Anterix Inc. (ATEX) Earnings Call Transcript & Summary

Hi, everybody, my great pleasure to welcome Anterix and Tim Gray. Tim, thanks for joining us. I think you have a safe harbor you want to share.

Sure, Simon. Well, first, thank you and the Morgan Stanley team for inviting us. It's always great to be here in San Francisco at this conference. We will, of course, be making some forward-looking statements. So I just want to make sure that people do refer to our SEC documents for all the risks that are pertained therein.

Great. From our side, please see morganstanley.com/researchdisclosures. If you've got any questions, reach out to your Morgan Stanley sales representative.

So Tim, let's just take a big picture for those who are less familiar with the Anterix story. Perhaps you just give us the 30,000-foot view.

Sure. So we've got a chunk of 6 megahertz of 900 megahertz spectrum that we are using to support the utility industry in the United States, build out private wireless broadband or LTE networks to support grid modernization and many other things that are going on with the changing utility industry in the United States.

Great. And what have you done so far in terms of signed contracts?

Sure. So we've signed 6 different utilities in the United States with contract value of about $270 million. Of that, one of the exciting issues, it's a good thing that we deal with is the fact that utilities want to capitalize cost and prepay their leases. So of the $270 million we've contracted, we've collected roughly $190 million to date with another $80 million that will be collected over the next several years.

Great. So you made a filing with the FCC the other day in conjunction with some of the electric utilities. You said -- started off saying 6 megahertz, but you're looking to potentially get to a 5x5. Can you just give us a little bit of a background, how did this come about? You've talked about it in the past, but why now?

Sure. So there is a 10 megahertz block -- excuse, yes, 10 megahertz, a 5x5 block of 900 megahertz spectrum, of which in May of 2020, the FCC allocated 6 megahertz or 3x3 for use to change from narrowband usage to broadband usage. But in the report and order that they issued in May of 2020, they did ask the question of when should we revisit this band and look at the opportunity to expand the broadband segment from 3x3 to 5x5. So that door was opened in that process. And then through conversations with several of our customers and to be customers, there was just some thoughts around what does the future look like as we start -- as we utilities start to see capacity demands grow and grow and grow over time with all the things that we're going to be adding on to these networks. And we thought it was the right time based on that feedback to go back to the FCC with a petition to move forward voluntarily with incumbents and with utilities to change the band from a 3x3 to a 5x5.

Yes. And you mentioned it, but importantly, this time, you have a lot of the industry players already supporting your case. So it's less likely be adversarial, perhaps?

Right. Well, you never know. Let me throw that out there. But yes, so we had quite a few co-petitioners from utility, a couple of different -- from utilities, a couple of different industry groups. So we feel good about the general support that this is not a solely Anterix thing that we're asking for, but there are multiple entities. We think this is a positive step forward for the FCC to make regarding the 900 megahertz band.

So just the mechanics of it, let's assume they did approve it, and we can go back to that. What -- who's in this extra 4 megahertz right now? And what would you need to do to get access to that?

Right. Well, the 2 biggest holders in the 2 megahertz right now are utilities. Several utilities had 900 megahertz spectrum that they had gotten over the years. So we've got quite a few of those. And then the FCC itself. A lot of this spectrum was never -- across different markets in the United States was never applied for. So it's sitting on the shelf with the FCC. And one of the key questions the FCC will have to answer as they move forward is how they're going to deal with that spectrum that sit on the shelf as a part of this 5x5 equation.

In terms of selling it to you or are they go to your customers?

Yes, exactly what those rules are going to be and how they're going to do it and how they would -- what mechanisms they're going to use to take it off the shelf, including compensation. So those are the things that we're going to -- that are going to be answered as a part of the process that we go through to be able to do that. But then there's lots of other entities that have some spectrum within the 2x2, one of which is railroads. And then just a lot of other enterprise entities that will have to be moved outside the band as a part of the process. But again, one of the things that's going to be different about going to the 5x5 versus the 3x3 is it will be voluntary.

And help us with the time line here. It feels like we're going back into another process here. And the last one took a little while, but obviously, you've moved a lot -- forward a lot since then. But if we get, they have an NPRM or a report and order. Is that the kind of the cycle of things we would expect here or...?

Yes, we would think so. And we think it's probably roughly a 2-year process. With election season, you never know what kind of changes could take place that could drive some FCC changes that may slow things down, but we'll see how that goes as things play out. But again, as you mentioned, it's a really positive step for us to have multiple entities on this petition as we move forward. And we would expect in comment periods, there to be some additional on the positive side as this process takes shape.

Good. And any initial response from the FCC? I assume you've been in contact with them all along. This shouldn't come as a surprise to them?

Yes. I mean, as a part of this process before you file, we've had conversations with the commissioners offices and down to the Wireless Bureau about what we're trying to do and how we were trying to look at answering the questions that they raised in the original report in order. So there are no surprises to the FCC that this got filed. But they've got their process, that they've got to go through administrative kind of just bureaucratic procedures that are just a part of any kind of rule change request that they'll go through. But hopefully, we'll see within a 2-year time frame, this come to fruition.

Great. Well, at the start, you mentioned the need for grid modernization and certainly, when we've been talking about data centers and there's -- it's sort of clear how much work there is to be done and how much capital needs to be spent here and having updated communication system, a big part of that. Help us with what are the kind of big use cases you're seeing? And presumably, the companies that you've already got contracts with can help educate and inform and encourage the rest of the ecosystem?

Yes, absolutely. Let me take the second part of your question first. I mean, I think from my perspective, one of the best sales forces we have is our current customer base, who get up at conferences and at forums like this where they can talk about what they're doing, what positive things are moving forward, what their use cases are, what challenges they might be having and some of the things they're facing for building out a large-scale broadband network for the first time as an entity. All things that are great for them to be up on stage talking about, particularly when they also mentioned how great Anterix is as a partner. But that's really important for us because they all talk to each other. They're monopolies. They share. They share a lot of information about everything they do. So it's great to have utilities just at DistribuTECH, which is their big show they had last week. There was a lot of sharing and participating. We had a huge booth presence there with multiple utilities coming in and out and talking to us about what's going on, but also talking to each other, which we think is a really huge part for them to move forward. And so I think that's a real positive step for us. From a use case perspective, you mentioned it when we talk about grid monetization. There's so much change going on in the utility space, whether that's in the power generation side where you see wind farms and solar everywhere right now. And so a lot of that traffic now is 2 way instead of one way. So it's got to be measured and monitored as to where we're going to send power today. There's also the proliferation on the usage side, a very specific use cases now that are newer with things that are being faced. EV charging stations now that are going to have to go up pretty much everywhere across the country to make the changes that the country wants to make from an electric car standpoint, data centers and where those are and how much power they need to generate to run those on a daily basis. So there's so much activity going on that needs to be monitored and is really data-driven that has to be -- have a specific set of networks up and running that they don't have today to be able to measure what's going on and where they need to send power and all those types of things. That's just kind of a broad umbrella with what's going on. But we've seen one of our customers, their main use cases around fire mitigation with specific devices that help depower lines before they hit the ground.

Is that San Diego?

Yes, that's San Diego. Yes, exactly. Others are doing cost-saving initiatives by shedding off old legacy systems. And there's just a movement to increase safety, efficiency, security on their networks as things like cyber threats grow and grow. So that becomes another opportunity for utilities. And again, going back to my first point, just the proliferation of devices that are going to have to be put on these networks to measure everything that's going on. The old legacy networks couldn't really handle all that well.

And, I mean you sort of brought it up with security, but why go this route, private network, you got to build your own network versus calling up Verizon, AT&T has got FirstNet. They're talking about network slicing and so forth and that's certainly [indiscernible]. There's other people who are looking at private networks as well, but talk a little bit about the competitive environment and why Anterix.

Yes. Well, first, let me talk about there are some core tenets of what a utility really wants with their network. So command and control, being in charge of it and not having to rely on others is a huge part for them, the ability to decide where to put cell sites. Those are just basic questions. There's no people in certain spots where there might be substations. And so they want to make sure that there's a cell site there so they can measure the activity that's going on right now. While the carrier may not want to put cell site there because there's just no people. And so that doesn't -- it's not cost justified from their perspective. They get to make decisions about how to harden their sites so that when an event happens, the site doesn't go down or it's down for only a limited amount of time. They get to prioritize when sites come back up when there is an event if it goes down versus relying on somebody else to go forward and do that. So those are some of the core things they want. And then one of the other pieces that's extremely important on the utility side is the ability to capitalize costs. There's such a benefit to them for the cost capitalization side versus having operating costs so that they're able to get that rate of return, go through the PUC process and the rate payer pays for that at the end of the day. And that is a very big process that each utility goes through on a cycle with their state PUCs and their regulators. So put all those pieces together, and those become very important and why private and working with us at 900 megahertz has been so important. I don't want to downplay the carriers and the heft and scope of what they have and could they play in the space? Absolutely. But I want to focus more on what we've built here and focusing on the core tenets that I talked about for utilities. And so with us going out and kind of building a marketplace where these -- to drive these private broadband networks, building an active ecosystem, the Anterix active ecosystem, as we call it, with 100-plus vendors now who've put time and energy and money into products that are going to work on a 900 megahertz private broadband network are all very important things that we've helped put together to help these utilities move forward and build out these networks.

Because I think initially, it was a leasing spectrum model, but they really want to buy solutions, right?

Yes, they do. I mean -- and these use cases are very important to them. And when we see different utilities come in with different thoughts and different use cases, it's great because that helps the next conversation with a different utility about what they could do when they're trying to solve for something very specific because somebody else has already done it and so they can see that. And so I think that, that becomes an important piece of that cycle that we go through in the education and sales process.

Great. So you recently updated your demonstrated interest bucket. Can you just help by defining what's the criteria there and just your overall pipeline where that stands?

Sure, sure. So first, I'll say, it's demonstrated intent. But -- so one of the things that we faced as an organization trying to think and put out some forward-looking guidance around when these utilities are going to sign is it's very difficult to say pinpoint exactly when a utility is going to finish its process on a private wireless broadband network and sign the lease with us and move forward with the rest of their build and all those other things. And so we wanted to be able to have a metric that we could put out there that would show how our customer base is moving forward in its process to get there at the end of the day and eventually sign a lease at 900 megahertz with Anterix. So we looked at the customers that we had signed, the customers currently in our pipeline at all the different steps that have to take place for them to get to A to Z. And so we have 20 different metrics. Some of them are public, some of them are not on what we score and they're weighted depending on how much that metric actually means. And once utilities hit a certain score level, that's when they go into the highest level of demonstrated intent. And so right now, we've got 18 utilities in that category with a little over $1.1 billion of value that have done a lot of things like have people appear on panels where they're talking specifically about what their future plans are. They've done things like put out RFPs for -- whether that's equipment or spectrum or things like that. So it looks -- shows that they are serious about moving forward. And that's just a couple of examples. There are more in our investor presentation on our website from an example standpoint if people want to take a look at that. And so that's the scoring process we go through just to show that the pipeline has customers in it who are advancing. We can't tell exactly when each one of those is going to sign and come out because they're now a signed contract but they are moving forward. And so in the last quarter, we signed Tampa Electric and took them out of the demonstrated intent category because they were now a customer. So that's the process that we go through on a quarterly basis and that -- it's something we spend a lot of time on making sure that we're getting those right and that the customers are moving forward on that scorecard.

And how do you get an estimate of how big that contract can be? Have they already kind of signaled what they're talking about here or...?

Yes. So we look at the fair market value for the spectrum in that specific geographies for that set of counties that we're going to lease or maybe, in some cases, sell to a respective utility, knowing that spectrum values are different in different geographies. And so we'll go through that process. But pricing is a conversation that takes place relatively early in the process. It may come up again when folks like procurement want to have their conversation with you about how much they're going to pay for spectrum. But we have already looked at the comparables, the things we look at whether it's things like 600 megahertz auction -- recent 600 megahertz sales transactions that have taken place in the AWS-3 auction and other private transactions taking place from a spectrum perspective. All of that goes into kind of our basket of what we think fair market value is and have that conversation with a customer getting pretty early.

Yes. Probably good to get that -- be on the same page if there's going to be some issue with it.

Absolutely. And it's an important part of the business case that they've got to put together. I mean that's just one piece of an entire project. I'd like to give the example of, the spectrum fair value for a prospective customer maybe $75 million or $100 million, but the entire project that they're working through their process on could be up to $1 billion. And so it's a large scale development of a capital project that they've got to go through; operating company approvals, holding company approvals, talk to the regulatory team about. And so that's all part of a long process that they take to move things forward. So we want to measure the activities that show they're serious about moving forward as part of going back to demonstrated intent.

How does that compare -- that measure compare to the 3 buckets that you've talked about for a long time now? Because we're talking 2 and 3, right? There's a little bit of some Venn diagrams going on here?

Yes, so -- there is. We do have a Venn diagram on our investor presentation that show that Demonstrated Intent covers pretty much -- covers all the entities in stage 3 of the pipeline, but some in stage 2 as well. And that is really where are we when we talk about Phase I, II and III and the continuum of the sales process, [indiscernible]. So we are having contract conversations where paper is going back and forth, all those people are going to be in Phase III where that's happening, and some other examples of that. But the Phase III has continued to grow over the past several quarters. We've also had some entities move from Phase I into Phase II. And Phase I is really just that exploratory stage. Phase II is when they're starting their process, they're building their business case, and they're starting to have more and more conversations internally and with us about their eventual path forward.

So somebody can be in Phase II, you feel really good. They're ultimately going to do it, but you know they've got a lot of wood to chop, so they can't go from 2 to 3 just yet. So what gets them, I guess, as the contract starts?

Well, the contract is just one piece of it. That was just one example of what I was throwing out. But there's also a -- have they, and this is just an example, not all of them are exactly the same, which [indiscernible] -- just like a lot of deals haven't been the same, the process isn't exactly the same. Have they had conversations at the operating company level where the presidents or leadership of the operating companies understand and have signed off and those types of things, we'll move them. That's another thing that you would look at moving people from Phase 2 to Phase 3.

So remind us how big Phase 3 is right now?

Phase 3 is about $600 million.

Okay. Great. And is it fair to think like Phase 3 is on the 5-yard line or the 1 yard line or what's...?

I would say Phase 3 is in...

Red zone or...

It's closer in the red zone. But some of the -- what you've got to do there is an inch at a time from even that point on. Because, again, these are still very large projects. They have to go through a process there. And some days, you're going to get an inch and you've won that battle for that day.

So I've talked about this a few times. So I think in the past, you had some explicit guidance about we're going to sign this much in contracted business by March -- by, I guess, the end of the month or something like that. What happened? What are the kind of the buckets of things that have caused the delays and you've hinted at some of them already? But...

Yes. I mean I think it just comes out of what I was just talking about. I mean, these are very large transactions that are going through large entities -- and so they have a lot of things internally that they've got to figure out and work their way through. There is not a whole lot that Anterix can do to move that process along when you're talking about a $1 billion project. We're a small piece of that. But what our sales team does, and that's very important, one of the key learnings that we've had is early on with a customer is to talk about what their processes are. Does the team even know what they are that's internal to the organization? So we've got that mapped out. And so everybody knows what's going to have to happen and how it's going to go. Time lines for that, though, are oftentimes very, very difficult to figure out. Other things we've seen happen, CEOs change. And so capital approval processes get changed in the middle of a deal that we think is really close to being finalized. And so things like that happen and just kind of out of the blue, but we've also had where there are hiccups, where they have priority changes for the next 3 months, where the wireless network gets put to the side for a second and they go fight a fire or whatever they've got to do over here for a couple of months and then come back to the project. And again, managing that and managing internal priorities is not something that Anterix is going to be driving.

How many of these need to go through a rate case to get some big dollars approved by the PUC?

Yes. Well, first of all, just [indiscernible]. Every deal is different. Every process that utilities go through as far as PUCs is very different. In some cases, they go through it ahead of time. They'll go through the PUC process. In some cases, we've signed a deal where they haven't gone through that PUC process yet, and that's going to come later. So again, it all depends on utility by utility, state by state and how they do things. And they will know the key drivers of how they want to manage that process. So I wish there was a one-size-fits-all answer to some of your questions, but because you're dealing with [indiscernible] that are kind of big and bureaucratic in a lot of ways. They do things their own way and on their own time line.

And how do we get comfortable about the fact that we haven't had the same deal cadence as, I think originally, you projected that it's not some -- well, this may be not the right solution. I'm going to have the Verizon guys in here next week or whatever. But it seems like maybe you've had 1 person drop out of the 60 plus, but what gives -- how can you give us confidence that there's not a kind of a -- well, this is really interesting, but we're going to need a lot more work before we decide to move forward?

Yes. I mean we are seeing, and as demonstrated by the Demonstrated Intent score that we've got, utilities continue to take steps to move forward and eventually get to a contract with us. And so we had one small utility that we were working with municipal that dropped out of the pipeline, but a bigger IOU covers that service territory. So it's not like we lost that geography in what we're doing to move things forward. But we continue to make progress every day. And so there are wins that we have that don't show up with a signed contract on a day in and day out basis. But we're confident that the Demonstrated Intent number. We'll continue to show additional contracts in the future. It's just very hard for me and the rest of the team to predict exactly when and on what time line that's going to happen.

And what's your protocol for if you do sign a lease -- I mean we had letters of intent back in the early days and so forth. But will you issue an 8-K at that time? Or will you wait until earnings? What's the kind of the dissemination?

The structure that we've used in general, up to this point is having a press release and/or an 8-K come out at the time that we do a signing. Most often, we've done a call to discuss it and then answer specific questions that investors or analysts like yourself have that are covering us. Will we get to a point where we're not doing that, maybe in the future. But I think for us, it's important with where we are in our life cycle to continue that kind of public dissemination pretty quickly after we've done the transaction.

Well, we appreciate that. And just to be clear on the FCC filing, that shouldn't be a delay factor? Or do you have anybody in the pipeline who says, "I need 5x5. So it sort of down pens until we see what the FCC does because 3x3 doesn't work for me." And this kind of ties in, I guess, to things like 5G?

Yes. No. So that has not been the case. So let me talk about a couple of things. From a 5G standpoint, we have gone through very specific processes with the 3GPP standards board so that the 6 megahertz of spectrum at 900 can be used for 5G. And so our team has gone through a pretty arduous process to move that forward and then that's gone through their process. So as a stand-alone, the 3x3 will meet the standards for 5G. So I know people have asked that question before, and I think that's now kind of checked off and moved to the background as far as we're concerned. And no, we haven't had any customers or potential customers say, "We're not going to do anything until there's 5x5 here." As of right now, all the use cases that are being discussed easily fit into a 3x3, the 6 megahertz that we've got and those networks that are being built out. But people think, especially in utilities where they're doing 10- and 20- and 30-year plans, what else is going to come from a usage and capacity standpoint that we may have to have the capacity to do at some point in time. And so that was part of the impetus for, let's try to go forward with 5x5 now, because -- I said 2 years probably on the FCC process, but you never know. And then there's a whole process of clearing out incumbents and all those types of things. So getting out ahead of that game and getting that ball moving forward is a great thing for us to do now, and I'm glad that we did. But we haven't had any customers that just said, "No, we're not doing anything until you get that done."

Great. So we had T-Mobile here earlier. They -- it looks like they may be auctioning off the 800 megahertz spectrum if Dish is not going to exercise their option. Is that of interest to you? Could that be bought by somebody else who might deploy this in a similar strategy with the utilities. There's a bit more spectrum there?

A lot of questions. I don't know the answers too either there on what's going to happen with that spectrum and who's going to be involved in a potential auction as it moves forward. So it's probably highly unlikely that we would participate in the auction, but we are talking to a lot of players here who may be interested in, and we'll see how that plays out and what use cases specifically could that sector be used for. And so we're watching that one.

Okay. Great. And another spectrum band. Some of the utilities bought themselves with CBRS. I haven't heard much about that recently. I don't think it's sort of taken off the way that some people were hoping. But what are some of -- I think it was San Diego have some. What are people doing with the CBRS? Is that something they're working in conjunction with your spectrum for some of their solutions?

Yes, exactly. So we've got a couple of customers who participated in the CBRS auction, San Diego being one example, where they are planning on using both bands. CBRS for some very specific capacity needs in certain spots where they want to have that kind of overlay. And so that's been very important. We've also worked with a couple of vendors to make sure that there are dual band chipsets that can work with both CBRS and 900 megahertz that they overlay together. And keep in mind, there's also a license that's out there that some people take advantage of as well and probably will with these because there's not as much need for licensed in their specific territories. So it's a piece of the puzzle as we move forward. But I think everyone does realize the fact that it's not the greatest spectrum for a big wide area of deployment and it's more specifically for small area capacity needs.

Office buildings or something like that?

Yes, office building, campuses, substations and things like that where it can be a very specific use case.

Great. So if we turn to the OpEx side of the equation. Can you just help us with how you see that evolving over time where you are on retuning and just the kind of run rate SG&A, et cetera?

Sure. So from an OpEx spend standpoint, we'll be, roughly continue to be over the next couple of fiscal years, in the $40 million to $45 million range. No significant change from anything that I've talked about before from that perspective. From a clearing standpoint, we have gotten done with about 70% of the country, but from a cost standpoint and an incumbent standpoint. And so just looking at the pure 3x3 piece of it, we are well on track with where we thought we'd be, both cost and timing. Then that's always one of the levers that we can push up and down. I think next year, probably in the $20 million to $25 million range on clearing.

When you say next year, you mean a year to March '25?

Yes, through our fiscal year, that ends March 2025. Correct.

$25 million?

Yes, correct. And one of the things that we'll continually monitor now when we think about the retuning process is the 5x5 piece of it. Do we want to find for moving someone into the 2x2 and then moving them again? Do we want to avoid that? I think, of course, we do. So we'll look for ways to think through moving people potentially out of the band.

So some of the initial retuning was into the 2x2?

Yes, exactly. So that's something that we've got to...

Work on, think through...

Yes, think through. But I would say there's been less of that than I thought there would be because we have actually, when I think back to our original estimates, we've done way more purchases of spectrum than the [indiscernible], as a part of this. So when you make that purchase, you're moving someone completely out of the band and they're gone. So there are less incumbents in the 2x2 than they were at the beginning part of this process, even with us moving some people into it. So we feel like we're in an advantageous position, but there's still a lot of hard work that's going to have to be done there.

So that's $60 million, $70 million kind of cash outflow a year on that side?

Correct.

Okay. And so how do you think about using the proceeds coming in, keeping a cash balance and then returning capital to shareholders?

Yes. I mean we look at keeping roughly $40 million to $50 million on the balance sheet from a cash perspective is where we want to be. And anything kind of coming in that drives what we call an excess of that, our plan, as we've talked about with the most part of that is to return it to shareholders through share buybacks. And so it's our intent to continue to do that. We did announce in September our second share buyback program at $250 million. In the last quarter, we reported on that ended 12/31/24, we had spent about $8 million, and we continue to be active in purchasing our shares, particularly at today's price levels.

Okay. Great. And remind us of -- I think you touched on -- you've still got $80 million to receive over the next couple of years. Is that right?

Yes, correct. So out of $270 million in contract proceeds, we've collected about $190 million. And so in FY '25, again ending March 2025, we've got roughly $15 million of contract due to come in. The rest of that $65 million is going to come in, in the couple of years after that, just based on the way that the deals are -- were structured when they were done. But we expect to have more additional proceeds from new contracts that we'll be signing in FY '25, TBD on amounts and numbers of deals, but I'm looking forward to talking more about that and some of the details are. But all of that to say, I expect on each quarter moving forward us to be active in our buyback program.

So let's take a hypothetical $100 million deal. What would be the kind of typical structure of the payments. I saw in the deal today you want $25 million within 3 or 6 months and the balance 2, 3 years later? What's the right way to think about it?

Yes. And again, as I've said now a couple of times, they're all different. Let me just talk about the way we model it from our perspective. We expect roughly 20% in the first year, 30% in the next 2 years and then 20% the year after that to get to that 100% level. All of them are going to be a little bit different. All of them coincide with the...

So, 20%, 30%, 30%, 20%?

Yes. All of them coincide to win -- the utility wants to have spectrum delivered to them kind of with their build-out because they've got some used and useful criteria that they've got to meet where if they go through the PUC process, they've got to start. The spend that they are doing, customers and consumers need to feel the benefit of that pretty quickly. So sometimes they want to delay getting the spectrum piece until they can have the network build-out done. So that's the way we look at over a 3- to 4-year period in which we would collect cash. Some of, there's going to be a little bit of a longer tail. Some of will be a little bit shorter, and it will all depend deal by deal, but that's generally how we look at it moving forward.

And you've done one spectrum sale. Is that right?

We've done 2. Yes. So we did San Diego Gas & Electric and LCRA. Both of those were what the FCC designated as complex systems. And we always knew when the report and order came out, that complex systems because they don't have to mandatorily retune, would be -- there'd have to be some creativity in putting together those transactions. And I think sale was a part of that. But we've also done some deals with some complex systems where we haven't done a sale. And so those are all going to be, again, a little bit different.

If we look at that $1.1 billion, I mean, is that going to be 80% leasing, 80%-20%, 90%-10%, 100%?

I think the significant majority of it will be leases, but I'm not going to rule out any additional sales.

Yes. And it's whatever, $50 million, $60 million on average, but I think you said there's -- I don't know if there are elephants, but there's a couple of hundred -- 3-digit type contracts in that bucket, right?

Yes, absolutely, there are. There are several just large utilities that have a lot of pops, particularly valuable megahertz pops where the spectrum is just worth a lot more. And so that would drive, what we see as several 9-figure deals within the pipeline. But again, the average transaction is right around $60 million with half the pipeline above it and half the pipeline below it. And so we'll continue to see deals being done at a variety of different sizes.

Great. And talk to us about moving beyond the kind of IOUs. Where are you in your kind of pipeline and going forward on that?

Well, I mean -- so just let me talk about one of the transactions that we've done within the last year, which is LCRA, the Lower Colorado River Authority. So a quasi government entity, not an IOU. And a significant set of their use cases were on the water side, not on kind of the electric utility and a lot of water monitoring with the Colorado River in Texas and all of that. So there are use cases that are coming from even outside of kind of the electric utility [indiscernible]. But we're also talking with different enterprise about potential opportunities here. But the sweet spot for us for all the reasons that I've talked about is on that -- on the electric utility side.

Great. Well, just in the last couple of minutes here. I think we were talking early on about the challenges of GAAP accounting. You have to amortize your upfront lease payments over whatever it is, 20 years or whatever. So there's really kind of a very big difference there. But how should investors value Anterix? What's the right framework? I think early on, we've done a sort of a [indiscernible] spectrum value. In theory, you can do a DCF valuation as well, make some assumptions about the conversion of the pipeline but then there'll still be some spectrum left over. So if you can just walk us through that?

Yes. No, it really is a cash flow story, Simon. Because there are challenges when you look at revenue. Sales don't flow through revenue. There's a gain that takes place there. So that doesn't flow through revenue. Revenue gets on the way. We recognize it gets diluted by time over a 20-year, 30-year contract. It's such a long period of time. The revenue growth in and of itself is not going to be significant. So it's really the cash flow that we can bring in on a year in and year out basis. Looking at what we believe or even you believe in your models, we can turn into contracts and then how that's going to flow through from a cash flow perspective. This year alone, as I talked about, we received over $106 million and we are returning a pretty significant portion of that back to shareholders.

Remind us of your cash balance at the end of last quarter?

At the end of last quarter, it was $62 million.

Okay. Okay. Thank you. Tim, appreciate your time. I appreciate you joining us today.

Thank you, Simon. Again, thank you to you and Morgan Stanley.

One question. We were just listening to T-Mobile talk about spinning up a network for Formula 1 Vegas and through the teams and things like that. What's to stop another like a T-Mobile from doing the same thing, the way they just talking about doing it?

The carriers all have big national networks in the size and scope of those where they potentially could. But some things would have to get solved around the OpEx to CapEx question for utilities. That's super important because they'd rather not pay by the bit or by the bite on an OpEx perspective. They'd rather capitalize all those costs. And I talked about some of the other core tenets that they've got around controlling the network themselves. So those are some of the key things that would have to get worked out, but could they? Yes.

Great. Thanks a lot.

Thank you.