. We've spent almost $50 million since we started buying back shares. We continue to be very active on a quarterly basis. Okay. I mean, we're kind of coming up on the hour. Robert, I'd hand it back to you for some closing remarks. This has been really helpful from our perspective. I think it's kind of a newer story to most of our clients, you know, are looking at, again, we talked about it early on, but are looking at the grid, companies to play the grid, and I just think this is pretty interesting, you know. Lean balance sheet, big TAM, buyback in place. But I'll turn it over to you, Robert, for closing comments. Just thank you to the team for joining the call. Thank you, Sean, and to the Jenny team for hosting us. I think you started on kind of talking about the who we are. Maybe I'll end on the same thing that what we're really focused on is solving what we now understand to be a very critical need. We're now seeing the inflection point of having this critical mass of 7 utilities in 15 states, you know, pretty significant contracted proceeds still to be collected from these important customers. Most exciting to us is what's ahead of us. It's the expansion strategy geographically, vertically into new products and services and being able to drive this really important and valuable network into our nation's electric grid. Natasha Vecchiarelli, who's on, our head of IR, is happy to... I know we didn't get to Q&A. We love talking to investors, especially, honestly, energy investors because as we've evolved from a telecom company to what we think now is an important energy story, we really wanna talk to more folks in the energy space about what it is that we're doing. Invite you to contact us, and we can follow up with any questions. Contact Sean, and Sean can help you get in touch with us. Great. Thank you, Robert. Thank you everyone else for for being on today. We appreciate it. Everyone have a good afternoon. Thanks, Sean. Thank you. Thanks, Sean