Good afternoon, ladies and gentlemen and welcome to the Anterix Third Quarter Investor Update call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Natasha Vecchiarelli. Ma’am, the floor is yours.

Good afternoon and thank you for joining us. With me today are Morgan O’Brien, our Executive Chairman; Rob Schwartz, our President and CEO; Ryan Gerbrandt, our COO; and Tim Gray, our CFO. Before I turn the call over to Rob who will deliver our prepared remarks, I will remind you that any statements we make during this call that are not based on historical facts represent forward-looking statements and our actual results could differ materially. A discussion of the factors that may affect our future results is contained in our SEC filings, which are available on our Investor Relations website. The replay and transcript of this call will also be made available on our website. Following our discussion, we will open the call to take questions from the audience. And with that, I will turn it over to Anterix’s President and CEO, Rob Schwartz.

Thanks, Natasha. Good afternoon, everyone and thanks for joining our fiscal Q3 investor call. It’s been just a short time since our last investor call when we announced our Ameren contract. So today, I will provide a brief update on our continued progress since then. We are really excited about Anterix’s current market position with continued customer progress, growing macro demand and strong regulatory tailwinds. As we enter this fourth fiscal quarter of a big year for Anterix, let me start with how we are tracking against our stated goals thus far. In this fiscal year, we have delivered on the FCC decision to bring broadband to 900 megahertz. We have secured our first long-term customer contract, demonstrating the considerable value of our nationwide spectrum asset to utilities. We have cultivated the expanding interest in 900 megahertz private LTE, which can be measured through a growing number of pilots, experimental licenses and industry collaborations. We continue to see and foster strong tailwinds from the legislative and regulatory environment, including for the administration regarding their focus on modernizing the electric grid to support the expansion of renewable energy. Despite the challenges of operating during a pandemic, we have expanded and developed a leadership team that is successfully executing on our business plan. And lastly and most importantly, we have continued our development of a robust and maturing customer pipeline that we believe will enable us to achieve our business goals. I want to focus on three key takeaways in my remaining comments today: first, our continued progress with target customers; second, our momentum that is now beginning to translate into an industry movement towards private LTE; and third, the positive legislative and regulatory trends that we are seeing and as a result of the energy policy focus of the new administration.…

[Operator Instructions] Your first question is coming from Phil Cusick. Your line is live.

Hey, guys. Thanks. I guess first, can you give us anymore detail on the funnel, anyone in or out as well as the prospects for the one or two more deals you have expected to be signed in the next couple of months?

Hi, Phil. Absolutely. I mean I’ll start and Ryan can go into the details. So as I mentioned, we see continued progress. Ryan gave a lot of detail on our last call about the movement of utilities through the funnel. Based on what we are seeing again, we remain confident about what we can deliver in this remaining period of the fiscal year. Ryan, you want to give some more perspective?

Yes. I will provide a little bit more color. Yes, we have talked a little bit about kind of the 40 accounts, Phil, in the past in terms of their maturity. Obviously, we have been working with the expanded sales team that we have been putting in place across a variety of these, even in parallel, while we were working to get the Ameren signing. Nothing has fallen out. I think that’s one of your specific questions. So we are not seeing anything like that and continue to see kind of the momentum that’s been building that we have been working to capture really coming out of the ongoing conversations that have spurred both directly and indirectly as we have announced Ameren and the positive signs that that’s created.

Okay. And then maybe, Rob, you could talk more about the customer interest in prepaying. Can you dig into that? What does this tell you about your funding needs? Thanks again.

Absolutely. I think when we approached our last public funding, we talked about that we believed that would fully fund our business model and built into that was an assumption that we would be seeing proceeds from future customer contracts. And with the completion of the Ameren agreement and those we are seeing in the pipeline we have – Tim has mentioned in the past, we do see a growing preference for the potential prepaid agreements. Obviously, it’s positive for us from a cash flow standpoint and we do see that we are going to continue to see that trend and that will provide sources of capital for us to continue to fund our business model. So prepaid is really being driven by the utility customers’ desire to be able to capitalize their costs of their spectrum. And some utility are seeing a greater ability to do so if they can prepay it, obviously, to the extent that we can get the cash upfront and maintaining our long-term relationships, it’s a win-win for us.

If you find yourself with excess cash, what makes sense to do with it?

I think Tim has talked about that also in the past. We obviously have a lot of different alternatives. I would say that it would be a good problem to have when we get there. We are doing some careful analysis now to understand what our options are and we anticipate that when we run into that good problem to have that we will have a decision made about what we want to do with the capital. Tim, anything you want to add to that? Tim, you maybe on mute if you are talking?

Sorry about that. Two things, Rob, that I wanted to mention. Having additional cash from prepaid, as we move forward, will give us some additional strategic options, including share buybacks, I mentioned that before. And second is one of the things that we thought about, it’s been a little over 2 years since we last held an Investor Day and we are going to schedule relatively soon a virtual Investor Day to talk about prepaids, those impacts and other aspects of our model moving forward.

Great. Thanks, guys.

Thank you, Phil.

Your next question is coming from Simon Flannery. Your line is live.

Great. Thanks. Good evening. Thanks for your time tonight. In the Q, you mentioned on the Ameren deal, you still need the Board of Directors’ approval could you just take us through the status of the Ameren contract at this point?

Sure. Yes, I think we referred to that as kind of a customary issue within the agreement. What we are finding is that some utilities are able to include the payment per spectrum potentially in existing budgetary approval. Others need to go for a broader approval. Some are looking at spectrum as a single item where others roll it into a larger plan for their overall deployment of a grid modernization program. So they put together rate cases for grid modernization. That’s really where Ameren’s fits. So for us, while we have got all the right positive momentum, we are working with them already on their planning and deployment. We are working from their C-suite on down to their engineers on how they move forward. They have a Board approval date that will happen sometime probably by the middle of this year, but we see it – everything has green lighted so far from all their commitment and all their public statements. You have probably seen that they have been a supporter of ours, not just through the transaction itself, but they have also been out on the podiums with us as part of a number of the industry conferences. They are actually helping us with outreach to other utilities. They are even hosting other utilities that want to learn from their pilots and experiments in helping drive them forward. So every sign of their commitment from watching their feet from us gives us the confidence that Board approval will be something that is required, but we don’t think there is going to be any challenges in getting it.

And that’s something that will allow them sort of a gating item to getting recognizing revenue and getting the first installment, is that right?

That’s correct.

Okay. And on the ‘22, thank you for the color on signing 2 to 3 more leases. I know it’s lumpy, but is it fair to think that this is – could happen at any point or is it more a second half or first half or still too early to say?

Yes. I think it’s probably too early to say on the specific timing within the year at this point. And I made some comments obviously about the difficulty in predicting the timing of closure anyway with all of the utility agendas as well, but we are confident really and I think what’s important, Simon, is to see that that’s the right step that fits within our plan to get to our 2024 goals that we are confident that based on the breadth and depth of the pipeline that Ryan has described, that we will be able to achieve that many customers to be able to continue on.

And just following up on that, you reiterated the customer goals, are you also reiterating the financial goals?

Yes. Yes, we are. So I think as Tim said, we are targeting at Investor Day to really be able to refine that further based on our learnings. And a lot of that has to do with what we said, I believe – I think it was the last call as we are seeing prepayment, what the impact of that is on what we originally described as annual recurring revenue. Obviously, prepayment is a different cash flow impact and does have an impact on that recurring revenue. So we are confident that we are going to put 50% of our spectrum to work at least by that 2024 date and we will see the customer proceeds that relate to that as they get prepaid. That has an impact on the way in which we book those revenues. And so that’s what we want to get deeper into as we are seeing that trend happening. Tim, anything you want to add to that?

No, Rob. I think you handled that one. So I don’t have anything else.

Okay. Thank you.

Your next question is coming from Mike Crawford. Your line is live.

Thanks. Mike Crawford from B. Riley Securities. So can you talk about how potential license to Texas State University or UPS, which has an experimental license, would affect any utilities seeking to use spectrum in regions where other enterprises might also be desiring to use spectrum?

I’ll give you a broad answer to the – I think, the question that you are asking about, whether those experimental licenses will impair our ability to create commercial licenses. And I think, generally, the answer is no, meaning they are they really just sort of temporary authority to use it for experiments. But obviously, we have the ability to bring those out as broader commercial licenses. But Ryan, it might be worth you giving a little more detail as you’re bringing up – on the Texas State University on sort of our excitement about the opportunity.

Yes, happy to. Yes, what’s exciting about Texas State University is really what they are doing in terms of looking within their labs and across their student base and across the ecosystem of companies and partners that will be affiliated with us in the future to really explore a variety of new drivers and use cases. So we’ve talked a lot about the existing utility use cases. And at the end of the day, that’s what underpins the utility adoption that goes with them. But beyond that really becomes kind of the next-generation of what can be done with the various applications and use cases that can leverage the capabilities of private LTE. And just beyond that, unique to the Texas University initiative is really its application across sectors. So as Rob said, they are exploring not just individual use cases but the intersection of those use cases across utilities, cities, transportation and renewable, where there’s a lot of future opportunity to live for our prospective customers in terms of how they consider taking advantage of the capability under the umbrella of a built private LTE network.

And you get – Mike, that said, just bringing it back to your question, those are all experimental licenses and pilots and so there is nothing in them that prevents us for moving forward commercially in any of those regions.

Okay, thank you. And then just as you now are deeper into engagement with potential IOUs and other utilities regarding your spectrum, what are you finding to be the most effective channels in reaching these customers? Is it UBBA or is it more just getting straight to the C-suite or where are you seeing the most resonance with what you are proposing?

I will start there again and then pass to Ryan, but I think the answer is yes, meaning all of those channels are essential elements. And we’ve really taken a multi-pronged approach to driving the decision-making, getting these customers to yes. It really is – these are complex organizations and each one comes at it from a different place. I always talk about sort of the point of entry. We have some that come in as a member of UBBA. They happened to be at a DistribuTECH event, and they come by, and they hear about what’s going on in the space. Others happened to be in a forum where they hear it from another utility. And so the genesis of the idea comes from all different places. But I think what we are seeing is the C-suite, really with correlating to what I described as top-down activities becoming more and more important because there’s more and more compelling rationale for the C-suite to be involved in this, right? The challenge of these renewable energy goals that utilities are setting at the C-level and having to achieve them, the cybersecurity issues and challenges that are coming up, these are boardroom issues that now we are getting the C-level involved. Morgan O’Brien: Hey, Rob, it’s Morgan. I think something we should mention also is, as a specific example, if you look at what’s happening in California, where the major utilities out there had to report annually on what they’re doing for wildfire mitigation and investments they’re making to reduce risk, I mean there’s an example of regulators pulling utilities towards solutions that we’ve been advocating. So it’s an ecosystem that is developing around clean energy, and we’re just a part of it. We like to say we’re a foundational part because you sort of have to have that locked down before you do a lot of the others. But these proposals, these issues for grid modernization are coming from all directions.

Okay. Thank you.

Your next question is coming from George Sutton. Your line is live.

Thank you. I just wanted to follow on the Texas State University issue first. In what we were seeing, it looked like they were – that deal is going to include partners like the Department of Energy, the Department of Defense. That’s where we were so intrigued with that deal specifically. Can you talk about how involved they are in this specific experimental license and what that might mean for other opportunities with those agencies?

Yes. George, Ryan here. Yes. I mean a lot of their activities, I will say, are still a little early in the planning process. I do know that they have had kind of a broad swath of potential partners both from government and obviously from private enterprise, in fact, even some interest from potential customers who can all be part of the exploration. So I don’t know specifically yet in terms of the interlock between kind of the DOE and other aspects there as it relates to it. But the nice thing with these programs are certainly once they get going, they create both research that drives innovation across the technology rounds, but they do tend to tackle a lot of the other aspects around the adoption and the operationalizing of those solutions that I can absolutely see a potential intersection there. Morgan O’Brien: And let me – this is Morgan. Let me just add one other factor that – I think Texas really is focusing on smart cities. And we’ve had a little trouble persuading the utilities that they really have a tremendous amount to gain from becoming part of that smart cities and fleshing out how their infrastructure answers a lot of the questions that have been raised about – is there a good business case for smart cities. So I was particularly excited about this opportunity to put private LTE right at the heart of this thinking that’s going on about the smart city and all the peripheral transportation and other benefits. This to me is a real green light for us with utilities that may not have been thinking this way.

Got it. AT&T recently abandoned plans to lease spectrum to utilities for private networks. That was something they had been looking to do for multiple years. Can you just give us a sense from your perspective? Is that just competitive reality that they are seeing with your new position or is that a broader challenge of utility customers? Morgan O’Brien: So, let me take a quick stab at answering, which is that I think that their spectrum, where it is in the band relative to where ours is and, therefore, the total cost of ownership implications, plus the restrictions on that spectrum, including that it really wasn’t usable for mobility. If you start talking long-term usage of broadband network to the utilities and you say, of course, you’re not going to be able to use it for mobility, that’s a tremendous downer. So we’re, of course, always happy to see a competitor to drop out. But it just confirms what we’ve been saying all along, which is 900 megahertz just happens to be very well placed from cost of coverage and very well placed in terms of how you can use multiple – how there are multiple use cases that can be supported on this spectrum, not the least of which is that the power restrictions are somewhat relaxed at 900 megahertz, opening the door for innovation on the product side. So I think they just – their spectrum just didn’t hold up to that kind of an analysis when it’s compared to 900.

Got it. Lastly, Rob, you mentioned some quarters would be quiet. Some quarters would be very active. Can you just outline which quarters are going to be really active? I mean that will help us a lot.

I always appreciate your questions, George. But obviously, that’s not what I can hit on. But I think that’s always our challenge, right, in the business of big game hunting that we do, the sequencing of it with these kind of calls, we really like communicating with investors, but it’s really just trying to give everyone appreciation for the lumpiness of the business model that we have. We think it’s a great model, and we think it creates a lot of value, but it’s going to – it will probably have some quarters where we won’t be able to have announcements about customers.

Got it. Appreciate it. Thanks guys.

Thank you.

Your next question is coming from James Ratcliffe. Your line is live.

Hi, thanks for taking the question. Two, if I could. First of all, when you look at the Ameren deal, how should we think about that having read-throughs on pricing in particular for the rest of your base? I mean that’s an area where, historically, spectrum has – in auctions like has gone for perhaps less than the overall average. Is that a read-through or are there other factors involved? And secondly, just on the retuning costs and process, it looks like there was only sort of $3 million or so in spend in the quarter on that update on where you think the total returning cost comes out. And just any color on timing over the next say 8 to 10 quarters? Thanks.

Absolutely. Yes. Thanks, James, for the questions. I mean I will take the first, Tim and you can cover the second, but on Ameren and the read-through, we had a call in December, as you know, to talk about that deal specifically and put out a fact sheet with the details. And so if you look at the implied pricing of where that deal was relative to – we like to sort of refer to the benchmarks of the, we call it, bookends of both the 600 megahertz pricing and the AWS-3 auctions. And that really came pretty straight down the fairway between the two, a little above average, probably between the two, which we refer to as fair market value, really, somewhere in that range. The good news is since then I made reference to the C-band auction results. While not directly comparable because it’s mid-band spectrum and traditionally low-band spectrum has been more valuable than mid-band, our view is that, that just continues to show that, over time, and I know you’ve reported on those, James, that spectrum values continue to appreciate. And with the continued demand for spectrum and in that particular auction, there was no one but carriers and, I guess, speculators that walked away with that spectrum. So from our view, the Ameren deal does imply what the nationwide spectrum asset we have could be worth. And that market is, as you said, a below-average market, meaning if you look historically at the auctions, it’s – St. Louis is a great area, but it’s lower than the typical average pricing paid when you include all of the highest value, what we call the NFL cities, into that as well. And so you can imply from that nationally what spectrum is worth. And we expect to continue to see pricing hopefully close to fair market value in our future transactions.

James, this is Tim. Yes. I mean, this quarter, there were a couple of million dollars in spend on clearing, but remember that we intend to spend a significant majority of the spectrum clearing costs over the next 4 years. And our spend will vary at times and the pace will be determined by several key factors, including customer demand and market opportunity. I also want to note now that we have got a customer signed. We will start to see some significant increases in the clearing – in our clearing spend as we move forward. And I will spend some more time, as we get to the Investor Day that I mentioned earlier, with some clear guidance over the next couple of years as far as that’s concerned. But we are still very much on track for the $130 million to $160 million in overall spend that we have stuck to.

Great. Thank you.

Your next question is coming from Chase White. Your line is live.

Thank you. Good afternoon, guys. So, do you guys get the sense – or have you seen an increase or uptick in interest from utilities in the wake of the Nashville incident that happened back in December that took out AT&T’s network across the wide region? I am just curious if that kind of demonstrated to some utilities whether or not – the need for a private network that’s off of a commercial network entirely. And then... Morgan O’Brien: Well, we wouldn’t – Chase, it’s Morgan. We wouldn’t try to take advantage of that. But if anybody asked, it illustrates the dependence that – anyone who accepts the FirstNet proposition, the dependence that you have on somebody else’s network decisions. There is no such thing as a wireless network that doesn’t go down at some point. It did – it does sort of focus on it. And I know that they’re now – I see it in the trade press that there are now lots of sort of second-guessing, looking back at it to try to determine what could have been done differently. But all that does focus on the difference between a private system and basically any other.

And Chase, if I could expand on that, I think that’s really just the latest of a series of events that we go into utilities that we hear about that really have rationalized why they already operate private networks. I mean, utilities, most of their communications are on their own private networks. They are just typically narrow band or unlicensed systems that this is about a modernization of this communication. So, we hear stories about impacts of Sandy, and the last places to recover were some of the substations where the utilities needed communications; what happened in the wildfires with some workers getting throttled on other commercial networks. And so there is every utility pretty much has a story about the reliance on carrier systems and where that has run into some challenges. I think that – the Nashville incident is probably just one of the latest.

Got it. Morgan O’Brien: My impression is that there is some feedback also on [indiscernible] and all the security involved there and, again, highlighting how important it is to have sort of start-to-finish control over your network.

Got it. And are there any – looking forward, are there any potential opportunities for something like a revenue-sharing arrangement with vendors like Motorola and the others that you work with a lot? You guys have worked with Motorola, for example, on a lot of deployments and pilots and everything, so obviously, bringing in a lot of business for these guys. I am just curious if you could give us any color on – if and when we could see something like that? Morgan O’Brien: Well, I think one thing you can assume is that Motorola absolutely dominates the LMR, land mobile radio, business overall, and they also dominate with the utilities. And a lot of those systems are reaching points where they may need to be significantly upgraded or swapped out. So our working with Motorola as they look at sort of where they want to direct these customers for mobility as well as for fixed wireless services, it does give us a lot of opportunities to work together. And you can never go wrong approaching somebody with that brand. So we are excited about the opportunity working with them and the others. It’s a great opportunity for us to be the – sort of the essential party in a lot of different vendors’ product offerings.

Yes. Chase, I think to follow on Morgan, we are seeing with all of the industry movement that’s happening in private LTE and 900 megahertz specifically, strong vendor interest in joining in what we are doing and solving a lot of these complex needs of the customer. So I think you’re going to continue to see developments with us and vendors. And we obviously do look at, as you asked about, economic opportunities for us beyond spectrum in working with these vendors as well. And so that’s something we are exploring and I hope we will be able to share some things in the future about that. Morgan O’Brien: I will tell you one thing that we have learned from the beginning 5 years plus and that is that selling to the utilities for sort of next generation of the core at their business involves lots of different parties. And we’re glad to be now recognized as part of the solution. But there’s a bunch of different players that are involved. And it makes for really great opportunities for us because of lots of different people talking to customers about our products.

Got it. Very helpful. Thanks guys.

There are no further questions from the lines at this time.

Okay. Thanks everybody for the good questions and the time and listening to us this quarter. We look forward to talking to everybody soon. And with that, we will wrap up. Thank you, operator.

Thank you, ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.