Good afternoon, and welcome to the Anterix Second Quarter Investor Update Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. I would now like to turn the conference over to Natasha Vecchiarelli, Director of Investor Relations and Corporate Communications. Please go ahead.

Good afternoon everyone and welcome to the Anterix second quarter fiscal 2021 investor call. Joining me today are Morgan O'Brien, our Executive Chairman; Rob Schwartz, our President and Chief Executive Officer; Ryan Gerbrandt, our Chief Operating Officer; and Tim Gray, our Chief Financial Officer. Before I turn the call over to Rob, please let me 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 Web site. And as always a replay and transcript of this call will also be made available on our Web Site. Following our prepared remarks, we will open the call to take questions, using the process the operator will describe. And with that, I'll turn the call over to Anterix’s President and CEO Rob Schwartz.

Thanks, Natasha, and good afternoon everyone. Today, we'll provide you with an update on the key elements of our continued progress and momentum since our last call. Given that this last call was just about two months ago, Ryan and I will provide a brief update and then we'll go to Q&A with the full team. So with that, let's dive into the details. Today, we're going to cover a few key topics. First, I'll provide an update on our near-term customer contracting process. Then I'll address the continued progress of our top down state and federal strategy, which when combined with the tail winds of increasing private LTE market interest is providing for a catalyst for a potential collective movement by the utility industry for spectrum adoption. Ryan will then follow to discuss our customer pipeline and highlight the key indicators of progress and utility momentum we're seeing. I know Ameren is top of mind with many of our investors. So let me start with an update on where we stand. It's fair to say our contract completion process has been slower than we had anticipated. 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. And we do continue to remain confident in our ability to report two to three signed agreements before our fiscal year end March 31, 2021. With that said, it's important not to lose sight of the fact, 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…

Thank you, Rob, and good afternoon, everyone. As Rob just highlighted, we continue to make much progress with our pipeline. Just a few months since our final actionable FCC rules became effective. And to put it in perspective, as we shared on our last investor call, the combined service territories of the utilities in our current customer pipeline represent over 75% of our nationwide spectrum value. While progress has not yet the executed customer contracts that we all anticipate, there are many other clear indications from our pipeline and then the industry's increasing forward momentum that we are seeing which I will speak to you today. 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. 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. The introduction of broadband into utility communications will open new opportunities for utilities involving cloud and edge computing, machine learning and artificial intelligence, as well as the capture, aggregation, analysis and action on data. There is a clear message across this growing ecosystem which is rooted in collective private LTE adoption built upon our spectrum offering. Operationally, we continue to execute on strategic and opportunistic spectrum clearing activities. In the first half of our fiscal year, we have initiated or completed agreements with 35 license holders. To-date in this fiscal year, we have spent approximately $8 million and have another $2 million committed to complete clearing transactions, keeping us on track relative to previous guidance. This activity is an…

Thank you. [Operator Instructions] And the first question is coming from Mike Crawford. Mike, your line is live. Please announce your affiliation and pose your question.

Thank you, Mike Crawford from B. Riley Securities. If you achieve your confidently stated goal of having two to three licenses in hand by March 31. What conclusions should investors draw relative to the value of those leases relative to your 125 million to 150 million royalty target by 2025?

Thanks, Mike. Appreciate the question. A couple of thoughts. First of all, feel free, the rest team can jump in behind me here. I think relative to the first few contracts as a couple of important things. One is obviously as I mentioned in my comments, these are the pioneers, these are the ones that we've been working with for quite a while and are really helping shape the collective action by the industry. So while it's the tip of the iceberg, we're really confident that it will enable others to be able to transact and transact with a model and understanding of how to approach it. And as we've said before, uniquely in this industry, we're going to see that that sharing continuing whether three totally broadband alliance, or some of the other collective initiatives that I talked about. What we can't get into the specific economics of obviously the first transactions, especially because as you heard from Ryan, we've got a broad pipeline, there's a there's a there's a lot of opportunities in that in that overall pipeline. He mentioned, you know, it's really 75% of our spectrum value that really is within the full pipeline. So it's hard to predict exactly what's going to come through first. But we're confident that really from that initial transactions and the information we'll be able to share that you'll really be able to get a good mark on the value of our nationwide spectrum asset and also the cadence that we're going to continue to be able to deliver to investors

I will just add in Mike. Certainly, meet that two to three that fits in with what we thought would have for a business model on our 2024 projections.

Okay. Thank you, Tim. I'll just ask one follow up. So previously, you said we can expect the license “in coming weeks.” Today, we can expect the license “shortly.” I also hear that previously, it was fairly clear that Ameren was expected to be the first licensee. But now, Rob, I hear you saying that it's hard to predict who will be the first license, is that correct? And is there any other color you can put around by what you mean by shortly?

Sure. And look, Mike, appreciate your and other investors patience here. As I mentioned, while things are happening slower than we anticipated, we're still well on track to be able to deliver customers soon as Tim restated our target by fiscal year end. And so, we're not fully in control this process, right, obviously, we're working with large institutions that have complex completion processes. And so, but nothing in that has really given us any indication that we're not moving forward and be able to achieve our targets. I mean, with Ameren specifically, that consistently shown every sign and every indication of their commitment to moving forward with 900-megahertz. From the very beginning of their important role in working with us for years on the FCC process and their leadership has been outspoken, as you've heard CEO, Warner Baxter, in the public utilities fortnightly article, their Chief Digital Information Officer was in there as well. And it also was spoken at Edison Electric Institute about intentions. And so we're confident that they're going to move forward along with others. It's hard to predict, in 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. So it's a long game for us, and we know it takes patience. And as I mentioned, the patience very similar to like, what we had to do with our FCC process, which also wasn't in our complete control, but our experience and be able to drive these complex processes to conclusion, I think we've demonstrated the past and we're confident about the future.

And the next question is coming from James Ratcliffe. James your line is live. Please announce your affiliation and pose your question.

All right. James Ratcliffe, Evercore ISI. Two if I could, personally turn on the Ameren topic again. Is there any color you can give us? What changed in that time or what part of the process you thought was going to complete in a few weeks that hasn't gotten done yet? And secondly, going down the utility opportunities, any update on potential opportunities for the spectrum use outside of the utility footprint? Thanks.

Sure. Hi, James, I'll take the first question. Maybe Ryan, you want to take a crack at the second? On Ameren, as I just really talked about, it's not that anything changed? It's just process. It's their approval process. Unfortunately, because we're under an NDA, I can't give any explicit details of what's going on behind the curtain. But again, we're highly confident that we're going to be able to deliver that one soon. And so, Ryan, you want to take the second question?

Yes, happy to. So, obviously, as we stated, the center of our bull's eye remains on the industrial and utilities for good reason. We do see largely through some of the associated partnership conversations and other affiliations that we're developing in the industry, an interest in desire across a few other sectors for application of 900-megahertz and private LTE networking. Couple of those still live within the utility domain. There's certainly similar characteristics outside of what we traditionally have been talking about with the electric utility space, in and around applications for gas and water both as a potential opportunity for some of our customers directly. And/or additional opportunities for us to be able to engage into, but more broadly, as we think about just industrial sectors in general, I think other opportunities that partners have a stronger footprint into that open opportunities for us, more live in the realm of future things to look at in terms of oil and gas and just enterprises broadly.

And the next question is coming from Simon Flannery. Simon, your line is live. Please announce your affiliation and pose your question.

Morgan Stanley. So thank you for the -- again, the target of two to three by the end of the year. When should we expect revenues to start to be recognized? And have you had any more updates about what the form of the cash might be? The desire of utilities for upfront payments or for long-term monthly or quarterly payments? And then, on the pilots, perhaps just take us through from the NYPA announcements? How long does it take them to set up the pilots, run the pilots, evaluate the pilot? And then is that a six to nine-month process? Or what's the normal time there? Thank you.

Sure. Simon, this is Tim. I'll take the first part of that on the timing of revenue. We expect in the middle of next calendar year to start to recognize leasing revenue from these two to three that we'll be bringing in this fiscal year. So that's the timing as far as that goes. And let me turn it back over to Ryan to talk about the pilots.

On the cash flow?

Yes, so it's still early yet in the conversations with the customers. But nothing has changed from what I said last quarter about an emerging trend of these utilities for capitalization purposes, wanting to prepay all or some portion of at least upfront as we deliver spectrum. But again, it's early enough in kind of phasing in a pipeline and negotiating with customers where I don't know whether that's going to be a permanent trend, or it's just the first few potential customers.

Tim, let me tackle the pilot question a little bit. Let me start first with, pilots come in, obviously, a few different flavors, I think the best way to think about them is, two of the ends of the spectrum per se are kind of full on pilots, where field implementation happens in networks actually gets stood up. And the other contrasting scenario is more of a proof of concept kind of model and we see all of those varieties and a spectrum in between and a lot of these engagements. On the shorter duration, it's not uncommon that we'll see proof of concept kind of evaluations, moving the process forward, that happens more in the scale of one to three months, in terms of a more rapid evolution, validation of some of the used cases that they're focused on in that testing. Generally speaking, though, I don't think you're too far off in terms of the broader scope of pilots, and looking at I'd call it, probably more of a three to nine month range, depending a lot on the complexity. And when I say complexity, it really means the variety of the used cases that they're looking to test and validate, as they're working through what that file process is. But as you heard in Rob's remarks, reflective of NYPA and as Gil stated that, there, there's a strong ambition in a lot of these counts, to get through that pilot phase as fast as possible, because there's definitely a sense of urgency on the other side, as they're trying to push forward on broader strategic initiatives, and really want to move that ball forward aggressively. The other point that I'll just make, I referenced this a little bit in my remarks around just the blueprint, the standardization of how utilities work through this journey. It's important to note that not all utilities will even do pilots. And this is one of the attributes that we see with a maturing market. While, today, I would suspect, we'll see as we have a lot of activity in terms of testing and pilots, there's a lot of sharing that those go on that we've talked about. And utilities will have different paths that their work their way through and we do anticipate, in fact, we're working on some now that are not going to pilots.

Okay. Great. And maybe just one on the FCC. Are you in -- do you need to buy much in the way of licenses to fulfill the two to three contracts you're hoping to sign here shortly, are you pretty much already positioned for that?

I think Simon, we gave some information historically and continue to update on our retuning progress. We depending on the market, those that are more complex and those that are simpler, but we're well on underway and doing the retuning necessary to be able to deliver the spectrum in the timeframes as we're seeing in the kind of agreements that we're working on.

Rob, I think it's worth mentioning that most of these contemplate that we start off delivering 1.4 megahertz, which is a heck of a lot easier and faster. And then, we give ourselves time as they deploy to round up the remaining spectrum to get to the full three by three.

And the next question is coming from George Sutton. Georgia your line is live. Please announce your affiliation and pose your question.

Craig-Hallum. And I was most intrigued with the messaging around the collective adoption, as you explained it. And I'm wondering if Morgan in particular with the historic assumptions for what this could become relative to what a collective adoption might look like and what a network of networks might look like. Can you just explain what that difference might be and how that's changed recently?

Yes, sure. Thanks for the question, George. This is Morgan. Let me let me begin by saying that it's at the heart of our proposal to the critical infrastructure industry, utilities in particular. It's at the heart of our proposal that each of them wants to have as close to total control of their system performance as they can. And that's why they are inclined and have been historically to go with their own private systems. So they determine priority of communications, they determine backup, they determine coverage, they determine all the performance characteristics. And nothing we would ever propose to the industry varies from that. However, as each utility makes the decision to put in LTE facilities at 900-megahertz for its purposes, it is a key part in enabling its neighbors; neighbors adjoining and also neighbors broadly defined as the nation in having much greater economies of scale. So as we pointed out, there is a very interesting new paper that Guidehouse has put out that's on our Web site that has to do with, how do you look not bottom up as we sign each of these leases? Not how do you look at that, but how do you look at the aggregate and the connectivity and collectivity of the industry, as you put all of these things together. And when you start to do that, you start to look at the evolution of thinking from a core that would operate the LTE facilities to cloud that would operate them. And adding all of these additional elements of complexity that any particular utility itself might not want to develop. But the industry would benefit tremendously from. What we said all along is that, that the greatest opportunity for the utility industry is that LTE is a mature developed…

Well, I think the summation of the answer is it could become a network effect situation. So moving on to my second question. Just making sure I understand the differences quarter-over-quarter, I don't believe you said last quarter that you had the sign-off of, or the sponsorship of the leadership that Ameren. Am I correct in in that assumption? And does that suggest that what is left is not necessarily an Ameren's decision-making? It's by the regulators or something like that. That's it for me.

Thanks, George, for the additional question. I don't think that's the right interpretation. We've continued to have senior leadership sponsorship from early on in the process I mentioned even through our FCC process for Ameren, as you saw from the filings even came to the FCC with us several times. And as I mentioned, the public statements of their senior folks. So I wouldn't read into that. To me, it's continued senior sponsorship in bringing this over the finish line.

So just one more question, then senior sponsorship does not equate to a senior sign off yet. Is that a correct statement? But what we're waiting for is the execution of our contracts. So yes, we've got the senior sponsorship and hopefully shortly we'll have the senior execution of our agreement.

[Operator Instructions] And the next question is coming from Phil Cusick. Phil, your line is live. Please announce your affiliation and pose your question.

Hey, guys, JP Morgan. Thank you. I wanted to get back to something we talked about a few minutes ago, one of the questioners referred to the 125 million to 150 million in 2024 revenue goal. At this point, is that realistic? That's three years from now, it takes a year to get these things up and running. Doesn't it make sense to just pull back on that and put expectations in a different place at this point?

No.

That was Morgan's quick answer. I'll elaborate. I fully agree with him that we remain confident that based on the robust level of interest, both the organic bottom up approaches we're talking about that we're seeing, along with the opportunity and potential for some of these top down breakthroughs that can drive adoption even faster. We remain confident and stand by that prediction projection for now. So, it's early in the game, we're going to start being able to put some numbers on the board soon. And from that, we'll be able to draw better conclusions. And I was able to communicate more with your analysts and investors about that trajectory. But for now, we're confident with that number.

We just can't present it other than as we see it. That's how we're seeing it as it develops, then, if we could just turn loose, every conversation we're having it easier for you to sort of understand where we are, but of course we can't.

And Phil, it's Tim. Just one thing I will add. Remember that the revenue guidance we had put out there is really based on a small number of top 20 IOUs. So it's not like we need to sign the 50 to get there. We mentioned 6 to 11 and we're still within that -- looking to be within that range. So again, it's a relatively small number.

Okay. Maybe you can help us then by framing the number of potential customers or some kind of way to quantify how many customers are in those different buckets of contracts or of discussions and sort of pipeline, not necessarily, who are they? Or how big are they? But how many customers are in that pipeline?

Yes. I think we've discussed in past the broad scope of over 40 customers in the pipeline. And we're determined, it's not prudent for us to continue to sort of refresh that number, regularly. Because, like any large account, sales, customers do move in and out, and just based on their starts and stops, it's kind of natural in this kind of sector. So, it remains large, it continues to grow, as we chose to give you a scaling of it of saying, as Ryan did about that it represents three quarters 75% of our spectrum value across the nation, in that pipeline. So we think that's a good order of magnitude understanding of what's in there.

Okay. And then, one more, and Morgan, maybe I appreciate everybody's thoughts in this, but the idea of utility company of America, sort of a top down congressional action driving utilities to sort of work together. Again, I'm struggling to see that is very likely in a divided Congress and a country that has a hard time doing anything in agreement.

Yes. Well, let me first say that. And I don't think you're saying this either. Because it has not happened ever, doesn't mean that it couldn't happen. That's the first thing. The second thing is, I'm not saying there will be any such thing. I'm saying that, collectively, if the very well run diverse companies that are in this space, is to be their advantage, then, it seems to me, it's our job to show the advantages. We have much deeper roots in the wireless space and knowing wireless is going as it goes from 4G to 5G and artificial intelligence and whatever else. So we need to be -- we are persuaded, we are confident that we understand how their operational requirements which we've gotten to know so well, their operational requirements are going to be amazingly impacted by 4G, 5G wireless connectivity in ways that a lot of them still do not understand. They're beginning to understand it. But let me have Chris talk to you about the congressional process, because I'm willing to bet you, I'm willing to bet you that this area of infrastructure investment to make the grid more secure is something that could well have bipartisan support, one of the few things, but Chris is an expert on this.

Sure, thanks. Thank you, Morgan. And, yes, I mean, I think I just want to add to what Morgan had introduced earlier, and then sort of reiterated, which is we have an expectation that Congress from a bipartisan perspective is going to influence some form of infrastructure stimulus funding. And whether it takes the form of directly of infrastructure funding, or specifically, whether it's sort of grid modernization or some effort to fuel some environmental policy, or its cybersecurity focused or Chairman Pallone, might want some form of effort to sort of stimulate the utilities and the communications companies to have better -- ultimately better performance, reliability or redundancy. We see a bunch of different vehicles, all designed to really enhance utilities and to stimulate utilities to move to a more resilient, to a more modern grid and a key component of that we've been all over policymakers on Capitol Hill and in the States educating them that you can't have a modern enhanced, intelligent grid without modern enhanced broadband communications. And with that comes and I know Morgan sort of went through the list of the benefits of collaborative movement. But, you really do have and as we've met with policymakers, they've really begun to understand you can get, obviously buying scale and scope with that. But you can also get a real significant incentive to innovate and to drive enhanced research and development and a device ecosystem and an application to ecosystem and best-in-class cyber security. And for us, those all are bipartisan ideas and messages. And so, as we look at this from a sort of a circular perspective, Congress can really help to stimulate the economy by diving into infrastructure support. But with that comes those range of benefits that, I think George called it a network effect that's exactly what we would call it. We call it again, the network of networks. But it's a networking effect or a network effect, that we believe Congress is going to one to embrace. Our goal is to ensure that Congress identifies communications as a key element of that. And that's what we're really pushing, not just Anterix and not just our advisory council, but also with other sort of key utility organizations and thought leaders. I'll stop at that.

And Chris, let me just emphasize that Anterix sees a vision for this industry, which doesn't stop at 900-megahertz, but it's 900-megahertz is foundational to getting started. And then, you have CBRS and other types of spectrum that are going to be layered on to this network to support much greater usefulness for the grid operations and grid security, as we go on. It's inevitable that it will happen. And to our interest and the interest of our shareholders to lay that out to the policymakers and to have them do what they did back in 2008. They put like, $8 billion out there for smart grids -- smart meters and that caused the industry to move at a speed they had never moved before, to move collectively in many respects. So it can happen. It's not the way it's been done for the most part with that big exception, but we think it is going to happen, right?. The ARRA is the logical model. And while when it unleashed AMIs, we could see sort of a whole new universe of opportunities for utilities, machine learning, artificial intelligence, cloud computing, edge computing, all of those things that get facilitated and stimulated by broadband. So, as we look back at the process that led to the ARRA, we are in a very similar situation at this moment.

Do I understand we have another question? We have another question.

Yes. We have another question coming from [Brian Warner] [ph]. Brian your line is live. Please, announce your affiliation.

Hi, Brian [indiscernible]. Thanks for taking the questions. This point ties into some comments you made earlier and just now about 900-megahertz being the foundation of this. And it just, can you give me a sort of very high level, maybe some of the issues between CBRS and the 900-megahertz band, and whether or not, I'm sort of trying to figure out how complimentary they are and at the same time, how competitive they might be? Can you just as investors did have some thoughts about what some of the most important variables might be?

Hey, can I take a quick stab at it Rob and let you guys fill in. My quick stab says one thing you want to do is, you want to look at online and see what the product line that Motorola is talking about where they combined in a single equivalent set, they combined 900-megahertz, and [3.5] [ph], so they see it as extremely complimentary in the same equipment that they're intending to deliver. But that's the essence of it is one of the spectrum bands at 900 gives you a lot of coverage and a lot of penetration. And the other gives you tremendous capacity, but does not have anything like, it can't go more than a few blocks. So it's a question of what is your used case? And Ryan talked about used cases. I've seen a list of 24 used cases that various utilities are looking at for broadband and some are ideal for and absolutely require the ability of 900 to get that wide area coverage and penetration and others are going to work much better if they have pockets or episodes of CBRS at particular locations which can't possibly afford to cover through. So let me throw it back to Rob.

Thanks, Morgan. I think you hit it pretty clearly but Brian, just for your knowledge, so CBRS went to 3.5 has both licensed unlicensed spectrum. So for any major carrier was built from the globe almost all started with low-band spectrum; spectrum under a gigahertz because it has the physics that the rules that don't change the ability to travel long distances with a single cell site. And it's important because it multiplies the CapEx and OpEx every time you have to add cell sites. CBRS is probably needs at least four times as many sites to cover the same kind of space as a single site of 900. But more importantly, it also does building penetration, right, at that kind of spectrum. So for utilities that have to get into -- be able to read, devices within buildings in subterranean areas, if 900 has greater penetration. Overall, we see it as completely complimentary. There's a lot of examples of that both utilities that are piling the two, as well as examples of other sectors where they're seeing low band, we call that sort of a layer cake, putting on multiple bands of spectrum. But starting with that foundational, low band. Another important thing about CBRS is it really showed through this recent auction was that utilities were willing to pay for spectrum and obviously outbid carriers for that spectrum. So it did demonstrate the importance of spectrum and utility business model. And so multiple utilities ended up with CBRS, many of whom we've talked to and see the complimentary aspect of 900 and have intentions of being able to do this sort of mid-band low-band configuration to get greater capacity in their in their network.

I got it. So is it a concern, as quick a follow up, is it a concern that some of utilities are going to be sort of more interested in, are they sort of getting pushed back, because they feel like they could do hybrid systems, where there's plenty of area, particularly densely populated areas where CBRS is effective or with that limitations that would make them not practical?

…utility and you're trying to cover a broad area, service territory, and you got to realize these are utilities that have multiple states of coverage. And they're covering areas where there is no existing wireless networks, where there's substations and transmission lines. And so in order to achieve economic coverage of their service territory, which is their objective, you can't do that with CBRS. So it's very good for and I was on this panel at Fierce Wireless, several weeks back, where Google's head of their effort and CBRS talked about their pilot in Arlington, Virginia. And really said, not only couldn't he go through windows, but he couldn't go more than a couple blocks. And so it's great for covering a stadium, it good for covering campus, but it's not really spectrum that's going to go further than that. It's really like -- I've heard people talk about kind of super WiFi, think about the applications where to use WiFi, this is a new band, with less with more proprietary usage and less interference that you can use now for those kind of applications, right? A - Rob Schwartz But I think you're used to the word hybrid suggests that that would be something we would fear that the hybrid systems is exactly what we anticipate seeing that's the vision, when we look forward, we see hybrid systems with foundational low-band spectrum. And on top of it built additional spectrum uses for highly specialized uses where you can have these huge chunks of spectrum. So you can do virtually real-time stuff, artificial intelligence type stuff, which you're going to have a hard time doing at 900-megahertz. 900-megahertz has a completely different profile of used case.

Thank you. And there were no other questions in the queue.

Great. Well, thank you, operator and thanks, everybody for all the good questions and the continued interest and patience. We look forward to our next opportunity to update everybody in our ongoing process. Thanks again.

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.