Anterix Inc.

Good afternoon ladies and gentlemen and welcome to the Antarex first quarter fiscal year 2022 investor update. At this time all participants have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to send the floor over to your host Natasha Vaccarelli, Director of Investor Relations and Corporate Communications at Antarex. Ma'am the floor is yours.

Good afternoon everyone and welcome to the Antarex first quarter Fiscal Year 2022 Investor Call. Joining me today are Rob Schwartz, our President and CEO, Ryan Gerbrandt, our COO, Tim Gray, our CFO, and Chris Gutman-McCabe, our Chief Regulatory and Communications Officer. Before we begin, please note that during today's presentation, we may make forward-looking statements, either in our prepared remarks or in the associated question and answer session. These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. Risk factors that may impact our performance are identified in our most recent SEC filings. Following our prepared remarks, we will have an operator-led question and answer session. In addition, at the conclusion of today's call, A replay and transcript of our discussion will be posted to our investor relations website. With that, I'll turn the call over to Antarex's president and CEO, Rob Schwartz.

Thanks, Natasha. Good afternoon, everyone, and thanks for joining our Q1 investor call. Just recently in June, we had our investor day, where we shared our refined vision of the future of Antarex and highlighted key improvements to our business model and investment thesis. The response to that event, and specifically to our fine vision of the Enterix opportunity, has been quite positive, not only from our customers in the utility sector, but also from the investment community. Since most of you heard the Investor Day presentation, I'll reiterate a few key points, and then I'll provide a brief update on the continuing momentum since then, further supporting this developing industry movement. Our prospective customer pipeline now includes over 50 utilities with a total potential prepaid contract value of about $3 billion. And with the increasing demand for prepayments that we're hearing from prospective customers, we currently believe that the majority of our contracts will be prepaid in full over the first three to five years of the contract terms. This evolution brings significant cash flow earlier than previously anticipated in our forecasts. and allows us the potential opportunity to begin to return value to shareholders within the next two calendar years. In our current fiscal year, ending March 31st, 2022, based on our current sales pipeline, we continue to forecast signing contracts with proceeds over $200 million. Looking ahead through fiscal year N24, we intend to sign approximately $1.8 billion of contracted proceeds. totaling about 50% of our nationwide spectrum value. By fiscal year N24, we would expect to have collected approximately $300 to $500 million in cash proceeds, with the remaining more than $1 billion contracted due to be collected soon thereafter. And beyond that point, we expect to continue to grow, with 50% of our spectrum value still on our balance sheet, available to monetize, as well as the residual value of our lease renewals, plus our ability to explore and develop potential new revenue opportunities with partners. Foundational to all this momentum is a modern communications platform driven by the utility's need for connectivity to provide situational awareness and allow for the command and control of millions of distributed assets across a growing utility footprint. Our 900 megahertz low band spectrum specifically addresses these needs and is propelling the demand side for Enterix's spectrum offering reflected in our growing list of pilots and industry activity. Let's now spend a few minutes discussing the significant additional signs of momentum that we've seen just since Investor Day. First, an additional three companies have applied for experimental licenses on our 900 megahertz spectrum. These entities include a utility, Tampa Electric, as well as technology leaders Ericsson and Burns and McDonald. It's worth noting that utilities are no longer pursuing pilots to confirm private LTE as a technology. Pilots are more often being used to demonstrate use cases and to build support internally for investment business cases. As Ryan's detailed in the past, not every utility will seek an experimental license before they move forward with private LTE, but they are a good indication of continuing momentum throughout the industry. Let's spend a few moments discussing key areas of focus for each of these three new experimental licenses. Tampa Electric is a Florida-based investor-owned utility who, per the FCC experimental license application, is exploring use cases in support of electric and gas utility operations, including AMI, SCADA, and other uses. Tampa Electric joins more than 10 other utilities who have leveraged 900 megahertz spectrum to better understand the unique resiliency, reliability, and security features of a dedicated private LTE network. It's also worth noting that TAMP Electric is one of the 11 utilities that also purchased CBRS licenses at auction, and like several other CBRS licensees, is working with us to explore the complementary nature of these bands, which is helping us develop our integrated solution. Ericsson, a global leader in broadband communications, and Burns & McDonnell, a leading engineering, construction, and consulting firm to utilities, are each independently showcasing the value of 900 MHz private LTE in solving multiple use cases. Ericsson joins both Nokia and Motorola as infrastructure thought leaders working hand-in-hand with Enterix to help drive 900 MHz education, development, and ultimately adoption. We have other major efforts underway to increase awareness and attractiveness of our spectrum to utilities, such as the Enterix Active Ecosystem Program. As a reminder, we announced the program in May with 37 world-class technology industry leaders coming together to provide a wide range of solutions for 900 megahertz private LTE networks. The number has now grown to over 50 technology leaders, including Cisco, GE, Hitachi, Qualcomm, and many more. These ecosystem members have a vested interest in supporting private LTE at 900 megahertz and are actively engaged with our team to collaborate on devices, services, and solutions that can support and address the current and future needs of utilities and other critical infrastructure entities. Since the launch of this ecosystem program, we've heard from numerous utilities about the significant value they see in this active ecosystem effort. As I previously described, We also expect the relationships in this ecosystem program to develop into commercial opportunities for Enterix. I want to highlight one example that we just announced. This morning we issued a press release outlining a new relationship with Federated Wireless. For those of you who don't know Federated, they were the leading proponent at the FCC in bringing the CBRS spectrum to market in its novel shared model and are a key provider of the CBRS SaaS platform service that's required for access to that mid-band spectrum. As discussed in today's press release, we're bringing to market a combined and complimentary offering of dedicated use of our 900 megahertz broadband spectrum paired with Federated Wireless's shared spectrum SaaS services for use on the CBRS band. This is a logical relationship as we are already working with many utilities on the hybrid approach of combining low band 900 megahertz with an overlay of mid band CBRS to add capacity and coverage in incremental areas as needed. As we identified at our investor day, the remaining 70% to 85% of the utility spend on private LTE network deployments and operations beyond the cost of our 900 megahertz spectrum creates an opportunity for Enterix to identify low capital intensive ways to build incremental value for our shareholders. This relationship with Federated is a good initial example of the kind of opportunities we referenced. We look forward to sharing more about these options for incremental developments throughout this coming year. We also are seeing continued significant positive momentum from policymakers. Yesterday, the Senate voted to pass the Infrastructure Investment and Jobs Act. Language in the Act embraces the intersection between grid modernization and private broadband communications, as well as the connection between utility private LTE deployments and the support for rural broadband. The bill provides billions of dollars earmarked to support these efforts. The legislation now moves to the House for their consideration. As we've detailed in the past, we do not need legislation to deliver on our business plan. However, the education of policymakers and the industry alone has already aided in heightening the awareness of the importance of our efforts. Washington's focus on decarbonization, distributed energy, and infrastructure has shined a light on our goal of helping to modernize America's electric grid. That being said, with this bill's passage, we would expect that this would be a further catalyst to securing utilities interest in Enterix's offering. And another important milestone for Enterix, in the last few weeks, the FCC granted our first broadband licenses for several counties of our initial customer, Ameren. Those grants are the culmination of a lot of hard work by our team, the utility sector, and the team at the FCC. They also represent the formalization of our effort to deliver broadband for mission-critical needs across the United States. As we shared at our investor day, Enterix intends to become the de facto private wireless broadband solution provider to the utility and critical infrastructure sectors. With our breakthrough achievements, continued significant momentum and tailwinds, we feel we are well aligned to achieve this mission and look forward to sharing more about our continued progress with you all soon. Thank you very much. With that, I'll turn it over to the operator to open the call for questions.

Thank you, ladies and gentlemen. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone now. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold a moment while we poll for questions. Your first question is coming from Phil Tusick from JP Morgan. Your line is live.

Hey, guys. Thanks. Maybe dig into that $200 million of contract value I think you said by March 31, 2022. How do you count the ones that have been signed already in that and how many should we expect between now and then?

Sorry, Phil. This is Rob. As we talked about investor day, the $200 million is the incremental contracts we intend to sign through the end of the fiscal year. That can be all kinds of mixes given the breadth of the pipeline we have over 50 utilities. And so, I don't know, Ryan, do you want to add anything Any other color to that Phil's question?

Yeah, I'd be happy to. Hi, Phil. Let me come back to a little bit, as Rob said. So in the aggregate, net incremental contract proceeds of $200 million. And we get to that. We talked a lot about it in the investor day around how we're qualifying and what we see in terms of opportunities in the pipeline. And I'll just reiterate, Rob hit on a few of the very key points in the earlier remarks, but let me add a little bit of depth to some of it. So in addition to what we're seeing now, you know, in the growth of the over 50 accounts, you know, representing over $3 billion, we break that down into the various phases. You know, and it's those different phases and the evolutions of accounts through those phases, you know, which are really the basis of how we think around operationalizing the path towards, you know, both the $200 million goal and the year-end fiscal year 24 goal. The highlight that I take away from what we've seen in terms of that momentum that builds the capability and what we see in terms of the confidence has really been defined in terms of some of the evolution that we've seen into what we call the phase two category. So, you know, with today, you know, already roughly one third of the pipeline value, you know, represented in that phase. And that's important to me because that's where, you know, a lot of the opportunity pipeline growth is coming from. in addition to obviously what we have already in Phase 3, which as I said, at the late stage of contract negotiations, are kind of the bottom of the funnel as we ultimately think about it. But with that doubling in the overall growth of the pipeline, and then frankly just the diversity that we're seeing, so we've now scaled a world-class front-end sales organization to be able to capture not just singular opportunities that we see in front of us, but to really lean in and capture all of the interest and demand that we're seeing across the whole market. And that creates a powerful set of optionality. As we think both to the near term and the long term, we now have a diversity of large, medium, and small-sized customers that gives us a variety of paths actually here now in the $200 million goal for this year and as we look out to fiscal year 2024.

Thank you. And I know it's only been what, six, eight weeks since the analyst date, but any change in the phase two count or the types of customers coming in there and then movement from phase two to phase three. Thank you.

Yeah, no. And as you said, Phil, you know, it's not been a lot of time in between. Um, so we've not seen a dramatic set of changes, you know, in any of the overall categories that I think is, is worth noting. What we are, though, continuing to see, and this is playing out literally day by day, week by week, is just the overall intersection, I'll say, with what we've been driving in terms of market education, market awareness, coming off the heels of some of the things, you know, like industry and customer participation in the active ecosystem program, a broadening understanding and awareness as we see across the entirety of the pipeline. And that's most measurable as I'm seeing the new customers coming into the top of the funnel. A year ago, Most customers coming in had an interest in PLT, didn't know a lot about it. You know, we had to spend a lot of time in cycles really educating them on the ins and outs of what the technology is, how it fits into their business cases, you know, what the applications even that they can support on it. One very positive thing that I'm continuing to see, you know, is how that education has landed. And it's not just us delivering it anymore. It's coming from across the entire market and ecosystem. is that they're coming in more educated. They're coming in more aware with information in hand that they've been able to source either directly from us or through others, either indirectly through the ecosystem or through organizations like ABBA, who've been all collectively doing just a fantastic job driving the overall education and awareness of the broader set of customer base. And that matters to me from a pipeline trajectory perspective, really because it helps the process move faster earlier, you know, so we don't need to invest as much time in that front end and really get into the brass tacks of helping to work through the details of the business case and executive buy-in and sponsorship, you know, where really we can put some of our best skills to work in the world-class team that we've been able to assemble.

Okay. Thanks, guys. Thank you, Phil.

Your next question is coming from Simon Flannery with Morgan Stanley. Your line is live.

Thank you and good evening. I wonder, Rob, if you could update us on the progress with Ameren and SDG&E and how you're getting on with the clearing. It sounds like you're making some progress with the FCC, but how do those two stand and what's the latest thoughts in terms of cash receipts for the balance of the funds from them?

Sure. When I talk about the relationship continuing, and Tim, maybe you want to jump in on the cash receipt side, but individually, Amer and SDG&E are both progressing tremendously, from my view, in that we are actively working with them. I think of them both as really sandboxes for us of not just the deployment of our spectrum, but also a better understanding how utilities are using and getting value out of private LTE networks. We've got teams that are working across the board with Ameren on their planning, their deployment. You heard the great news about their first licenses coming from the FCC. That was a really momentous occasion for us because it really showed that, you know, despite us talking about it and getting rules, now the process works and we can apply for and get granted it on a reasonable short-term licenses to be able to fulfill our obligations under the contract. So SDG&E, the same thing, continue to see their contributions innovative thinking on use cases. They're active participants across the board, you know, nationwide, also working with ABBA and with other vendors helping us drive the ecosystem forward. They've made comments to us about how much they appreciate how we brought together that ecosystem. So I think overall those relationships that are really just getting started from our standpoint and will continue to grow. I do think the relationship with Federated Wireless that we mentioned is and our ability to now be able to bundle together a combined CBRS 900 solution is valuable for all utilities, but specifically the first couple of customers we have, and I think we'll hopefully see some more developments there as well. Tim, you want to talk an update on the cash receipts?

Sure. Well, let me talk about clearing first, Rob and Simon. I think we've made good progress in both territories on the clearing front, and we'll continue to do so with what we see in front of us. So the FCC put out the rules for applying for broadband licenses in May. We were in line with the first several bunch of counties for Ameren as soon as we could be on the day that it opened. And the process has been rather seamless working with the FCC. So as Rob mentioned, we've started to get our first set of broadband licenses and would expect our next payment from Ameren to be in the next few months based on the timeline that we've laid out with them. So we feel like we're in really good shape with that as well. So all things are progressing forward. And the last thing I'll say, Simon, is as a part of applying for broadband licenses, we've also begun to work with the FCC on anti-windfall payments. Their calculations have been right in line with where we expected, which gives us even more confidence in our overall nationwide estimate for our clearing costs that we talked about before, the $130 to $160 million. So overall, clearing is progressing as we had hoped at this point.

Great. And that's helpful. Maybe one for Ryan. I think that the CBRS thing is really interesting. Do you think we might see the utilities active in the upcoming Auction 110, the 3.45 to 3.55? I know it's sort of bigger license areas. And relating to that is we've talked a lot about LTE today, but how is 5G coming into the conversations as the utilities think about, should I be waiting to deploy a 5G network rather than doing LTE for now?

So, Simon, it's Rob. Maybe I'll start on just the other band. Obviously, We can't share anything we know confidentially under NDAs with our relationship with utilities. But just broadly speaking, I'm not hearing about any considerable interest from utilities specifically in that band. That's not to say that there aren't utilities that may be thinking about it overall. But, Ryan, maybe you want to step in on the rest of the question.

Yeah, no, and I agree with you on that. I'm not hearing anything specific at this time also, Simon. But let me come back to the 5G part of the conversation. We do encounter this question. Obviously, there's a lot of hype, I'll say, still put into the 5G conversation coming from various stakeholders. I find utilities, though, are pretty pragmatic in what they're anticipating in terms of their evolution of network functionality and really their roadmap towards supporting some of these next evolution networks like 5G. And a lot of it's rooted in, you know, the use case and the capabilities that they really need today, you know, and a broad understanding of kind of what they can get and the value proposition that a 4G LTE network brings, you know, is more than sufficient what they need. And we also talk a lot about risk aversion. You know, utilities aren't known for, you know, wanting to be on what I would call the cutting edge, you know, kind of a technology landscape. And so there's some wariness in terms of, you know, letting – Others prove the technology and capabilities, you know, and being really able to capture that value, you know, at a potential time in the future. And so it's not been a big focus, you know, of the conversations that we're seeing in the utility buying process today. But they're not blind to it either, I think is really the point, you know, in terms of looking at both the capabilities today as it's ready, it can be deployed, and they can put it to work very, very quickly. but thinking through the long-term perspective of their architecture and the various systems, you know, as they're putting together the design and the vendor choices that they're making to keep open the optionality around, you know, how at the right time with the right ecosystem and with the right demand and use cases in place that they can naturally evolve to that outcome when they're ready. Great. Thanks a lot.

Thank you, Simon.

Your next question is coming from Walter with LightShed Partners. Your line is live.

Thanks. Hold on. My dogs are going nuts. Rob, can you put some more meat on the bones of the federated deal? Meaning, are you the one going to the utilities and saying, hey, can you package or package the GA licenses and are utilities willing to use GA licenses? I know you had that, the San Diego one that like they had their own licenses, but, and you have that whole layer cake concept, but can you do that or other utilities you think willing to do that with, you know, with GA licenses as opposed to priority licenses at the San Diego utility owned?

Yep. Thanks, Walt. And I'm glad to hear your dog is excited about Antarex as you are. The, the, Look, the federated deal, and you know the leadership of federated, led by Iyad Tarazi, a good friend and colleague, also former Nextel, are a really smart and capable group of people that really were trailblazers on this idea of sharing spectrum and were critical in getting the FCC to put that band in the scheme that it is, which is both the licensed and unlicensed. The agreement between us, which I can't really... talk about the terms specifically because we're prevented from doing so, but it does contemplate economic benefit for both of us. So the idea is that we are really a powerful channel for them into the utility space, and that's what I think they value in the relationship, and what we value is their extreme expertise in CBRS and all of the elements around that. They really help drive the ecosystem in a great way. They understand the deployment, the strengths and limitations. And so it's a great relationship for us. And really, well, I would say the spending in CBRS may not be as material in the overall scheme of utility spend. For us, it's a good example of how we translate these ecosystem partners into win-win situations where, you know, obviously we get the benefit of combining this product and making it more appealing to the customer. Federated obviously gets access to this great group of customers. We've invested years of building relationships, and the customer's getting a better solution. That's really what matters at the end of the day. We think it helps with the adoption. I do think, Walt, that we'll see more utilities well beyond. We talked about Temp Electric as being a CBRS licensee. There's plenty of PAL license holders, licenses that were won at auction, but the unlicensed, the GA licenses, I think that absolutely are a great additive value Once you have the foundational element of 900, you then can put the building blocks on top of that of unlicensed spectrum, applications, devices, all the things. So we really see that our job beyond 900 is helping build the value of this solution set, of which CBRS is an important piece. We think other bands eventually, through that layer cake approach, can be. That's the beauty of adopting LTE as the standard, which is new to utilities, but they get the value of that that it's a forward compatibility path to add more capacity, add more capabilities as the evolution occurs, the E of LTE, this evolution.

Got it. And then a different question, but I believe Motorola Solutions is in your ecosystem. Greg Brown just reported a very good quarter and tremendous traction with public safety and his – camera security business is really taking off is that um where are you i guess with them and in terms of like obviously the electric utilities great opportunity you know very obvious in terms of nationwide but beyond utilities um where is motorola with perhaps broadening that market to um you know other other market segments that might be interested in this spectrum

Yeah, Motorola, obviously, we've had a long-standing relationship. As you know, they were the key technology partner of Nextel and continue to be an important partner of ours from the beginning of Enterix and even PDV prior. We're actively working with them. They are part of the ecosystem. They have a very unique set of assets and skills that we think are really valuable to utility customers and are complementary to a lot of the other ecosystem providers. So I think all of the application skills they have that you've talked about, a lot of which have been further developed through their FirstNet experience. A lot of them are translatable into being applications and skills for utility networks. So we think we see strong capabilities. The other thing to remember is that a lot of the incumbent licensees that we're retuning here are two-way radio customers, LMR customers, a lot of which are Motorola's. And so their ability to understand that, understand the migration path of those two-way radio systems as utilities get more comfortable with the idea of mission-critical push-to-talk, which FirstNet, again, is driving, and Southern Company as a utility has adopted already. We see that they have a very big role in helping with that migration of LMR to LTE for mission-critical push-to-talk, and just migrating those networks as utilities understand that the future of communications is LTE and private LTE. I think they're going to be a great partner in doing that.

So I see that. So what you describe, though, is basically... good value to them in terms of selling radios, LTE radios to their existing safety or, you know, maybe to a utility base. I guess the question is, you know, is there an opportunity for them to integrate this LTE, this LTE, this spectrum, your spectrum for sales to non-utility customers, to public safety customers, other, other industry segments that, that they do well with. Obviously, you know, you're targeting the utilities and that's a great ecosystem and, But like if these guys, if some of these utilities want to drag their feet and someone else in that same market in a different industry sector, like public safety, wants to grab that spectrum, is that, you know, is that a realistic opportunity? Do you think that's something that Motorola is looking at?

Yeah, I think, you know, without getting into Motorola's objectives, you know, for us, the utility space is clearly our bullseye. But as we always said, we see those concentric circles of other critical infrastructure users as being complementary. We've had lots of discussions, and we do talk to a lot of the vendors in the ecosystem about how we can get additional usage of these networks. So for us now, folks, yeah, there's substitutes of other sectors, but I think it's really complementary users in a lot of ways. And so as you start putting together these individual pieces of networks, each individual service territory of utility as an example, and that becomes a network of networks and eventually a nationwide network of networks, that's a valuable asset. And I always go back to the Southern Company example through their Southern Link because they're further ahead in having deployed private LTE, and they've taken it further in saying, you know, we're going to host on our network, allow other municipal utilities, gas, co-ops, to use that network. They even have public safety customers on that network that because of the way they built their network with greater resiliency and greater reliability and greater cybersecurity, longer battery backup, things that they bring uniquely because of their needs, other critical infrastructure entities want that as well. So I think, yes, there's an opportunity for a substitute of other critical infrastructure segments, but I think more likely it's complementary that they find ways to work together, share costs, share the benefit of this nationwide network of networks.

Roger that. Thank you.

Thanks, Will.

Your next question is coming from George Sutton with Craig Hallam. Your line is live.

Thank you. Along that same line of that concentric circle concept, we, as we've talked to folks in the industry, we're getting a larger, hearing a larger focus on rural broadband opportunity. And I'm wondering, if that would be, by your definition, complementary, or would that be incremental opportunity?

Hey, George. Thanks for the question. So we've talked about rural broadband. In fact, we've been recently out promoting what's soon going to be a paper published on the topic, working in conjunction with a number of partners. From our view, there's a couple of key values about rural broadband. As utilities build their infrastructure for private LTE, and already utilities have a lot of infrastructure that's being leveraged for third-party communications networks, but as they start to pull more fiber and build more towers to get private LTE coverage, those assets are a critical piece of unlocking the opportunity to serve rural broadband. And so we do see, and we've been talking to a number of parties, from NARUC, the National Association of State Regulators, to Edison Electric, the industry association, and then to the utilities themselves about how they individually want to facilitate that to happen. A lot of utilities want to enable ISPs to build those rural broadband capabilities leveraging their networks. And so we're talking to a series of utilities about their individual models of how they want to do that. I think it's less likely that utilities are going to want to serve those end users in rural broadband but I think that most utilities are going to want to enable those models, and that could be leasing their fiber, using their towers, supporting that deployment, because it's in their interest. One of these utilities said to us that they want to make sure that these communities, especially the rural communities, keep their residents because they're investing in infrastructure to serve power and other things to those customers, and they don't want to see a migration of those customers to cities or elsewhere. And so it's very important. I think the legislation that you heard about, I'm sure, and I'm sure you wrote about it as well, George, puts a lot of capital, again, into both the last mile, the fiber and broadband to the end user, but middle mile is a really important piece of it, too, as talked about in legislation. Middle mile being a lot of the investment of what utilities are putting into their fiber and their infrastructure, and I think we'll see a lot of support for investment in that middle mile to support rural broadband.

You mentioned NARIC. I know you've conducted multiple webinars in conjunction with their commissioners. Can you just give us a sense of their comfort with all of these different opportunities that you're looking at? Our sense is it could accelerate some of your approvals in the future.

Yeah, I could start on that. Maybe Chris McCabe, our chief regulator, wants to jump on that. But I think overall, we spent a lot of time educating about the importance of broadband wireless in completing the communications to all these important assets, but also the importance of it in supporting, as we just talked about, the rural broadband as well. Chris, you want to elaborate?

Yeah, thanks, Rob. Thanks, Rob, and hey, George. You know, we, I think Rob hit on the key term, which is education. We tend to, when we first sort of knock on the door of a policymaker, we tend to do it in the context of trying to educate them, particularly about the intersection between grid modernization and an advanced communications platform. And so that's been our goal over the last couple of years at NARUC. And I think we've made great strides as, you know, as Rob referenced, We've seen them now begin, them being NARUC and particularly the public utility commissioners individually, begin to talk about grid modernization and include communications as a component. And as they also talk about, you know, closing the digital divide, really focusing on rural broadband and broadband to unserved, there's been a focus on this middle mile component. And we've had them and watched them evolve through our education process from talking only about fiber to talking about fiber and the components of a wireless network as well. So I think we've made some great headway. That really is mirrored in what we just saw come out of the Senate, as Rob referenced. And I think that helps. I think it's circular in nature somewhat that the work we did at NARUC helped us on the federal legislative front and the work we've done at the federal level will help us and perhaps more importantly, will help our utility customers as they pursue rate cases at the state level.

Super. And last question for me, you talked about use cases. San Diego Gas and Electric has been fairly excited about one of the use cases, which is the ability to shut off a power line before it hits the ground and therefore avoid all of these fires. And Of course, much of our country having had fire issues recently, I would sense that that creates an accelerated pace of discussions from many of the utilities. Can you just discuss that use case specifically?

Yeah, Ryan, you want to talk about flowing conductor a little bit?

Absolutely.

Yeah, let me take that one. So falling conductor protection, um, you're absolutely right. Um, you know, San Diego, um, has put a lot of focus on it, you know, as part of their proactive wildfire mitigation plans. And obviously with, with the urgency, you know, again, here we are in the middle of, of wildfire season out in the west coast. Um, I mean, the application supports obviously all utilities, you know, across a variety of geographies that are facing similar kind of challenges. And the essence of the technology, you know, and it's complementary to a lot of the other wildfire strategies, you know, that we see, you know, publicized from the utilities is really the proactive ability for a utility, you know, grid to be able to detect a downed power line. And, you know, just as that downed power line, you know, becomes a potential emission source for wildfires if it so touches the ground, the technology is designed to be able to drop the power effectively to that phase of the transmission line or distribution line to be able to limit the potential of it causing a source of fire. Now, obviously, the requirements of it are, you know, it needs a, you know, broadband, low latency kind of communication system. You know, the ability to communicate in near real time across the various assets, you know, technology that are necessary to enable the solution to are quite critical, you know, and that is an important alignment actually to what we're talking about in terms of private LTE. And so I do anticipate, you know, just as we are, we're going to continue to see conversations about it and I'm sure other similar kinds of technologies. You know, as an industry, you know, we continue to come together to try to find more and more innovative, you know, technology-based solutions to be able to support all of the nation's utilities with dealing with some of these environmental disasters like fires.

And again, not to sort of reiterate the same set of issues, but the Infrastructure Act and the legislation as it came out of the Senate really recognized the need to move funding towards resiliency, redundancy of the grid, and particularly to help stimulate technologies that can prevent utility line caused wildfires. So there is that additional catalyst, I guess I would say, that is out there.

We absolutely love catalysts.

Thanks, guys. Thanks, George.

Your next question is coming from Mike Crawford with B Reilly. Your line is live.

Thank you. all the cash you're expecting to collect and then return to shareholders in the next three to five years, why wouldn't Antarex convert to a REIT?

Thanks for the question, Mike. Just, I mean, as we've said before, obviously we see this trend towards the prepayment as being very positive, and as Tim talked about in Investor Day, will give us the opportunity to contemplate returning capital over the next couple of years. We do have our NOLs in place. And Tim, maybe you want to kind of detail our thinking on how we're planning for it at this point.

Yeah, Mike. Thanks. And good question. And we get that one quite often. So right now we've got over $250 million in federal NOLs that will get us through the next several years with the proceeds that we see coming in and how they impact taxable income. And so with that, we have some runway to look at and fully analyze whether or not we want to be a REIT. I would say we're examining that possibility with our advisors and trying to figure out if that's, one, possible, and then, two, the best path forward for us. So more to come on that as we move forward through the process, but it's something we're actively looking at. All right. Thanks, Tim.

And then I know that spectrum lease cost itself is a relatively small portion of overall investment, utilities costs. would make to deploy private broadband network, but has there been any reaction from your customers following this wildly successful auction of 3.5 gigahertz spectrum in Canada that came in two to three times? What people thought would clear that?

Good question, Mike. And we saw your note on the bio is well explained. And I think, look, our view is we always talk about the value of our spectrum in these conversations being fair market value. And obviously, any new data points that occur in between these transactions go into that discussion and calculation of fair market value. So you should assume that as we're both internally and using our external experts positioning the value of spectrum, which, as you know, over time has shown historically to increase in value, over a pretty significant trend line. We're not surprised to see other good high-water marks and to continue to use those in our negotiations and discussions to continue to drive getting what we think is good, strong fair market value.

Okay, so I know it's only been a couple weeks, but you haven't seen any accelerated interest to just sign on the dotted line somewhere given the lower prices you're talking about versus what the big three carriers

I don't want to say anything disparaging about Canada because our chief operating officer, Ryan Gerbrand, is from Canada. But I think it's an important data point, but it's clearly not in the context of all the other data points. It's just like anything where you have comparables, it's another important one to show the positive trend and upward trend of spectrum. Ryan, anything you want to add there?

No, other than I'll confirm I'm from Canada. But I think you hit the nail on the head. I mean, there's a lot of considerations, obviously, that the utilities are going into in their buying process here. And there's no doubt, you know, seeing other auction transactions, you know, at good quality prices only helps support the conversations that we're at. You know, but it in itself, you know, doesn't change the process that the working their way through justification and stakeholdering on, you know, a deal that's much larger than what we see in just the spectrum transaction. And that's still a necessary process. Even though they are, you know, I'm confident in this, you know, seeing the urgency and the scarce nature of what the spectrum offering is, you know, that's promoting a lot of the conversations we're seeing.

Okay, great. Thank you. Thanks, Mike.

Your next question is coming from Chase White with Height Capital. Your line is live.

Thanks. Thanks for taking the question. First one, were the utilities the ones driving the federated agreement and just the general conversation? Or was that more you guys and federated coming together? And are you in discussions with any other SAS providers like Amdocs or Google for similar collaborations?

Hey, Chase, how are you? On the genesis of our relationship, we've known Federated almost since they started probably. Again, Iyad Tarazi, their CEO, is a former Nextel colleague and colleague of ours and friend. And so we've been working with them from the beginning. And so thinking about the complementary aspect of this arrangement that we have with them. So it was driven by us because we've been following Seabreaths from the beginning and see this complementary aspect. I always compare it to you know, you're using Wi-Fi in your home or office and you go outside and use cellular. That's the way I see the complementary aspect of CBRS very much. It's, you know, mid-band. It works well in buildings and campuses. But as soon as you start having to cover wide service territories, you need a foundational spectrum like 900. And Federate gets that from the beginning. You know, they've got a great team of people. But there's nothing particularly exclusive about that from the utility standpoint, right? Our view is we You know, we have a really strong long-standing relationship with Federated. We want to help them create a better product that's integrated with ours to be able to offer to utility customers. But as you said, there's a lot of choice on SaaS providers. We do think Federated has a very, very strong offering in that it's what they do solely and are very focused on how to bring that kind of shared spectrum solution to marketplace. And so we're excited about the relationship.

Great. And in terms of returning capital to shareholders, once you've started to roll up more of these leases over time, assuming that they're similar to the Ameren contract, what it sounds like you guys are thinking that they will be where the cash is received in stages pretty much up front, you know, given the credit worthiness of these utilities, do you see an opportunity to take on leverage to accelerate or smooth out the capital return?

Um, look, we're always, you know, we're looking at optimizing our, uh, you know, financial returns for our investors and including, you know, our capital structure. So, um, I think it's probably premature for us to talk about, you know, what, what we could, what we would do. Um, but, but clearly we're, you know, we, we, you can look at our history, um, both through the use of leverage in the early days of Nextel and through other companies. And at the right time, um, you know, if it makes sense in the context of what Tim said earlier about our financial planning, um, it would be something we would consider. Tim, anything else you want to add there?

No, I would only add that, Chase, yes, we're going to look at all the things we can put into our toolkit and see, you know, what's the best use for both Antarex and for our shareholders. And, you know, so more to come on our thoughts on that as we move forward with these contracts.

Perfect. Thanks, Ed. Thank you, Chase.

We have no further questions from the lines at this time. I would now like to turn the floor back to Rob Schwartz for closing remarks.

Thanks, Catherine, and thanks, everyone, for the continued time and interest. We look forward to talking to you all again soon. Have a good day.

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.