Anterix Officials: No Private LTE Contracts Yet, But Some Expected Soon
Wednesday, November 18, 2020 | Comments

During an earnings call, Anterix officials said they have not yet signed private LTE contracts with utility customers but still expect to have two to three signed by the end of the company’s fiscal year, March 31.

In earlier investor calls, Anterix officials had said that they expected to sign a contract with Ameren for private LTE services in the next few weeks, but that deal has not yet been completed. Ameren and Anterix have been working together on a private LTE pilot.

“It’s fair to say our contract completion process has been slower than we had anticipated,” Anterix CEO Rob Schwartz said. “However, based on our continued progress, we remain confident that we’ll get this first broadband customer contract signed shortly. The first one’s always the hardest, and while the approval process is not in our direct control, the execution process continues to move forward with sponsorship from their top leadership.”

Schwartz said that it was important to exercise patience as the company moves forward in trying to pioneer private LTE in the realigned 900 MHz band.

“It’s important not to lose sight of the fact that we are pioneering with Ameren and others a new and revolutionary idea for the utility industry that will have a major positive impact on our nation’s electric grid and will establish a differentiated and sustainable opportunity for Anterix, but new innovation with large and risk-averse institutional companies takes time. The result in value creation we believe is worthy of the patience required.”

During a question and answer period, several questioners showed concerns about the lack of a contract with Ameren and said that they were under the impression that Ameren would be the first contract. Comments on the call appeared to suggest a different reality, the questioners said.

“I mean, with Ameren specifically, they’ve consistently shown every sign and every indication of their commitment to moving forward with 900 MHz,” Schwartz said “… And so, we’re confident that they’re going to move forward along with others. It’s hard to predict the horse race of who comes across the finish line first. But as you know, we’re targeting multiple horses to come across that line by March 31.”

Schwartz said the company is making progress with other potential customers.

“In parallel, we’re also making strong progress with other near-term prospective customers,” Schwartz said. “And despite COVID’s impact in slowing decision cycles, we’re experiencing strong demand. This can be seen through additional utilities that have recently been publicly vocal about their interest in private LTE and specifically 900 megahertz.

Anterix Chief Operating Officer Ryan Gerbrandt preached patience and said the company is on the path to many of its goals.

“This is a long game, and we feel the momentum we are building for private LTE networks is precisely what we have been working to achieve,” said Gerbrandt. “We are focused on ensuring we are well positioned to capitalize on this growing demand. Availability of scarce low-band spectrum on which to build private LTE networks has created opportunities with a multitude of strategic entities, including carriers and technology vendors as well as cloud and edge providers.”

During his remarks, Gerbrandt broke down how the company’s pipeline of potential customers works. The first phase covers prospecting and qualifying a customer, the second phase include pursuing a customer and submitting a proposal, and the third phase covers negotiation and commitment. Of potential customers, right now, about 70-80% of prospective customers are in the first phase, 10-20% are in the second phase and 10% are in the third phase.

“Our pipeline is just where we would anticipate it to be at this stage of our plan,” Gerbrandt said. “And from my experience selling in similar complex utility enterprises, I have confidence in our present position and trajectory to achieve our stated fiscal year-end goals, as well as our fiscal year 2024 financial guidance. It’s important to note that due to the typical multiyear sales cycle for these types of customers, we are not expecting to see big changes to the pipeline phases quarter-by-quarter even if we are fight on track.”

Schwartz said that through the company’s work in successfully petitioning the FCC to realign the 900 MHz band, as well as the recent Citizens Broadband Radio Service (CBRS) auction, there is a growing ecosystem for private broadband. This is leading to the opportunity to create partnerships within that ecosystem. “We’re exploring ways to work together, creating more compelling solutions and in turn, add partner capabilities and heft to accelerate the adoption of 900 MHz private networks,” said Schwartz. “We’re also making progress on our top-down programs aimed at impacting the utility industry as a whole at the state, federal and industry association levels. By moving the industry towards a collaborative initiative of a nationwide network of private LTE networks, the value and the function of this collective approach can be considerably greater than the sum of the parts for all involved.”

Schwartz said that the administration of President-Elect Joe Biden will likely have an impact on the business as its likely that the administration and Congress will consider legislation that could help accelerate modernization of the electric grid.

“The framework and funding amounts of these bills is difficult to fully forecast at the moment,” Schwartz said. “However, it’s anticipated that environmental policy, renewable and distributed energy, broadband deployment, infrastructure upgrades, grid modernization and cybersecurity will likely be key components of any legislation.”

Schwartz said that the company also believes that in light of the COVID pandemic there’s likely a strong case for stimulus funds to be allocated for job-creating opportunities such as building private utility broadband networks.

As part of the 900 MHz realignment process, Anterix must work with incumbents to clear the spectrum and relocate. Gerbrandt said that the company continues to make progress in that effort.

In the first half of the fiscal year, the company initiated or completed agreements with 35 license holders, and has spent approximately $8 million this fiscal year on completing spectrum clearing activities,” he said. “All told, the company expects to commit another $2 million to spectrum clearing activities this fiscal year.

Schwartz and the rest of the Anterix management team said they are pleased with where the company is at and said patience in the process was important.

“While finalization of long-term customer contracts takes time, I’m more enthusiastic than ever about where we are and where we’re going at Anterix,” Schwartz said. “Industry demand for private broadband networks is growing across sectors. We’re on target to deliver on our goals. We have a growing and experienced leadership team that’s executing on our plan, and we have a balance sheet that’s well capitalized both with cash and spectrum and remains debt-free.”

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