Anterix Inc. (ATEX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Anterix Investor update call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Natasha Vecchiarelli. Ma'am, the floor is yours.

Good morning, everyone. Welcome to the Anterix investor call. 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, I'll remind you that any statements we make during this call that are not based on historical facts constitute forward-looking statements, and our actual results could differ materially from those implied. A discussion of the factors that may affect our future results is contained in our SEC filings, which are available on the Investor Relations page of our website. A replay and transcript of this call will also be made available on our website. Following our prepared remarks, we will open the call to take questions. With that, I'll turn the call over to Anterix' President and CEO, Rob Schwartz.

Thanks, Natasha. Good morning, everyone, and thanks for joining this call on short notice. Today represents a monumental day for Anterix and our shareholders as well as for our partner, Ameren in the growing private LTE ecosystem. As you may have seen this morning, we announced that Ameren's CEO, Warner Baxter and I executed a long-term 30-year spectrum lease agreement, covering the full-service territories of Ameren Missouri and Ameren Illinois. Despite the substantial challenges we all faced during 2020, this has been a year of momentum and validation for Anterix, which included our major win at the FCC and now this capstone of our first broadband spectrum agreement. Looking back on our journey with the FCC and with Ameren, I can't help recall a round of meetings in 2018 that we and the executives from Ameren had at the FCC with the Chairman and the Commissioners. Those meetings were pivotal in convincing the FCC to produce such a groundbreaking spectrum decision. This announcement represents more than just the spectrum agreement. It represents the official launch of the utility industries capturing of the tremendous benefits of 900 megahertz private LTE. Just like we witnessed with their support at the FCC, we believe with Ameren's leadership, we will soon see the utility sector's collective adoption of these foundational networks. These networks will enable utilities to harness the value of new innovations, including machine learning, artificial intelligence, cloud and edge computing. The ability to capture, aggregate, analyze and act on endless streams of data can now be a reality. And importantly, consumers will considerably benefit from all of these innovations. An advanced grid that facilitates decarbonization and embraces renewable and distributed energy sources that addresses the increasing usage of electric vehicles will need advanced broadband communications. The current and future use cases and the value they create is why we are confident that other utilities will also be making long-term commitments to join the 900 megahertz private LTE ecosystem. Now let's talk about the Ameren contract and its positive implications to Anterix and our shareholders. While it required perseverance to first get through the FCC process and now to secure our first customer agreement, we can see that the long-term relationships and value created was well worth the wait. Thank you to our shareholders for your patience during this important journey. The 30-year lease of broadband spectrum with an option for an additional 10 years will empower Ameren to build a more reliable, resilient and secure modernized power grid in their service territories. Ameren, a long supporter of 900 megahertz private LTE now formally has the capability to leverage this private broadband network to enable valuable mission-critical use cases today and into the future. The terms of the agreement specify full prepayment of approximately $48 million by 2026, with about 50% of the total paid by June 2021. So while we will recognize the revenue over the life of the contract in a straight-line for GAAP, Anterix will benefit from the near-term prepayment cash flows versus our original guidance of annual long-term payments over the life of the contract. More details are included in the fact sheet now available on our Investor Relations website. It's worth noting with prepaid -- with a prepaid framework of this deal and with our visibility of the structure becoming more prevalent in our pipeline discussions, including our discussions with complex systems incumbents, there could be a substantial positive impact on our cash flow, should we see more prepayments in future transactions. We remain confident in our forecast of our fiscal year-end target of at least 2 to 3 signed customers and our fiscal year-end 2024 targets that can be achieved with 6 to 11 transactions with top 20 investor-owned utilities. As we've shared before, this would equate to the utilization and monetization of about half of our nationwide spectrum. With this developing prepayment trend that I just discussed, we expect to see an accelerated cash flow benefit, and we are now considering, therefore, whether the reporting of annual recurring revenues may become less relevant than our contracted proceeds. This thinking will logically evolve as we complete additional transactions. And my comments wouldn't be complete without taking a moment to recognize the incredible team that accomplished this monumental feat. During a very difficult year, without the ability to visit with customers or even an office to collaborate, we brought this important partnership to completion. Our team remains centered around a meaningful mission of bringing reliability, resilience and more important than ever, security to our nation's electric grid, an incredibly complex machine that we all rely on literally every day to keep the lights on. We, as a team, know the importance of this mission and also know that with any new idea, we will face obstacles that we must overcome. With the initial contract, we did just that today, and I couldn't be any prouder of our Anterix team for this achievement and for the many more to come. We will continue to embrace the opportunities presented to us as a company, and I look forward to 2021, and I see a bright future for Anterix. With the same drive attention to detailed discipline and focus that got us through the FCC process and launch will become at least a 3 decade relationship with Ameren, I believe we can drive the utility sector toward collective industry adoption of 900 megahertz private LTE. That concludes our prepared remarks. I'll now turn it over to the operator for questions.

[Operator Instructions] Our first question today is coming from George Sutton.

Craig-Hallum. So congratulations, first, a long time in coming. The pricing on this, if we're doing our math correctly and we look at 600 megahertz as an example, these markets, I believe, were only 2/3 of the median in terms of the values that we're seeing in those auctions. And it looks like you're actually above the median with this pricing, which would kind of suggest better than expected, at least what the market was thinking pricing. Am I reading that correctly?

I think you're spot on. As we've talked about in the past, and I know we've mentioned in our fact sheet, in prior auctions, we've seen variation in pricing in markets considerably, the Ameren service territory is valuable for sure, but it does fall below average on just historical pricing. And so that 2/3 is really an accurate view of it. And so we're excited about what it implies about -- if you look at it relative to historical auctions, it really puts us just above the midpoint of prior auctions from a value standpoint. And so that -- it really puts us exactly where we thought we'd be, which is demonstrating fair market value for our spectrum. And this is worth noting, Ameren as an important customer is going to get considerable value from what they're purchasing. We've done a lot of work with them and others in looking at the value equation, right, the cost benefit of what they're paying relative to what they get out of it and there's a really detailed model that they have and others as well, showing all of the contributions that they're going to get. You saw the quote in our press release, the Chief Digital Information Officer talking about the migration of all the existing systems. And obviously, the costs associated with running all those independent historical narrowband systems that now can migrate to this broadband system. But the real value is the future, as I talked about, all of the opportunity to be able to put new use cases that weren't enabled until you have a private broadband network.

Just one other question for me. You mentioned collective industry efforts here, and this dovetails with what you introduced on a recent call relative to network of networks. I think there was some debate about that or some consternation from some of my peers. Are you making progress along those areas? And can you also discuss the cyber hack of the SolarWinds in any way, have an effect on people kind of moving forward, thinking about this?

2 good questions. I'll start, and my team should feel free to jump in. So on the network of networks, right, we've talked before about as we see more and more utilities coming forward, the value of the nationwide network becomes even greater. When you think about the centralized capabilities, starting with just the analysis of how to use the broadband network within a utility. A lot of that started in the grassroots way from our utility broadband alliance. It also started with the numerous experimental licenses that are going on around the country and the experimentation of seeing different use cases. If you've seen those filings, you've seen a variety of different applications, some overlapping, but a lot of new innovations. And so the uniqueness of this industry sharing that information from the beginning is very powerful. And we see it once the network start being built, the connectivity between them becomes even more powerful. So we're on a great course there. A good example there, also, I know we talked about in our last call, even is the focus of the industry on the potential for federal funding to be able to help drive the deployment of these networks. And we think we're on a very solid course given the new administration and the focus of the importance, both of infrastructure funding, but also the importance of the utility industry and its security, as you mentioned. And so on the security piece, I think, unfortunately, every time there's another incident, and this SolarWinds was a big one. It does point out the need for private air gap networks where they're not connected to the public Internet and anything you can do. There is no silver bullet in cybersecurity, but clearly, from the comments made by the federal government and what we're hearing from utilities, having the availability of broadband private networks, separate from the public Internet is an important component of their cybersecurity strategy going forward.

Rob, it's Morgan. Let me just throw in an additional point that every time another player embraces private LTE at 900 megahertz. It benefits everybody that is joined before and it benefits prospectively because it gives scale and scope to the investments. And just think about developing applications that are uniquely suited to the need say of the utilities, the critical infrastructure industries. Think about the advantages of having applications developed and tested and put into place across the board as opposed to on a utility by utility basis. But when we say network of networks, the effect, it includes those aspects in particular. It just is great business for the industry to coalesce on a particular spectrum band and technology. So -- and we're hoping that the rest of the industry, which are generally characterized as fast followers will follow the lead now of Ameren as well as Southern Company, Southern Linc, the 2 really standouts at this point.

Our next question today is coming from Mike Crawford.

B. Riley Securities. So Rob, Morgan, Tim, could you maybe just help to connect the dots a little bit more between your megahertz pop calculations between, say, 600 megahertz, and AWS and what you've contracted today with Ameren, given its 7.5 million population served and I believe an addressable market of around 278 million people in the U.S.?

Sure. Mike. I'll start with that and maybe Tim can jump in with some of the specifics. So as I mentioned earlier, the Ameren markets as valuable as they are, are markets that when you look at historical pricing are below average. What we saw here was clearly something that was right down the midpoint between the historical 600 megahertz and AWS auctions. So really consistent with the fair market value we had talked about, and we were hoping to achieve. But Tim, do you want to answer some of the other details?

Yes. I think, Mike, when we've looked at it and Rob give you that answer, we've narrowed it down to the pops because this is county by county versus the PEA or larger 600 or AWS blocks. So we've looked at it on a county by county basis for the bespoke coverage that we're giving to Anterix -- or excuse me, giving to Ameren for their service territory. And then I think from a nationwide pop perspective when you talk 270 million, I think you're taking 52% of the U.S. population based on the amount of spectrum that we currently have. You have to keep in mind that over time, and as we apply for broadband licenses, we'll have a full 6 megahertz 3x3 once we clear and file for those licenses.

Yes. As you know, Mike, spectrum valuation is as much art as it is science. So those historical data points are just that. They're inputs into discussions. And you can imagine these are prolonged discussions and negotiations in which we're really educating the utility industry about spectrum, right? As spectrum experts, all of the investors on the phone and ourselves, we watch closely all the auctions that are happening. And clearly, we're seeing with what's happening in the marketplace even with the C-band auction now that there is no shortage of demand for continued spectrum absorption into the marketplace. And so there's an awareness in the sector now in the utility sector, especially with this transaction, that there is a limited opportunity to be able to capture the low band spectrum. And so we think that this really marks that we have the confidence to be able to see fair market value in this and future transactions.

Rob, can I just make a final point, which is that spectrum, particularly pivotal spectrum in the low-band with all of its multi-purpose uses, it just goes up in value over time. So auctions are a relevant benchmark, but I think if you just look around what's happening, spectrum increases in value.

Absolutely. And I think, Mike, I think you said the population in the U.S., they use 328 million as a population for the denominator in that calculation. But I think what's important too is when we look at megahertz pops, it's a back of the envelope math, right? We can carve down to a single pop, but that's not the way in which spectrum is available historically to be sold, right? We're carving a specific footprint of Ameren service territory, bespoke for their needs. But if you were to participate in the 600 megahertz auction or the AWS auction or now C-band, you wouldn't have the opportunity to buy just what you need. So the bottom line cost would be considerably higher. So that's another point of value that we make sure we emphasize in these discussions and doesn't necessarily come out when you just do a megahertz pop calculation.

Right. So regarding the denominator, I wasn't using 328 million because I mean you will surprise me if you ink a contract in, say, Florida anytime soon. But as far as -- one final topic, can you just update us on the status of your pilot projects and thought about others needing or not needing to enter a similar experimental license pilots that the FCC would grant?

Sure. Well, you've seen there have been 8 filed experimental licenses, and I always like to talk about different points of entry. That's kind of 1 point of entry where those utilities and others want to see -- take the time to kick the tires, put up systems. I am confident that as we see more and more deployment, and this is where the collective collaboration really comes into play that utilities will be relying on each other. I can't tell you the number, but it's considerable of utilities that I've referred to Ameren that Ameren has hosted and talked to and the same thing as Southern company, right. Southern Company, as we've talked about, hosted the Utility Broadband Alliance meeting in their Alabama power facility so that utilities could come and see it. We have the NREL programs that are going on through the National Renewable Energy Lab part of the Department of Energy, there were 7 utilities that participated in that directly, 7 different utilities, mostly. We have the members of Utility Broadband Alliance that are coming there. And I've mentioned all these because these are all different points of entry. So I don't think that pilots are the only way, experimental license's the only way you'll see utilities coming into play. And we do have customers in our pipeline, and Ryan can talk about that. But we have customers in our pipeline that are, hopefully, near term, that aren't doing experimental licenses. And so we're participating in other ways and getting their knowledge through the collective action of the industry.

Our next question today is coming from Phil Cusick.

From JPMorgan. Thanks, Rob. Can you talk more about the pipeline and the 4 companies in the final stage? Where are they? Any progress there? And how is that pricing going relative to this deal on maybe a per pop or relative to the auctions basis?

Sure. Thanks, Phil. I'm going to pass over to Ryan after a couple of comments on -- to be able to talk about the pipeline. But what I can tell you is what we're seeing is continued progress since the weeks when we last spoke about it. I restated our comfort that we'll see a total of 2 to 3 by the end of our fiscal year-end, March 31, 2021. And from a pricing standpoint, we remain confident that we're going to continue to see fair market value. As we said, it's a wide range, but I think we'll continue to see things gravitate around that mean of where the industry historically has transacted upon spectrum. Ryan, do you want to add any color on the pipeline?

Yes, happy to. Phil, yes, definitely, just to reinforce, as Rob said, we've talked about the 40 customers in our pipeline and a little bit of an overview in the last session around the different phases that we contemplate as they're working their way through it. We are continuing to see the momentum in those conversations and being able to progress them through the various phases that they're in their account development part of their journey towards private LTE. It's the build-out really of kind of both the pipeline and what we've done in terms of the people. We talked about the organization that we've built to really capture the momentum and drive these conversations with these prospective customers. And ultimately, the process that underpins us that helps us apply the lessons and even as we're coming out of agreements like we have with Ameren to be able to continue to drive and find these collective benefits that can help accelerate it. But it's really the depth and the quality that we're seeing in those conversations that gives us the confidence to continue to reinforce where we believe we are in the near term. And on our long-term trajectory towards 2024, we see nothing but positive signs in it. It will be interesting now. We talked a little bit about the entry points and kind of the journey that the customers are on and some of these benefits of the collective outcomes that we are seeing and expect to see accelerate as we get the early adopters moving forward and continuing to share the best practices and some of these applied learnings to our benefit that all of those different attributes will certainly help us in terms of better driving the understanding of how these early adopters made their decisions and accelerate ultimately the trajectory that we see our pipeline on. So it couldn't be more positive in terms of where we're at and the developments that we've seen both near and long term.

Can I just throw in for one second that I think everybody on the call is aware that there are complex system markets, somewhere around 10 of those. I would say that those conversations also are going forward being productive and that we may see in those markets, a different approach because what makes a complex system a complex system market is that there's somebody besides Anterix, that has a significant spectrum position. And so you might expect different arrangements there, but that there's absolutely no reason to assume that complex systems aren't going to resolve with very creative broadband system solutions, and we're certainly hopeful that those will all be in the service of the critical infrastructure industry. That's been our long-time theme.

Our next question today is coming from Walter Piecyk.

LightShed. Morgan, I think, what you just trying to say, basically, someone could lease 2 different blocks of that 600 and then if they have higher bandwidth applications, just carrier or like the lease or can it effectively aggregate those bands together. Is that what you were trying to say there?

Well, yes. Yes. But also, maybe I should try to be more clear. In the complex system markets, it is not necessarily going to be Anterix, which ends up as the broadband licensee, maybe someone else who ends up as the broadband licensee with Anterix and kind of a relationship to make its spectrum available because there is no market that can go broadband without us, but that doesn't mean that in every market, the broadband licensee ends up us. In fact, I think it would pretty be good overall for the industry if that weren't the case. So I think you'll see creativity around the way we structure for that reality, realizing that. Those complex systems are all major markets, and it's in everyone's interest, the industry's and ours, to get those resolved.

Got it. Rob, does the contract enable Ameren to offer any type of commercial service? And then thinking back to Southern Company when they were building iDEN that they were obviously not just using it for their own use, but also selling services underneath that. Does anything prevent them from doing that in terms of this lease agreement?

There's nothing whatsoever want that prevents Ameren or any utility for that matter under the rules or under the commercial agreements from proceeding with commercial services. I would say just as a not specific to Ameren, but more broadly because I don't want to violate a NDA, but more broadly, it's a question we get all the time from utilities as they see the Southern Company model, and they see the investment they're making infrastructure clearly leverageable for a lot of business opportunities. A number of utilities are already in the commercial fiber business as they're pulling fiber throughout their networks and have seen -- what they see as an offset of their cost, the way they typically approach it from a regulatory standpoint, it's not about a business opportunity, but it's defraying the cost of investing infrastructure. We see the same with the mobile infrastructure and not just to be able to offer typical wireless services, but it's also -- we see it as an important asset to be able to leverage, to be able to deliver rural broadband. And politically, that's a pretty important and valuable opportunity now that helps them both serve their customers, but also in the regulatory environment.

Got it. Any sense of -- yes, sorry. Go ahead.

I want to step back to the point that you were talking about with Morgan on complex systems, it is worth noting, in preparation for Ameren and some of retuning, you did see an announcement or we've disclosed about moving Evergy, which is one of the complex systems out of the band. And so just as a precursor, I would say, to -- that the transactions can happen on a voluntary basis with these complex systems. I think we'll see many more to come.

Can I go back for one second. Walt, can I just go back one second on to commercial applicability. I think this needs to be clarified that while 6 megahertz of spectrum is a fantastic building block for the kind of basic communications that the utilities want to do. 6 megahertz wouldn't support a sort of to the consumer broadband. But the infrastructure, the towers and the backhaul and the things that are associated with deployment at 900 megahertz, the towers and all the -- that kind of equipment could be a major element in making a rural broadband proposition work for somebody else. So we anticipate utilities playing in that space, but not necessarily delivering on 900 megahertz to [ brought ] into the home. Hope it's clear.

Any anticipation of what vendor they're going to use and how much spectrum initially?

Ameren specifically still is making their determination about the key vendor. But Nokia was their vendor for the pilot. We've talked about that before, I made an announcement and led a really good effort in demonstrating the capabilities, but they're still looking forward to, I think, running a process to determine their vendor. As you know, there's no shortage of off-the-shelf band 8 LTE equipment from all the major vendors.

And any initial spectrum depth that they're planning on?

It will be delivering the spectrum as we talk about in the fact sheet over that period of time. The nice thing about LTE is you can start with the 1.4 and then get to 3x3. And so we're going to plan on delivering it that way, and they'll start using as soon as we clear the 1.4.

Right. I'm just thinking that that's another way to look at value in terms of their usage is not necessarily on the full denominator of the 6 megahertz initially. It's presumably what they can use and then get to over time. Just one last question, Rob. When I think about disclosing what they paid, on one side, I feel like you might, in some cases, anchor yourself in terms of, hey, another utility looks at this and says, well, they paid this, why should we pay that? And then you can have the argument of like, well, you're in this market versus that market. But on the flip side, advertising maybe opens you up to -- I know you're focused on these verticals. But like anyone that needs low-band spectrum can say, if I can get it at that price, then maybe I want to lease it because it's obviously -- you're not -- the FCC is not restricting you to use it only for this use, I don't think. So can you just talk us through why you came to actually disclosing it? It doesn't seem like it's something you would have to have disclosed to investors. But why did you actually disclose the amount?

It's a great question. One we obviously spend a lot of time debating -- threading the needle between our desired disclosure for investors to be able to show the direction, but also be able to show the industry that one of the most innovative utilities and Ameren really has viewed that way in the industry. Their CEO, Warner Baxter, he was Vice Chair of Edison Electric Institute and has a real solid podium and has listened to across the industry. And so the idea of putting the message out that a utility as smart as them is willing to transact, and this is the way to transact and even the kind of pricing at fair market value we thought was important. As you know, there were doubters, both in the investor community and across the utility industry. Utilities got to realize, don't know what you know about spectrum and historically got their narrowband spectrum pretty much for free. And so taking them from that historic model to now paying for spectrum, which is new to them, is really important. We've talked about the CBRS auction, where a handful of utilities stepped up and bought spectrum was really an important milestone because it is the acknowledgment that it doesn't come free. The FCC is not going to gift spectrum to them like they did in the past. Instead, it's an open marketplace, which they have to bid against utilities -- against carriers in order to get spectrum and so that there's a willingness to pay. And so it's a balanced message, Walt. One last thing, Ameren clearly was a pioneer, as we talked about all the things that they did to help us drive the marketplace. This deal clearly is a pioneering deal for us. And so for us, it should set a floor from a value standpoint as we talk about it in the marketplace. We can talk about contribution.

Yes. Let me just clarify one thing you said, Walter, is that you assume the spectrum can be bought by and used by pretty much anybody. And the answer is, it 100% can. We've been pretty clear for the last 5 years where we think the best use is. But another rationale, I think, for getting a price out there, is that pretty much the #1 benchmark when a utility is approaching its regulatory officials to -- for an investment that they've made is whether it's prudent. And if you think about prudent, it's -- how are other people doing this? What have other people done? And so if you get some of these numbers out, it's an educational process, not just for the utilities that are in our pipeline. But for the regulators that they will be taking these business propositions to because they'll be talking about making significant investments and novel investments in spectrum. So we just want to get that out there to facilitate from both ends.

Walter. Just the last thing I didn't say is that this is obviously material for us as a company. And the disclosure obligations we took seriously, and that's one of the other reasons we want to make sure we put out enough information about the contract.

Our next question today is coming from Chase White.

Height Capital markets. So just in general, for this specific contract, what exact -- is there any additional info you can give us on the mechanics of these payments? Obviously, you said about 50% coming by June 2021. But how long should it realistically to take you to receive all the money? I mean, is there anything that contractually slows the pace? Or is it just the delivery of spectrum? Any other details you can give us?

Sure. Thanks, Chase. I think the terms that we disclosed really pretty much speak for themselves and that, as we mentioned, it's prepaid over the first six years, measured from now, roughly 50% of it will come in by the middle of next year. Absolutely, it's dependent upon us delivering what they're paying for the spectrum, and we're well underway. We got a really good head start on clearing their markets and are confident we'll be able to hit those milestones. And then the remainder comes in overtime but is really completed by 2026. And so the prepayment, we think, has substantial value for us and being able to capture this kind of investment in our company versus waiting for it over the 30-year life of the lease. And as you can imagine, the kind of discount rates that we talk about when we're talking to utilities are closer to their cost of capital versus ours. And so we think we also benefit from that upfront payment as well.

[Operator Instructions] Our next question today is coming from Tim Horan.

Oppenheimer. Congratulations, guys. A couple of questions. Can you elaborate on the federal subsidies, maybe how large it could be where they could kind of come from? Secondly, can you talk about this pace of clearing out the spectrum? I guess, what's the bottleneck or the long pole in the tent? And I guess, maybe I missed it on the contract, but when will you deliver the entire range of spectrum that's kind of needed?

Thanks, Tim. And happy to at least give a start on those. From our standpoint, obviously, with any kind of legislation or federal government funding, there's always a question mark on achieving it. But every day that goes by as we see what's developing, both with the new administration and their commitment to the funding of infrastructure investments and the importance of the utility industry as a key part of that are critical. We've been working actively with industry associations, most recently, the GridWise alliance put out their view of why the industry should be providing tens of billions of dollars, specifically to the utility industry, and we work with them and making sure that also specifically identify the importance of wireless broadband as part of the investment. And as we talked about earlier, the cybersecurity challenges that are only growing every day, just further emphasize, from a federal standpoint, the importance of funding and putting in place these kinds of communications networks that keep our economy running when you look about the importance of electricity in fueling pretty much everything that happens within our country. Your -- you had a second part of the question?

Yes, just the pace of clearing out the spectrum, when will it be completed? And what's the long pole in the tent in doing that or the bottleneck?

So as we've talked about in the past and having, I guess, recently, probably since our Investor Day, there are hundreds of incumbents in this band, many of whom we know and a lot of whom are actually the target customers. We've gotten a good head start on already moving a lot of those key parties out of the band. We've talked about our plan to do so. The lead times, typically, we're starting -- as we said before, we're starting as we see commercial interest from utilities, we're already starting to move utilities -- move incumbents out within their area. It is worth noting, and we gave some of the examples of some of the folks we've retuned that when you retune, take a customer, an incumbent within the Ameren territory, that actually benefits because of the proximity to other sectors like so Ameren owns the western part of Illinois, but as we move some of their incumbents, it's going to benefit us moving forward with the customer potentially in Chicago, for example. And so there's a collective effort that as we move incumbents, it benefits multiple territories of utilities, and for that matter, other potential interested parties in our spectrum.

Rob, can I move to an additional aspect of the federal funding. There's really only one time in history that the federal government has put a lot of capital at work in the electric grid, and that was for smart meters back in the 2008 time frame, and it was some number of billions of dollars on a matching fund, I think it was 50-50. That was probably the only time we've ever seen, not only the federal government step up like that, but also really had an accelerating effect in the industry because there were time frames for making these investments and getting them -- qualifying for the matching funds. So we're imagining that the same thing is going to happen here. It will be a federal-state partnership, but the federal government will be putting more capital than they normally would into the goals of getting a more secure, more resilient grid and then matching some form of matching funds. I mean, this is all predictions, but we just don't -- we don't know. Our estimates that we've been working on for the last couple of years and sharing with you folks, didn't include any of that as a likelihood. But I think now if you sort of look at the political environment, it is much more likely that there is going to be some kind of a federal accelerate.

Just lastly, can you maybe just discuss some of the more important use cases that [ electricity ] utilities are realizing in your recent discussions?

Absolutely. And I know we've talked about a number of these before. When you look at Ameren, I think it tested 14 different use cases in their initial pilot, I mean, what I would consider to be bread and butter needs of a utility, connecting substations, what they call IntelliRupter, which are the reclosers that open and close the power lines when there's damage to align, you have to be able to quickly shut up one area and feed the power into another. Those are kind of the current as I said, bread and butter use cases. Then you look out into the future, and it's really -- it's almost limitless. We've seen everything from the testing of drones on broadband LTE spectrum. We've seen the use of it for the command and control of a network for wildfire mitigation, right? When we do these cost benefit analysis, one of the things that we always talk about and have to point out, right, the value of a network like this and as expensive as it is of preventing one major incident for utility is just priceless. I mean you just have to look at what PG&E went through with their wildfires, and we're working on programs exactly for that to focus on wild farm mitigation. And that technology isn't just for California, where it's critically important. It's the same technology that works across networks and depending on the region, it could be about weather conditions. It can be about vegetation growing over limbs. And it can be about storms coming through other corridors. And so there's really -- it's just -- I always like to compare it when I talk to people who don't know the industry to the LTE phones in our pockets, right? We got them to make phone calls and we first started on cellular, then we started doing more things like texting, and now we're ordering food, inhaling taxi cabs and managing our finances on the same devices. And so there's an unlimited number of applications that utilities are developing. And the great thing about the sector is they're now starting to do it together. Starting with the Utility Broadband Alliance, it's become a place where they're sharing their needs and use cases. And that joint investment in R&D is really important. So rather than we used to travel around the country when we could and we'd see utilities individually trying to solve the same problems, figuring out how to connect new devices, how do I get thousands of new sensors into my systems. And that really -- the biggest use case now we're seeing as we're driving into all of the incentives that are likely in the new administration is about connecting renewable energy sources with -- they're calling distributed energy sources. And so as you get millions and millions of these new points of generation from residential solar rooftop to industrial, wind and solar. The need to be able to be aware of when those are generating the intermittent power that they generate and feed that back into a network and then be able to control industrial usage and consumer usage as well. And so that end-to-end connectivity and visibility to be able to maintain the network is critical, and we think it's that private LTE will do just that.

Can I just fill in one -- so let me just throw in one last thing. The public safety industry uses an expression, which I think is really app Tier 2, which is the situational awareness. And if you were going to control an increasingly complex universe of sensors, you have to have the lowest latency, meaning you have to have near real-time perception of what the situation is so that you can manage it and control it. That's going to become increasingly the role of the investor-owned utilities not simply generating and distributing power, but managing the, as Rob was talking about, the distributed points of wind and solar. So you need broadband to get the right latency and to get the right collection going on of this relevant data. So it's situational awareness and a whole number of -- host of applications that fit into that.

Our final question today is coming from Dan Lascano.

Congratulations. What I was -- wanted to ask was, you said that in complex systems, the license holder might not be you. Does that mean that in some situations that you would maybe have to sell the broadband license to them? Or is that not how I should read that?

Dan, the fairest way to look at it is, every one of these negotiations that we're involved in, and Ryan has explained how many there are, is unique. When we get to complex systems, we rule nothing out, so we wouldn't rule that out.

So whatever is best for the customer?

However we're going to get the best long-term relationship because, as we say, every customer that we gain after today benefits Ameren. Every customer that we gain the next day benefit. So it's this economy of scale. So we're going to do what we need to do to accelerate the movement of the industry, where they're willing parties onto the spectrum so we get this network effect going.

And obviously, in those cases, Morgan, as Dan said -- sorry, Dan, as Morgan said, we have spectrum in those places as do they, and we'll make sure, obviously, they're getting good value, but what's important for us is that we're also getting good value from our spectrum as well.

We have no further questions in the queue at this time.

Thanks, operator, and thanks, everybody, for calling in today and sharing what is really a big and monumental day for Anterix. We're really proud to have both demonstrated the value of our nationwide asset, and clearly, the demand from the industry just beginning and what a great way to launch us into the new year. So thanks, everybody. Have a happy holiday. Look forward to talking to everybody soon.

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.