Good day and thank you for standing by. Welcome to the Anterix second quarter fiscal 2027 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Natasha Vecchiarelli, vice president of investor relations and corporate communications. Please go ahead.
Good morning, everyone. Thank you for joining us today for Anterix's second quarter fiscal year 2027 investor update call. I am Natasha Vecchiarelli, vice president of investor relations and corporate communications. Joining me today are Scott Lang, president and CEO, Chris Guttman-McCabe, chief regulatory and communications officer, and Elena Marquez, CFO. Please note that our second quarter financial results were issued yesterday afternoon, and the related materials are available on our investor relations website. Today's call will begin with prepared remarks from management, followed by a question-and-answer session. We may also discuss our business outlook and make forward-looking statements. These statements are based on our current expectations and predictions. Actual events or results could differ materially due to risks and uncertainties described in our SEC filings, including our most recent Form 10-K and Form 10-Q. With that, I will turn the call over to Scott.
Thank you, Natasha, and thank you all for joining us. Last quarter, we said Anterix was no longer a single-path value story. The last three months have made that clearer. The market for spectrum is moving, strategic capital is flowing into the sector, and the number of available nationwide low-band assets is down to one, and it is Anterix. Since August 2025, nearly $70 billion has been committed to spectrum and spectrum-rich assets. The buyers include some of the largest and most respected visionary companies in the world, such as SpaceX, Amazon, AT&T, companies that consistently skate to where the puck is going to be, not where it has been. They are securing the spectrum that will be needed for the networks of today and into the future. Even more important, these transactions have expanded their positions but have not fulfilled their need.
Licensed low-band spectrum is hardest to come by, and we have it. It travels farther, reaches inside buildings, and covers more ground with less infrastructure. Once a long-term strategic owner secures it, that spectrum is theirs and theirs alone. The SpaceX-Grain transaction shows what that scarcity is worth. Grain acquired a nationwide 800 MHz portfolio in August in a transaction reported at $3.6 billion. Two months later, it agreed to sell that portfolio to SpaceX for a reported $8 billion. Critical infrastructure is where Anterix started. Our pipeline has grown from nearly a dozen active opportunities in August to 16 today that include seven, eight, and nine-digit deals. Utilities have consistently paid a premium for this spectrum. What has changed is the companies I mentioned earlier and others view spectrum as a key component of their forward-looking strategy, and that raises the bar for everyone.
In this environment, strategic interest in our spectrum continues, and we are speaking with all the relevant parties. We are not dependent on one buyer, one structure, or one timeline. We have a real utility business, a growing set of opportunities, an asset that is becoming more capable and more scarce, and a device ecosystem that now includes multiple Apple devices. We understand what we own, and we are evaluating where it can create the greatest value. With that, I will turn it over to Chris.
Thank you, Scott. I love the Wayne Gretzky reference and the focus on value. Let me give you some updates on our spectrum. We have now crossed the six-month milestone of the FCC's decision to provide us with the full 10 MHz. In those six months, we have worked with 3GPP to standardize the 10 MHz for 5G. We have secured and successfully completed an investigation of satellite connectivity with Lynk. We have been included in an FCC NPRM to expand direct-to-device opportunities. We have continued to clear incumbents nationwide, and as Scott mentioned, we have secured Apple products as part of our device ecosystem. That is an amazing number of accomplishments in a six-month period, further enhancing the value of our spectrum asset. Let me turn to two topics that naturally come up in discussions with investors and analysts: clearing and monetization.
On clearing, we remain confident in our ability to clear the full 10 MHz nationwide. Let me repeat that. We believe we can unlock the entirety of the country across the full 10 MHz. Our approach continues to be strategic and market-driven. Approximately 85% of our nationwide spectrum remains available, including significant coverage across the majority of the largest metropolitan markets. On monetization, we see a broader opportunity than we did even a year ago. Utilities remain an important part of that opportunity, but the expanded capacity, established technology ecosystem, and emerging applications create additional possibilities across the satellite sector, as well as other critical infrastructure and enterprise markets. On the satellite front, the FCC has taken another step that enhances opportunities for Anterix.
On October 29th, the commission advanced a notice of proposed rulemaking to modify its Supplemental Coverage from Space rules, which includes consideration of adding 900 MHz to the list of bands. This is a significant development that can support the evolution of our band and our opportunities. Ultimately, our objective is to make sure we are putting the spectrum to its highest and best use. The FCC's decision has expanded what the band can do. The technology ecosystem continues to develop and evolve, and we're actively working to advance the opportunities that it creates. With that, I will turn it over to Elena.
Thanks, Chris. My comments today are going to be fairly short because it was another solid quarter. As a company, we continue to make great progress across a number of fronts, and more broadly, the spectrum environment continues to be active. Starting with our financials and looking at our income statement, GAAP revenue for the quarter was approximately $2 million, and operating expenses were approximately $9.4 million. We also recorded a $6.1 million gain on license exchanges in six counties. Our balance sheet is strong. We ended the quarter with approximately $107.5 million in cash and no debt. We have approximately $33.1 million in contracted proceeds outstanding, including approximately $9.6 million expected over the remainder of fiscal 2027. During the quarter, we also invested $5.4 million in clearing. We remain disciplined on costs and invest where it makes the spectrum more valuable.
With that foundation in place, let me take you through how we think about the value of our 900 MHz spectrum. Double-clicking on one recent transaction, the SpaceX purchase of 800 MHz spectrum at a reported $8 billion works out to roughly $1.70 per MHz-POP. What did that demonstrate? Two things. First, the only other readily available low-band spectrum option is off the table. Second, a new price comparable has been set. So where does that place us? We recognize that we are, at this moment, the only remaining licensed low-band spectrum available nearly nationwide at a value that far exceeds our current market cap. As Scott said, we're not dependent on one buyer, one structure, or one timeline. Our balance sheet gives us the flexibility to make decisions carefully. We can be patient and disciplined while continuing to consider a range of monetization options.
Patient, not passive. We're extremely disciplined in how we allocate capital. Capital goes where it creates the greatest long-term value per share, whether that is share repurchases, clearing and license acquisition, or preserving liquidity. Our board's $250 million share repurchase authorization runs through September 2029. We did not repurchase shares in the quarter, and the full authorization remains available. It is clear to see why we believe this asset is worth significantly more than the market reflects today. We're focused on maximizing the potential of the scarce asset that has just become more scarce. With that, I will turn the call back over to Scott.
Thank you, Elena. As you have heard from the team today, we are in a great spot. Our responsibility is to protect and increase the value of this asset and deliver the best outcome for shareholders. We love the position we are in. With that, operator, please open the line for questions.
As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by while we compile the Q&A roster. Our first question comes from Greg Pendy with Clear Street. Your line is open.
Hey, thanks for taking my questions. A couple. Just on the Apple, the iPhone arrangement to support Band 106, can you just give us any color? Are there any customers using this, and when might we find out that customers are using this?
Yeah. Hey, Greg. It's Chris. And thank you. Great question. Yes, we actually do have several customers that are taking the phone through a trial internally. You'll probably hear us talk about it from time to time. I don't think there'll be any press releases about the use or anything directly about that. But we definitely have multiple existing customers that are actively pursuing utilization of the iPhone. So it's a good outcome for Anterix, for our customers, for the ecosystem.
Got it. Just another one, just on the buyback. I know you didn't use any of it this quarter, but how are you ranking your priorities, I guess, over the next, say, six months with your cash position? Is it clearing the band, buybacks, or possibly investing in new products like TowerX?
Yeah, Greg. Thank you. I would say it's probably none of the above, potentially, as we're currently very focused on preserving liquidity and having a strong balance sheet to ensure that we can be patient as we consider different monetization options for our spectrum. With $107 million in the bank, lower OPEX, and opportunistic approach to clearing costs, we're really in a great position to be able to exercise that patience. Of course, not equal to being passive. The buybacks ultimately will continue being in our toolkit. As you know, as commented in the past, we so far have returned $57 million in share repurchases over the past several years.
Our board and the management wanted to reauthorize the program as it expired in September to ensure that, should there be the right time to pull that trigger, the program is available and no governance steps are required.
Got it. That's very helpful. Just one more, if I can. Just on the deal pipeline, can you just kind of tell us how many you think are in late stages? Just give us an update on how that pipeline has changed, perhaps, now that you've gone to 10 MHz, and what those conversations are looking like on the utility side.
Yeah. Hey there. This is Scott. Thanks for the question. As I stated in the prepared remarks, the active pipeline has gone from about a dozen to 16 during this last quarter. Now, I think your question is regarding the 16, which ones would we consider advanced, late stage, very active? I would say at least half. Those have been interesting because with the dynamic happening regarding the value of the asset and the value of the spectrum, and as we alluded to in the prepared remarks, there's a couple things that happened in the quarter, and not least of which is we are the last man standing in low-band spectrum.
We have gone back to some of the utilities that we have been talking to for quite some time and have had to address the gap in pricing increases that have happened as a result of the value of spectrum and what both utilities and other potential strategics see that value to be. Those conversations are very active. The utilities have had to sharpen their pencil. They are engaged. That takes a little bit of time. As you heard us say the last quarter, Elena emphasized, that patience, we believe, is paying off, and those conversations are active. I would say about half of them I would put in the category of moving very quickly and very advanced as we continue to look at the other options that we have in front of us.
They are nice, high-quality, high-cotton, so to speak, options that we are looking at. We spend a lot of time on those every single day and looking at the best outcome for Anterix.
That is very helpful. Thanks a lot.
[crosstalk] a little bit there.
Thank you. Our next question comes from Mike Crawford with B. Riley Securities. Your line is open.
Thank you. If you are successful in your goal of clearing the full 10 by 10, can you just break down for us in terms of MHz-POPs, like how much remains to be cleared or acquired pursuant to the Report and Order at 600 MHz auction clearing prices, and then how much would have to be negotiated in transactions with owners of spectrum in markets like Boston and Florida, where there are other holders of your similar spectrum?
Yeah, Mike. We have about three, let me look at Elena, about 3 billion MHz-POPs available to monetize still. We are aware and have had conversations with every incumbent. We know what it will take to clear them and move them, including the folks up in Boston, who have been In fact, we have teams with some of these folks right now at the EWA event in Tucson, Arizona. We are comfortable we are going to get there in a way that is very valuable and accretive to our shareholders. A lot of folks talk about the 800 MHz recent transaction and how it secured $8 billion for David Grain and his funds. What a lot of people do not talk about is he paid $3.6 billion to secure that, and he gave 50% of the upside return back to T-Mobile, right? These are the things that are reported.
When we look at a transaction like that is what he invested to secure that return. What we invest is our clearing costs, and I assure you, they are not going to approach $3.6 billion plus half of what remains. What we have said repeatedly is we are not going to give very specific numbers because it will help us hold down those clearing costs. With regard to your question about clearing costs versus unjust enrichment payments, it is a little bit of a sliding scale. The more we secure entities that we clear, we get their channels, and that allows us to offset what would ultimately be unjust enrichment payments. If we pay $1 million to retune and clear someone out of the market, oftentimes we get $600,000, $700,000, $800,000 in value in channels.
That million dollars in cost is actually only a net $200,000 or $300,000 off our balance sheet. I am going to take it back up a level and not fully answer your question. We are absolutely comfortable that we can clear the country, that yes, it will cost money, yes, it will take some time with certain incumbents, but the fact of the matter is, we are going to monetize the entirety of this nation and this spectrum, and it is called capitalism. If some of the folks want to work with us and secure a return, then they are going to do that. But we are going to negotiate an outcome that is absolutely valuable to our shareholders, and it is not going to approach the numbers that just happened with the 800 MHz transaction.
Okay. Thank you very much.
Thanks, Mike.
Thank you. As a reminder, to ask a question, please press star one, one on your telephone. Again, please press star one, one to ask a question. Our next question comes from Sebastiano Petti with JPMorgan. Your line is open.
Hi, thank you for taking the question. I guess as conversations widen to critical infrastructure and satellite, or direct-to-device counterparties, I guess, is a nationwide transaction now more likely than market-by-market approach? I guess Chris is dovetailing what you just kind of talked about, and you did also mention that the top 20 metros, does that anchor, is that a better anchor for a nationwide deal? Does that command a premium relative to going market by market? Then I guess, Scott, follow-up on your, I think, prepared remarks, that strategic interest in your spectrum continues, and you're talking with all relevant parties. Any color perhaps on the number of strategic counterparties you're perhaps speaking with, and as you talk about, in the pipeline that you refer to, does that include non-utilities? Thank you.
Thanks, Sebastiano. Thanks for the question. We're not ready to talk about the number of strategics at this point, but it is plural. As I mentioned in the prepared remarks, all of the relevant parties that you could imagine that are in the market, been active in the market, we know well and they know us, and there's conversations that have happened. Regarding the nationwide versus regional, we do the math on that every day, which has kind of led us to sharpening the pencil and asking utilities to sharpen the pencil. When I started here two years ago, the spectrum portion of these investments was very different than the spectrum portion of the investments that the utilities are making today. This is an asset that will continue to go up in time. So I've seen this movie before with utilities and previous companies.
The network portion is a very strategic portion of this, and we've spent quite a bit of time educating and advocating that. I've seen a huge shift in the last two years from where utilities thought about the spectrum as a commodity and a portion of it to a very strategic portion of it. Now with the strategics coming in and showing the vision and the opportunity, and that the spectrum is such a strategic portion of the investment. I think I made a comment in the opening remarks that that really raises the bar for everyone. That's a long answer.
Hopefully, it kind of dials in the question that we revisit and we look at these pricing every single day, that to the extent it goes down a regional utility option, our goal is multiple utilities at once that look as much like a nationwide transaction versus individually fragmented long periods of time between each one that is not priced in a relationship to the value where we are. Whereas strategics are looking at it in one fell swoop. The NPVs might be a little different for a strategic on one fell swoop and might back us into a little bit of a different number that makes it something that we would want to do and want to consider versus the utility side.
I have active conversations with the highest level of the utility industry nearly every day. In fact, I had another one last night. They see this opportunity, and they are working on it. We want the right place, the right infrastructure, the right critical assets to have this spectrum. We realize how scarce it is. We realize how valuable this is to multiple players, and we are working very hard every day as a team, with our prospects, and with our board to ensure that it returns the greatest value for our shareholders, and we don't miss this opportunity because there's kind of this special nature of what we have that's very unique in the marketplace right now. That's what has led to the patience, and not passive. We like to move fast, but we like to measure twice, cut once, and really do the right thing.
If I could ask a quick follow-up, just piggybacking on those comments and Elena's comments about the market does not necessarily reflect the price of the asset. Why aren't you buying back stock then? Can you comment to the effect of, are you in some sort of blackout period because of the strategic review and the strategic process in some of your conversations? I'm just trying to. It's a question we're getting increasingly this morning. Thank you.
The reality of blackouts always are hanging around the head of the Section 16 officers, but that really is not what's driving this. It's really, as Elena said, $100 million is a nice dry powder, and given the number of options that we have to be able to have the flexibility to go execute on those options, whether it's potentially buyback, whether they're potentially clearing, whether they're potentially investing in opportunities that would bring immediate accretive value to us in other ways, is a nice place to be. I'd say it's really more of just keeping the optionality of a $100 million bag there that's ready on standby to execute, because this market, as you know, moves very fast. When you do a buyback, that's something that doesn't necessarily align with the flexibility and the freedom to move very quickly when things happen.
In the last six months, a lot of things have happened on a very fast speed, and we want to be prepared for the next six to nine months, which we expect the activity in this market to continue to stay as active as we've seen. We don't see it slowing down.
Great. Thank you, guys. See you soon.
Thank you.
Thank you. Our next question comes from George Sutton with Craig-Hallum Capital Group. Your line is open.
Hey. Morning, guys. Logan on for George. Scott, you made a comment about the transactions we've seen in the market expanding those buyers' positions, but not necessarily fulfilling their needs. I was just hoping you could expand on that a little bit, maybe help us understand how we should think about what those needs will ultimately be based on what's been disclosed from those companies, and just how is that showing up in your conversations?
Yeah. Good to hear from you, Logan. I'm going to ping it over here to Chris. He's dying to get in.
Yeah, I'm like itching. Hey, Logan. When we say that it doesn't satisfy their needs, right? When you think of each of the different, let's say, the satellite entities or even the carriers, what you see is a consistent pattern of expansion. You see carriers continuously or continually participating in auctions, putting capital in play in order to secure greater capacity, things like that. What we're seeing with the satellite providers is obviously a range of deals, right? SpaceX had a range of deals, and then they went back and bought 800. I think many of us believe that there was more than one entity that was bidding for that 800. You've got Rocket Lab, you've got Amazon Leo, you've got SpaceX, you have AST, you have Lynk. You sort of can keep going.
These are all entities that desire to have some form of spectrum connectivity to go after a total addressable market in the direct-to-device space. When we talk about the needs not yet being fully met, that is what we are referencing, that at the micro level. We are seeing it, we are all reading about it with satellite providers, but at the macro level, we are experiencing, as Scott referenced, a range of interest that matches with what we are all reading.
Understood. Helpful. Then maybe just a quick follow-up, going back to the addition of iPhones to the compatible device list. I am curious to what degree that maybe lends itself to your plans to explore infrastructure customers outside of utilities, and just how should we think about the compatible device set expanding here going forward?
Yeah. The focus of the company and our technology teams for a half dozen years was on enterprise specifically, and particularly utility, like we really drilled down. Everything was around that, modules, devices, chipsets, things like that. We started getting inbounds where some of our customers desired to be able to integrate consumer-focused devices, and obviously the one that jumps out and screams out to everyone is the iPhone. Our technology team, led by our fantastic Chief Technology Officer, Carlos L'Abbate, really worked hard to get Apple on board. That was a pivot from where we were before, but the neat thing is it clearly opens up the direct-to-device world. It happened in a great alignment with some of the other things we were looking to do with our spectrum.
Okay. Thanks, guys.
Thanks, Logan.
Thank you. Our next question comes from David Barden with New Street Research. Your line is open.
Hey, guys. Thanks so much for taking the questions. Appreciate it. I guess maybe a couple more follow-ups for Chris. Chris, could you kind of elaborate a little bit now on next steps for the SCS review at the FCC, and kind of the advocacy that you can make and any pushback that you're getting, and what timetable could we look at that happening over? I guess the second question would be, maybe for Scott, is to the extent that you're having multiple strategic conversations, are any of these conversations contingent on SCS authorization? Then I guess my final question would be, this is kind of a weird one, but just because if you look through the depth chart of the Democratic wins, a lot of that happened at PUCs in different states around the country, and so there's a little bit of regime change going on.
One of the reasons why spectrum values are going up is the space guys, specifically Elon Musk and SpaceX, have been bidding up prices of spectrum, which makes it more expensive for utilities to get that spectrum. I'm wondering if you've kind of had any conversations that inform a view that the utilities and the PUCs that regulate them are as supportive of the exercise that you guys are undertaking. Thank you.
I'll take the last two and then Chris can take the first one.
Yeah.
Your second one, no issue with SCS. On your last one, I have not picked up any indications that this is a political, influenced by political decision or a party. This is driven by capitalism and by critical infrastructure and needs for connectivity to support business plans that are long-term journeys and visions. I've not picked up any hesitation from any of the players, whether strategics or utilities, that it affects their plans going forward.
Yeah. I'll pile on there. First of all, David, how you doing? It's good to hear your voice, and we're excited to have you on the call and asking some questions. Welcome to the Anterix earning environment.
It's great to be here. Thanks, guys.
Yeah, awesome. Okay, so I fully agree with everything Scott said. If you look at the macro issue of satellite connectivity, it is something that both political parties want to win, right? They want to win the race to space, I guess, in a corny sort of way. But the idea is sensible, right? No matter who's in control politically, they're going to want our technology ecosystem to be the best on the planet. I'm comfortable, Scott's comfortable, we're all comfortable that there isn't a political element to that. Yes, certainly SpaceX and Elon Musk takes up a fair amount of the oxygen, but they're one of a half dozen companies that are pursuing this. Specifically with the FCC's notice of proposed rulemaking on Supplemental Coverage from Space, and I say all the words because when you start saying all the acronyms, it gets a little confusing.
We are very excited to be part of the consideration. Chairman Carr has been very out front about his desire to fuel that evolution of the satellite opportunity, satellite products, and connectivity. I expect that this is a pretty quick-moving NPRM. I anticipate that we ultimately will be part of it. I think there's every expectation that our band, like others that are referenced, fit well into this form of expanded
opportunity and connectivity. We will clearly weigh in. I am sure others in the satellite and utility space will weigh in favor of that. So, we like to say sort of stay tuned. But we're excited about each of the things that have come out from the FCC over the last 12 months that have benefited our spectrum and our shareholders.
That's great to hear, guys. Thank you so much.
Thank you.
Thank you. I'm showing no further questions at this time. I would now like to turn it back to Scott Lang, President and CEO, for closing remarks.
I'd like to thank everyone for joining us today. I want to thank this team and all of our partners for the entire quarter and all the hard work that got done. Reflecting this quarter marks my second year as the CEO of this company, and it's been a radical shift I've seen from where we were and where this company was two years ago, when spectrum was considered a commodity and plug it in at some point in the time. Now it's considered one of the most strategic parts of the investment journey and the investment thesis for a much broader group of players, not just utilities. It's been an exciting time for this company and to see this company mature.
I think the core underlying of this company is as solid as it has ever been with the work we have done in OPEX, the talent we have around the table, the focus we have on taking these messages to the industry and the value of spectrum. We are really at the crosshairs of something that is, we believe, just very exciting that is shaping up, and the spectrum is at the heart of that. We will look forward to seeing you and talking, I am sure, in between now and the next quarter. Thank you again for your time today, and we will be in touch soon. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.