Anterix Inc. (ATEX) Earnings Call Transcript & Summary

Good afternoon, and welcome back to Citi's Apps Economy Conference. For those of you I haven't met, I'm Mike Rollins, and I cover the communications services and infrastructure stocks for Citi. Before we get started, I'd like to mention that we do have disclosures available to the right of your video player as well as under the Citi Disclosures tab if you're viewing this via Velocity. [Operator Instructions] So with that out of the way, I'd like to welcome back to Rob Schwartz, CEO of Anterix. Rob, great to see you. Thanks for being here today.

Great to see you, Mike. Pleasure to be here again.

Well, maybe to get us started, maybe introduce the company to our audience for some of those that may be less familiar as well as give us a sense of the strategic and operating priorities for the company for 2022.

Sure, Mike. Thanks. And again, thanks to Citi for hosting us. I love the theme of the app economy. I think it really applies across the whole sector, but there's some really specific things I want to talk about as it relates to Anterix. So for those who aren't familiar with Anterix, we are the largest holder of 900 megahertz nationwide spectrum. We acquired the spectrum from Sprint going back several years ago, went through an FCC process to allow it to be used for broadband that was back in late 2020 when it got effectuated. And since then, we've really been focused on utilizing our spectrum to enable private broadband networks with a bull's eye focus on the utility sector for a number of reasons that we'll talk about, our mission, our goal is to make the spectrum the de facto ban for that purpose. We think there's a lot of reasons why it makes sense for the sector like that to gravitate towards a single band for all of the scale and scope benefits. We're founded by the founders of Nextel, I was one of the early team Morgan O'Brien is our Executive Chairman, one of the co-founders of Nextel. And with that, we've really taken an operator's point of view to bring this spectrum to market but with a different model. The model for us is taking the spectrum and leasing it to utilities so they can own and operate these vital private networks to support our nation's electric grid. And there's a -- most of your viewers are telecom followers, but there's an important utility element to this, right, the utility sector in our nation and globally is going through tremendous change. There are some macro trends that are happening with decarbonization requirements and commitments with the changes that are happening with cybersecurity needs and with the usage changes, right, electrification of vehicles, of industries. And so with all of those changes, a modernized grid as the utility industry called it requires a modernized communication systems. And one last thing about the sector is that they uniquely have operated private networks for decades. They realized a long time ago that to get the level of resiliency, security, ability to control the destiny of those networks, they've always operated networks, whether it's for their meter reading AMI systems for their SCADA to control their networks, their 2-way radio systems for their fleets of vehicles. And so all of those typically single application systems historically all logically converge onto a single platform. of LTE evolving to 5G, and that's really what we're helping utilities build and operate. And so we launched officially commercially as we got our FCC ruling in 2020. We've signed in roughly the past year with 3 customers, our initial customers. We've got a big pipeline of another 50 or so that we can talk about. And so we're pretty wildly excited about the momentum we have going into 2022 and using that to translate our significant pipeline into contracted proceeds, but also importantly, solving really valuable use cases with these systems. And that's really where we're focused as historical operators, not just on spectrum, turning spectrum into money, but also being able to solve these important use cases. And we find ourselves in the middle of really what's going on in the sector. We spent now 6, 7 years investing time of really getting to become a trusted partner within the utility sector, and that's starting to pay some significant dividends.

We mentioned the 50 or so companies that are in the pipeline currently. And maybe we start there, if you talk about the breadth of interest you're seeing from the utility companies. And as you've gone out with the business model, are you seeing also some interest from private enterprise who may be interested in having their own networks?

Yes, absolutely. So we've got -- I mentioned over 50 utilities which really -- it's a vast majority of our nation's population, right, and meters as they look at it. And for us, it's the vast majority of our spectrum value in that pipeline, probably over $3 billion of contracted proceeds that we see in kind of our full pipeline. The demand side in the utility sector absolutely is growing. We're seeing -- this is a -- it's a unique sector that these customers work together in other sectors where I've operated, you have competition. And so you're selling 1 customer at a time and educating them 1 at a time. Here, we actually have the opportunity to bring them together through industry associations that exist. And obviously, we launched one of our own Utility Broadband Alliance going back now a couple of years ago, we spun it out last year to be a stand-alone nonprofit industry association. It's become very vibrant and uniquely a place where the last event was hosted by Amarin in St. Louis in this past year. Over 400 people participated, 300 in person in the midst of COVID, and it was really an opportunity for utilities to share their learnings with each other. And there is no better way for us to facilitate the growth of this capability and having utilities talk to each other about their learnings and deployment. So hosted by Amarin, but all of our customers were up on panels talking about the benefits, the use cases that they're doing. There were dozens of leading technology companies there. It was a plug fest where they were showing the compatibility of their devices, applications, platforms with 900 megahertz spectrum and the value that brings. And so that vibrant ecosystem within a sector is a really important part of the uniqueness of why we pick the utility sector. And keep in mind, I mean, this is sector is probably going to spend over $125 billion of capital as investor-owned utilities in 2022. So well-capitalized big requirements for communications upgrades, and that modernization of the grid is really driving this communications modernization requirements.

When we hear from the large national wireless companies and they talk about 5G, one of the big talking points of 5G is slice and the idea that they could take a piece of their network geographically, capacity, latency, security and package that for customers. How is that different than the solutions that utilities can get by leasing or purchasing spectrum from you in building their own networks? And what's the feedback in these forums that you've received from the utilities?

Sure. So network slicing is a great technology and 5G is a great solution for a lot of enterprise requirements. And I think that's going to continue to grow from a demand standpoint. Uniquely within the utility sector, and again, why we're focused, long history of operating their own private networks, and that's because of the requirements for control, right, the ability for them to go out and literally physically plan that network where they need it, right? Remember, there's utility assets in places where there are wireless networks today. They intentionally build transmission lines and substations in places where there aren't people. And so the coverage aspect of maintaining that. And then there's the cybersecurity aspect of it, right? So we're working -- we've actually just announced we have something called the Anterix Active Ecosystem program. it's our sandbox. We're technology leaders. And we've got folks like Cisco and Motorola and Ericsson and GE and Nokia and others that have now over 70 companies that have come together to help develop solutions within this environment. We just launched a cybersecurity a security element of that. A half dozen companies that are focused on the security layer. And that's important to your question because when a utility is deploying their network, they want to put a layer of cybersecurity that may be different for their requirements than what a carrier offering has, right? A cybersecurity element that is separate from the public Internet, right? You go on a public network, you're part of a network that my kids are watching YouTube on the same network, you can go buy a device a foreign entity can get access to that network just through the public Internet access. And so separate from the public Internet is a key and vital element of the secure part of it. And so between that -- and then there's financial incentives, utilities are really in the business of investing capital in their networks to get a regulated rate of return. And so paying OpEx to be part of a network is kind of against the principle of their investing capital and having that return on that invested capital as part of the rate case, the fundamental economic model of regulated utilities.

How important is the low-band feature of your spectrum for utilities? And how do you see the utility firms interacting or considering the use of CBRS spectrum?

Yes. So it's vitally important. And I know, Mike, you've been around in the wireless space, almost as long as I have in knowing the -- to me, they're tools in the toolkit, right? And so you don't use a hammer for what you need a wrench for low band has a very discrete purpose that isn't what mid-band does. It's just like fiber is in the mix as well, right? Wired versus wireless. You can't run fiber to every single place you want to have connectivity wireless made it more economic. And as you go down to low band, it's the best physics, right? It allows you to have that cost-effective coverage. When you compare mid-band spectrum to low band, roughly it's 4x the amount of capital you have to deploy if you go to mid-band because of the number of cell sites, and that drags along all the operating expenses as well of backhaul and site rent and all those things. So is it physically possible to use mid-band to build wider errors. It is just like it's possible to wire fiber everywhere. It's just not cost effective. And so low band as that foundational spectrum is essential. But it's not. It's -- we don't see it as a substitute. They really -- they're complements. And so that's why we've announced our working with CBRS since the beginning. I think I was on a panel with in your event several years back with Iyad Tarazi from Federated as a partner of ours. We've announced our partnership. And so we actually combined CBRS and part of our offering. And utilities were actually uniquely one of the largest industrial categories of buyers of that CBRS spectrum in the auction. I think there's over a dozen utilities that bought Spectrum, 1 of our customers, for example, San Diego Gas and Electric leased 900 megahertz spectrum, they acquired 900-megahertz spectrum, they also have CBRS spectrum. And it's 2 tools in their toolbox that are completely complementary. So CBRS is -- I like to think is for, super WiFi, right? It applies really well in campus areas, in buildings and stadiums and can give you amazing bandwidth. And whether that's licensed or unlicensed. We've got a lot of utilities in the middle of the country that are planning to overlay CBRS and don't have licenses because of the great licensing scheme of being able to share that spectrum, especially in places where you're not being bumped down by the Navy and the ships come to port. And so we see that the low band is essential. These utilities have multistate footprints often. And so you're covering vast amounts of territory that's really uneconomic to do with mid-band or higher spectrum.

Rob, you mentioned earlier that Anterix has signed 3 deals so far. Can you talk about how those deals are structured and value?

Absolutely, absolutely. So we've signed deals with Amarin, San Diego Gas & Electric and Evergy. 3 investor-owned utilities, I would consider them to be leaders in the sector. Total contracted proceeds for us is about $128 million so far for those 3. They're all prepaid. And that's an important dynamic that really changes our story has evolved and as we've gotten to know utilities better. Utilities -- these are -- so Amarin's deal, for example, is a 30-year lease of our spectrum. As we got into the conversations, they were strong minded and wanting to prepay for the lease. And for us, that's obviously a great impact. From a cash flow standpoint, it's a great impact from an inflation exposure standpoint, and obviously, from our ability to use those proceeds, both to continue to invest in our business. But importantly, we actually already announced a share buyback program, where we're using some of those proceeds to retire some shares. And so the Amarin deal, we see it as a partnership over that period of time. As operators, as I mentioned, we're helping them all the time, every day practically on how do they take the spectrum. Now they're making their vendor decisions. They're making their infrastructure vendors, their endpoint decisions, the use cases. And as you know, and we've learned from LTE evolving to 5G, this is an organic network. It's a paradigm shift for utilities who they -- I would say they plugged in a 2-way radio system 30 years ago, and that system does exactly the same thing today as it did when they turned it on. LTE is very different, right, where they're going to lay in use cases, use cases to do implement battery storage connectivity and solar and wind so they can hit their decarbonization goals. Be able to, as San Diego Gas on Electric is doing actually prevent wildfires, right? They've got a system where they're going to put controllers on their on their poles and should align break, they can actually sense it and depower before it hits the ground, preventing a wildfire from starting. And so these are very powerful and value use cases, but we're certain that it's just the beginning, just like when we were talking about phones, years ago, we didn't foresee being able to hail taxi cabs and balance our checkbooks and do all this, watch videos, live stuff on our -- well, you probably predicted that before the rest of us. But for the rest of us, we didn't see it. It's the same thing for utilities. They've got a current -- they're justifying these. Amarin as an example, justify the deployment of this expensive network in acquiring spectrum building a network just on the current use cases, just on migrating, they have over 20 different networks that are going to get migrated onto this single LTE network. And so that long-term 30-year deal with them, SDG&E, they acquired the spectrum. They're part of what was called a complex system of the FCC. And so we struck a special deal with them to move them forward. They're a great partner. We've got all kinds of ways that we're working with them to help them, and they're also leaning in heavily to help drive the rest of the nation. They are a Board member of the Utility Broadband Alliance. They're a technology leader in this use case of wildfire mitigation. We're excited about that relationship. And the last customer we announced was Evergy. Evergy was a $30 million deal. They prepaid for it upfront. It's a 20-year lease. And we're excited. One of the interesting things about Evergy is they border Amarin in Missouri. They have 25 counties that they share. And so it's going to be the first opportunity for us to demonstrate the value of what we call this network of networks and the platform that gets built as a result, right? Suddenly, you're having to think about -- they have a very important principle between utilities as they work together called Mutual Aid meaning if footnote a storm goes through the Amarin territory, their neighboring utility Evergy is going to roll trucks in and help them restore any damage that occurs, and vice versa. And so those communication systems have to be interoperable. The devices that they're deploying should be interoperable. And this is our ability to help them with that connectivity. So it's a border issue, but it becomes really a nationwide issue for utilities. And we're excited about the demonstration of this initial value of this platform, this nationwide network of network platform.

As you look at the first few deals you've done, and you look at -- I think you mentioned the contract pipeline, the sales pipeline being $3 billion or more. How do you look at the valuation of the pipeline versus what you've achieved in these first 3 deals?

Yes. It's a good question. So as I said, we've been around long enough watching spectrum value, right, through auctions, through private market transactions. And so we really talk about monetizing our spectrum at fair market value. And while we've got a lot of experience there, utilities don't. And so it's an education process for us to explain to utility why they're paying for air. Why it has so much value historically and a value that continues to increase over time, right, as we've seen. And so the 3 transactions we've done have really fallen pretty much in the middle between 600 megahertz auctions and the AWS-3 auctions. And so that's kind of where we're defining on those bookends where fair market value is. And we expect to see that continue to happen. We hope to see continued growth in spectrum values. We're clearly seeing that from the most recent auctions like C-band and we hope that, that continues to have an impact. We've also done 3 transactions. So actually, the best proxy, the best comps for utilities now is the smart utilities that have already transacted. And that makes it easier for the conversation. You can imagine the first one when the utility was saying, why am I supposed to pay for spectrum? I always got my spectrum for free from the FCC in the past because they got it so long ago, that took time. Now that we have smart leaders of utilities and C-suite leaders that are talking about it publicly at all these industry events helps educate and understand that, yes, this is a valuable asset an asset we want to own for the long term, and it's worth making the investment.

And as you look at how the first 2 deals were structured, you look at what's in the pipeline, is there any further evolution in the way that these deals could be structured or valued or how they might evolve in terms of duration that investors should be mindful of?

Yes. So I mean our kind of bread-and-butter deal is a 20-year lease with multiple 10-year renewals, right? And so that's what the Evergy the last deal was a 20-year lease with 2 10-year renewals we didn't make that strategy up. That's really coming from the tower industry analogy. And it seems to work, right? These utilities have -- what we love is their long-term outlook, right? I mean what companies get to sign 20-year partnership agreements with their partners. And that's exciting. I don't see that changing much, plus or minus some years, terms changing a little bit. But for us, it's about making sure that we enable them to build these really valuable networks. And we do think about where do we go beyond just leasing spectrum, right? We're excited about being able to help utilities gain more value out of this over this long term. And we definitely see opportunities for us to work. We have this Anterix active ecosystem program that I mentioned, the 70 companies, helping bring those companies together to create integrated solutions that are very valuable. And we think we play an important role of curating those solutions and being able to hopefully create some value for our shareholders in doing so as well.

You brought up the term earlier a complex system, and it reminded me of the clearing process that you agreed to with the FCC. I'm just curious if you can give our audience an update on the clearing process for the spectrum -- And if there's opportunities to augment the amount of inventory or spectrum that you have in this 900 band.

Yes. So the bottom line, Mike, is we're on track, as we talked about, our ability to -- and for those who don't know our history as Nextel, right, there was a much bigger effort of Nextel to clear spectrum, move incumbents out to clear the valuable broadband spectrum and really retune them. Here we're doing the same thing. The FCC has allocated a specific 6 megahertz for us to bring to market broadband. And there are some incumbents in there, a few hundred of them, and we've made a lot of progress moving a lot of them out already. Once we do that, we apply to the FCC. We ask for broadband like in the case of Amarin, and we've already been granted our initial broadband licenses. So I would say we're fully on track. The costs are fitting right within our projections as we put out initially, and we expect to be able to continue to do it. Part of our expertise, having done it Nextel is we've got really a lot of the same team, and it really is a core competency of our ability to take this antiquated narrowband spectrum understand how to deal with the incumbents who are there, make sure they have a seamless migration to another place within the band. This is moving from one part of a band to another part. A lot of the equipment that's out there is tunable. And so it will -- the hardest part is getting to the party. Some of these are utilities, some are large institutions and just getting them to return our calls and -- but we've got a team that's so experienced in that, we're making great progress.

And just back to the technology. We're coming out of an LTE cycle entering into a 5G cycle. As your prospective customers look at the opportunity and deployments, is there any risk of paralysis of decision-making as they might understand LTE well, but want to understand 5G better. And so this transition could delay some decision-making because maybe they just want to get to a scaled 5G environment from the get-go.

Yes. We haven't seen that as an issue at all. In fact, just kind of the opposite Southern Company, one of the first utilities to deploy their LTE network, their broadband network. They also had a broadband network of the same technology of Nextel. So we know them for a long time, all the way back to then. They talk about their 4G network, their LTE network as being a workhorse, right? The Utilities don't take technology risk. We don't want them to take technology risk, right? We want our electricity to work when we plug into the outlets and not have to ask questions about that. So -- but the -- our technology partners of Nokia and Ericsson and Motorola all have solutions that are coming out as LTE but are upgradable and mostly software migratable to 5G. And so the modern systems are putting in place, right? They're not updating legacy 4G systems. These are the current state-of-the-art 4G LTE that are being -- and as everyone knows, the E in LTE is evolution, right? They're designed to be -- to evolve. An important part of -- we think about the infrastructure, but it's about the end points as well. low-cost IoT modules, right, the chipsets, the modules that go into the devices. We have a great ecosystem of 900 megahertz devices at this point that are there because 900 megahertz our band is part of the 3GPP standard. And so all the vendors that we're making products are now focused within this ecosystem on doing so. And so for example, the GE Orbit product. It's probably the most prevalent router that's being deployed within the utility space to connect anything into it. You plug in ethernet plug-in to get access to your, whatever it is. Your recloser in a utility system, your substation cameras, those devices now are what's called Anterix active. They really are labeled they're marketing in that way. And so having those robust communication modules that can go into those kind of devices that are the bread and butter of the utility space today matters, devices they've been using. Will they evolve to 5G, Absolutely. They'll do it on their time frame. They're not the technology leaders intentionally, as I said, but these systems will be upgradable. And at the right time, we'll likely see some migration.

You mentioned the enablement on some of the products, for example, this orbit router that you're just describing., Do any of the decisions in the pipeline depend on creating LTE in the box, being able to, with your partners, just be able to offer a do-it-yourself kit and to enable that path of the customer.

Yes. Look, I think anything you can do to simplify the offering is beneficial, right? And the sophistication of utilities varies dramatically. There's thousands of utilities. We include the municipal utilities and cooperative utilities. And some of these are very small entities that don't have the capabilities. I mentioned Southern Company. They have a commercial entity that just drives their broadband LTE system, and they've got great sophistication. But if you go to a small muni or co-op, a turnkey product would make a lot of sense for someone like that, right, where you took a lot of the complexity out of the system and enable them to deploy in their area as simply as possible. And they have different economics, too, as a muni or co-op. So I think as we continue to penetrate the market and go to the smaller customers and customers that don't have the capabilities, that's where there's opportunity for us. When I talk about the platform, the platform that we want to help pull together with these partners that's what it would entail, right? Hyperscale cloud capabilities, the trend that's happening in the sector already independent of us, of moving a lot of the formulary hardware into software in the cloud, giving you much more flexibility. We absolutely see that opportunity to bring utilities to that space. they're not going to be the leaders in doing so. They're not going to take risk appropriately in doing so. But absolutely, we'll continue to evolve the solution set so that it will go further and further down market within the utility space and beyond, right? Because those technologies also allow you to do sharing. You had asked earlier about kind of the different sectors. I think I didn't answer the question. Utilities is the bull's eye as we see it of the opportunity. But as these networks are being built, there's no reason why other like-minded critical infrastructure users can't be sharing those networks in some way. And that kind of technology of being able to go from the legacy hardware architecture to a cloud-based architecture, it gives you that kind of flexibility. Everything from roaming and billing and rating and operational requirements of running a network that's not just for your own use, but also allowing others to use it as well.

Rob, you mentioned earlier the importance of grid monetization, and I'm curious what the regulatory environment is like. With the infrastructure bill and government funding of programs, is that opening the door for utilities to want to pursue their own communication networks as part of the modernization process.

Yes. Absolutely, Mike. What's happening, and obviously, you're reading it in the daily paper, when the White House is talking about the need for modernizing the electric grid when we're obviously passing laws that are going to fund a lot of that infrastructure investment, that's all positive from our standpoint. We've been talking about the need for this for a long time as Anterix. And we really have boiled up from deep in the bowels of these utilities talking to the telecom engineer folks who typically are sort of the step child within the utility infrastructure because it's kind of noncore. Now just like you can pick something like IT or cybersecurity, this has become a C-suite issue, right? The need for more robust, more secure communications is part of the dialogue. And as a result, we worked closely with the GridWise Alliance, an important DC-based utility association in helping facilitate the legislation. And specifically within the legislation now there's in multiple places language that explicitly talks about being able to use some of the funding for the deployment of private broadband networks, private broadband wireless networks. Obviously, there's a lot related to rural broadband, which we believe. And we put out a white paper that with several other parties, including DEI, that the deployment of these private LTE networks will support that's the same infrastructure needed to get rural broadband, right? It's not the spectrum band isn't the 1 that's going to fix that, but it's the towers, the fiber backhaul, that infrastructure, that's really the big fixed cost and upon that is where we should be building greater access for rural broadband.

So clearly, you're very focused on this core opportunity with spectrum you have and with the utility vertical target that you have. But as Anterix thought about where it goes next, different spectrum bands, adjacencies. What should investors be thinking about?

Yes. So look, you know as well, Mike, in the question. First of all, our primary focus for this year is going to be continuing to monetize our spectrum to the next series of customers to be able to enable this valuable use case. And so focus. We put out our plans by the end of our fiscal year, which is March 31, now this year, 2022, to have another $200 million of contracted proceeds. And by fiscal year 2024 to have $1.8 billion of contracted proceeds, which is about half of our spectrum utilized. So beyond that, we still have another. The other half, plus all the renewals of leases at the end of term and the other things that we can do beyond that. I think of it as sort of the platform value, the optionality I mean the platform that we're putting in place as we start to get that critical mass through 2024. So beyond that, we're spectrum folks at heart, right? We've done this for a long time. We're always looking at other opportunities in other bands. Our partnership with CBRS, we think, is a very valuable complementary aspect -- Are there going to be other opportunities? I'm sure there will be there. And within this platform that we're talking about, this network of network platform, we're absolutely looking at ways in which we can build greater value for our customers and honestly, our customers' customers. It all starts with you and I as electric users, what we need, and that's where utilities are focused and how do we bring that back into creating more valuable services for these utilities and obviously then creating more value for our shareholders. But we've got a great runway in front of us in this coming year, just about monetizing our spectrum. And if we do just that, we think that's going to be great for our shareholders as is.

And you mentioned the change in the model where you have these long-term leases and then the utilities came to you and said, we want to pay you upfront. And so as you think about these long-term leases and getting cash upfront, how are you evaluating the best capital allocation process and procedures for Anterix and the shareholders?

It's a great question. It's a constant discussion that we have, right? As I mentioned, we announced recently a $50 million share buyback program over 2 years, right? Based on our current signing of our 3 deals and our $128 million of contracted proceeds, of which we've collected most of it. We've got about $55 million still due to us over the next year or 2. Based on that, we said we're in a position now where we're fully funded, where we expect to see more closure of spectrum deals in the coming months. And based on that, we have the ability to tax efficiently buy back shares, and that's a great way to return value to shareholders. But we're always looking at all -- we've got a good runway of NOLs. So the idea of us being able to continue to contract those proceeds, collect the cash utilize those NOLs will take us at least through our fiscal 2024 at this point. So we've got some time kind of figure out what our next steps are for now. We think things like the share buyback program. There's obviously other tax efficient ways for us to return that value to shareholders. And we're always looking at other opportunities beyond what we do today. And if we think there's opportunities that have greater returns for our shareholders, we'll evaluate them seriously.

You mentioned tax has the company learned anything more about the opportunity to qualify for a REIT structure.

Yes. We're talking all the experts and there's plenty of them out there to evaluate it. I think it's too early for us. Again, as I said, we've got a long runway before it becomes an issue for us because of our NOLs. And so I would expect us to come back and talk about in the future. For now, it's about monetizing our spectrum into these contracted proceeds. And as long as we have the NOLs, we don't see ourselves as a significant taxpayer in the immediate future.

Are there any other areas of focus that investors should be mindful of for the company?

Look, I think what as I mentioned earlier and having been sort of on the telecom side for decades and opening my eyes to the utility space that we spent a lion's share of time over these past 5, 6 years. Understanding the trend that's happening, right, the tailwinds, the macro forces in the utility space are unstoppable and the needs and you're seeing it with the initial indications of the first utilities. But you're also seeing it through other indications of -- and we've got over 15 experimental licenses now that are granted by the FCC for all kinds of everything from demonstrations by key vendors to 10-plus utilities that are now deploying systems. The energy that's going on, no plan intended within the federal government and now rippling down to the state governments of the need for upgrade of the utility infrastructure. And so again, driven by these macro forces of decarbonization requirements, commitments made by individual investor-owned utilities, the cybersecurity requirements. I mean the battlefront that utilities are facing as the front lines on foreign entities encroaching on their systems is very significant and the need and the federal government is well aware of this to be able to shore up those lines. A hardened private communications network as a key piece of that solution for several government entities that have concluded that. I think you can see it in the growth of the collective effort. At the end of the day, we see ourselves really as a facilitator of this industry movement while we're a key part of it, it's always about the customers and what they're doing. And so uniquely in this sector, we're seeing -- we talked about the launch and success of the Utility Broadband Alliance. Now the Anterix active ecosystem program, and we launched it with 30-something companies. Now we're over 70. We see it's going to continue to grow. But importantly, it's going to grow in delivering solutions to customers. And so this scale value that utilities need to join in on this network, right, the network effect, the net cap law of that we think is just going to make it more and more compelling for utilities to participate in this momentum, which, as we say, is turning really into a movement at this point.

Rob, are you ready for our rapid fire, 3 questions in 3 minutes.

I'm always ready. Hit me.

Okay. Question number one, why should investors buy your equity?

That's a great question. I think I've hit on most of the key points. But if you look at what Anterix is from a financial engineering standpoint, we've got a nationwide asset. We've got spectrum throughout the U.S. low-band spectrum, which is the beachfront property. We've just started to monetize it. We've shown we can do that at fair market value. And when you do the math, as you and other analysts have done, you can see that there's a significant asset value there. On top of that, strategically, what we see is what I just talked about, which is that platform is highly valuable, well beyond just the spectrum value. The connectivity of these critical infrastructure, customers, starting with utilities, expanding to others, the additional services that get pulled through and are needed within that, we think, is another step of significant value opportunity. So that's what I see as the most compelling rationale.

Second question, is inflation a net opportunity, net neutral or net risk for your business model and financial performance?

It's interesting if you had asked me that question a few years ago when we thought we were going to have these tower-like long-term leases, obviously, with greater exposure over time of receivables, I would have thought inflation would have been a bigger risk. Now that we're getting prepayment, it's really more of our friend in a lot of ways, right? So to the extent that we're on a comparative basis, able to monetize long-term leases but get prepaid, we're not really as exposed from an inflation standpoint. The customer base, I mean, we have an amazingly resilient base of customers, right? Utilities from a rating agency standpoint, from a fiscal access to capital markets solvency standpoint, the necessity of our nation to rely on this electric grid more and more every day, it makes them a very resilient customer segment for us as well. And from an inflation exposure standpoint, aren't at much risk either. Obviously, they're borrowers, but they are in cost is so low. Our ability to leverage their balance sheets really by the model we have, which by leasing them spectrum and they use their balance sheet to build and own these networks is pretty advantageous. So I think we're pretty well hedged from inflation risk.

Final question is the App Economy conference. Is there an application that can fundamentally change demand for connectivity or data consumption over the next few years?

I love that question, Mike, because at the end of the day, we're always saying this, it's all about the use cases, right, the applications, the way they apply this spectrum to solve really big problems. And I talked about it earlier, but what's the value of stopping 1 wildfire. Unfortunately, we've just seen some word wallet powers in Colorado, right? We saw the weather issues that happened in Texas, in California. They recently made the conclusion about the cause was utility caused in this last wildfire. That's just 1 simple use case that could alone justify the deployment of these private networks, right, from a cost standpoint, from a value standpoint, talking about saving lives and saving billions of dollars of property damage. When you start layering on as we do on our phones, right, all the other applications that can be added here, right? The ability to deploy -- I mean, you got to real utilities as long-standing private network operators, right? No one really has been operating private networks as long as they have or at least as robustly as they have. And probably the biggest users -- industrial uses of IoT as we define it devices, they're reading your meters, they're reading the transformer on the poles and the substations. While they are probably one of the biggest users of IoT, when we get to see the growth curves, the multiplier effect of what they have to deploy to have the level of sensors and readings of their customers, I'm probably exceeding your time limit on our fast questions here. But that's what's truly exciting to us. And so it drives the use cases, right? Being able to have this situational awareness is a key part of the value that's being created. So to me, that's the killer app.

Rob, it's great to see you. Thanks for joining us today.

Thank you, Mike. Always a pleasure. Appreciate the opportunity.

Thank you.