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Christopher Guttman- Mccabe

All right. Good morning, everyone. Thank you, Scott. It's an exciting day. I'm going to turn to an update on our activity with the FCC. I am very pleased to share with you the significant progress that we have made on the 5x5 joint petition that was filed with the FCC.
On January 15th, the FCC issued a notice of proposed rulemaking that proposes to expand the 900 megahertz broadband segment from its current 3x3 configuration to a more robust 5 megahertz by 5 megahertz configuration.
To provide context, the FCC had previously considered this expansion in its original 2020 rulemaking, but deemed it premature at that time.
While there still is work to do to move the proceeding to a report in order, the FCC's decision to adopt this NPRRM is a powerful endorsement of not only the 900 megahertz private utility broadband movement but also the critical role that advanced grid communications play in our economy.
The proposed 5 by 5 expansion marks a major milestone for both Anterix and our utility customers, as it will open up new opportunities for utility broadband users and use cases, as well as strengthen our partnerships with our ecosystem.
It will also provide greater flexibility to meet the growing demand for secure private wireless networks, not only for utilities but for other critical infrastructure and enterprise businesses across the country. You just heard Scott highlight our role as a utility partner.
We see the work that we do with the global standards bodies, the module and chipset manufacturers and this work at the FCC as an embodiment of our long-term partner approach. At Anterix, we are committed to serving as the steward of the 900 megahertz band, ensuring it continues to serve the evolving needs of utilities and the critical infrastructure sector for years to come.
Looking ahead, the FCC will seek public comment on the NPRRM within 60 days after publication of the Federal Register, and then reply comments 30 days after that. We will continue to work with the more than 30 organizations that filed comments in support of the petition to engage in this important process and proceeding. And we look forward to providing you with updates as they develop. Now I'll turn the floor over to Tim to review our quarterly financial performance.

Timothy Gray

Thanks, Chris and good morning everyone. And Terex's third quarter results for fiscal year '25 reflect a solid financial position. We've provided a comprehensive overview in our 10K filing, which was filed yesterday and is available on our website. I'll now briefly highlight some of the key takeaways from this quarter's performance and some developments of note following the conclusion of the quarter.
As a result of strategic initiatives with select customers aimed at accelerating delivery ahead of contract timelines, we successfully delivered to a customer the next tranche of spectrum ahead of our initial contracted delivery date.
This has led to an incremental cash increase of $34 million which was received at the end of January. Combined with the approximately $29 million in cash on our balance sheet as of December 31, '24. We remain well positioned and well capitalized.
It's important to note that of the approximately $150 million in uncollected contract proceeds, we are scheduled to receive roughly $80 million during our fiscal year ending March 31, 2026.
These incoming proceeds not only support our ongoing operations, but also position us to continue returning value to shareholders. On the cost side, we have successfully identified an operational expense run rate reduction of approximately 20% from our annualized run rate from our second quarter this fiscal year. Which will further enhance our efficiency and increase our cash flows.
These reductions have already impacted our third quarter results and our general and administrative expenses. These cost savings are associated mainly with significant reductions in consultant and professional services. Regarding our share repurchase program, we have returned approximately $6.5 million to shareholders year-to-date in fiscal '25. Including $4.4 million in the third quarter.
As we've previously mentioned, our approach to share repurchases remains opportunistic and we will continue to calibrate the amount of buybacks based on cash flow and market conditions.
With our current cash position and substantial contracted proceeds outstanding, Anterix remains in a strong financial position to execute on our strategic priorities and continue returning value to our shareholders. With that, I'll turn it back over to Scott.

Thanks, Tim. I look forward to addressing any questions you might have on these topics. With that we will now open the call for questions. Operator, please open the call for questions.

Operator

Thank you. As a reminder to ask a question, [Operator Instructions]. Please stand by while we compile the Q&A roster. One moment for our first question. And our first question will come from the line of George Sutton from Craig-Hallum. Your line is open.

Question and Answer Session

Thank you. Good morning. So, interesting obviously to receive the interest from the outside. I just wanted to look at it from the lens of the fact we're moving closer to 5 by 5 from 3 by 3. Your equity value really hadn't changed much at all and You also look at it as a fraction currently of of where you're selling your spectrum. So obviously that suggests significant discounts to the ultimate value. Is that where you think the genesis of this interest has come from?

I, thanks for the question, George. I think it comes from that and I also think it comes from a question of the fact that we have built such a large ecosystem. That we have 7 customers that have moved from the lab to the field and are talking very publicly about the performance and the use cases of what they can do with private broadband 900 megahertz spectrum.
I think it comes from the pipeline. And so I think it comes from our industry strength and the 10 years of what we've done and the fact that we've got this pathway to 5 by 5, even though 3 by 3, as I mentioned in my remarks, more than satisfies everything that they could possibly do for years. The 5 by 5 is just one more step further along.
And so when I look at the, and I'll just jump in front of the question I'm sure is on people's mind and that I'm, I've been getting and we're going to get is what kind of companies and they really range from financials to strategic. There's no one common theme of the interest that we've had.
But the common interest is the fact that we have become such a market leader and a and a big cast and a leadership and influenceible where this industry is calling its embrace and wireless spot there. Networks and then you combine that obviously with our financial position of signing $400 million of contracts. There's $150 million of proceeds left to come. There's no debt. The pipeline is good.
I think all of those things, when you look at the market cap of where this company's been, yeah, I think that is a combination of all those things is what's spurred the external interest.

So one other thing on your industry initiative, I can certainly appreciate it has been a very slow moving utility market that we serve. I am not really clear the motivations for the utilities to move quicker from this initiative or what is spurring this that that's just, I'm not really clear about that.

Is the question what is spurring us to do this now or what would what's, I'm trying to just make sure I.

Think I'm trying to think from the position of a utility who naturally moves very slow we are through this initiative trying to get them to move more rapidly. I'm trying to understand what's going to drive them to do so from this initiative.

Yeah, I only can speak from my own experience.
When I referred back to the Silver Spring Network's time and in the first several years, it was really hard to get those first one or two companies up and going but once we did and they were able to communicate the performance and the power of distributing intelligence at the edge and speaking more broadly about that, there became a wave of just most utilities got on board with it.
And I think we're seeing that some of that now. We've now gone from the lab to the field and it's been in the field in some cases for close to a year and those utilities are getting more vocal and more clear about the use cases and the performance of this spectrum of what it's delivering in the field and I think that's being heard. And, I came 4 months ago.
And I will just tell you there is a sense of urgency when I look at the executives around this table with me right now and our board and the fact that I didn't come here to build another 15 or 20 year career, but we came here to deliver on this position of where we currently are and I am seeing a pretty strong interest of the next wave of utilities.
As an example, we reached out to a number of utilities that are next up in the pipeline. There was near immediate responses, yes I want to participate in this and I've directed and I'm supporting this team to be as aggressive as we need to be on price creativity, the ecosystem we bring to the table and making sure we give them a as frictionless as possible way to come on board and catch up with the first 7 that have already signed up and in some cases are 2 and 3 years ahead.
So that is a combination of all that, I think is what has gotten us to the point where now is the time to go get started.

Christopher Guttman- Mccabe

Perfect. No, I.Appreciate the time. That's it for me. Thanks.

Guys. Okay, thank you very much. Thanks.

Operator

Thank you. One moment for our next question. Our next question line of Mike Crawford from B. Riley Securities. The line is open.

Thank you in December the Commonwealth [Ason] finally got approval for its rate case. When, how long would that typically what would be the time frame would typically take from to move from that to actual spectrum license?

Hey Mike, I'm going to ask Brian, he's sitting here with me to jump in. Yeah.

Brian McAuley

Good morning Mike. Frankly, I wouldn't say there's necessarily a single outcome, that I've seen kind of over time with kind of how the utilities proceed obviously getting regulatory support was a was a big step and it is for a lot of utilities that go down that path to be able to get moving. Then they can go a variety of different paths in terms of how they ultimately go forward the different options that they're exploring and how they ultimately support driving procurement.
So, unfortunately, I don't have a crystal ball, to give a precise answer in terms of timing. But like any other utility, look at the bigger picture in terms of clearly as Scott had laid out the growing market demand is something that is driving,
I'll say the overwhelming support and initiatives that we're seeing across the entire market. This isn't completely dis-enjointed from the program that we're rolling out to capture that moment in time with a lot of these utilities. There's there's so many external influences that you're driving their need and their urgency and as they've been seeing and measuring the successes of the previous utilities are positive reasons why hopefully we continue to see that grow continuing while we're tracking what, what's going on with excellent.

Okay, and then just more broadly I think you've already. Done deals covering close to 43 million population in the US at by our calculations about $1.52 dollars and megahertz [po] an aggregate on the the eight deals to date and can you just remind us, or inform us what like the kind of goal posts would be between the prior two auctions that you've used to maybe inform some of these discussions for the remaining 236 million or whatever pops that that that you you cover and potentially could reach with your spectrum.

I want to make sure we've answered the can you, what's the specific question that you've got?

Well, initially when you're.

Right, by the way, on the on average per op, I'd say that's pretty close to what our math is.

And, but obviously, rural Texas is a low, has a low fare market value for that service area but downtown, Midtown Manhattan would be have a high area. So if you take all the remaining population in the country, like what would be the goal posts that you're, that you've been working towards. Maybe framed in prior AWS 3 and 600 megahertz auctions or or where discussions are today.

Christopher Guttman- Mccabe

Hey Mike, it's Chris. Yeah, those are the goalposts, right? Those are the logical comparables. And then we put into play, what are more recent transactions and things like that. I think what is new is what Scott referenced, which is we have room. When you look at our current market cap, and the market pricing of our stock and you interpolate extrapolate that back or forward or interpolate it back to a current price per megahertz pop for that market cap, we've got a lot of room to be creative in pricing and still drive extraordinary.
Value both to our shareholders, but also to the utility sector. And so yeah, those are the goalposts that we use when we talk about fair market value. And yes, you're actually obviously very correct in using sort of the real estate analogy right? Manhattan, New York is a different price point. Than than Manhattan, Texas or Manhattan, Kansas. So, but what Scott has authorized and is pushing us to do is to be, as creative as we can be with our offering in order to make the move. I think the word Scott you just used was frictionless. Make the move for utilities frictionless.

Oh, okay, thank you, maybe I'll just try one last question. So if if not if and when you get an ability to offer 5 by 5 solution, there's certain markets where your spectrum holdings, I think already would make you very able to do that and others where it would be more difficult so is there any way you could try to bifurcate areas like I don't know like Boston where other people have Spectrum Holdings or or or different markets where where you're in a position would be in a position to move quickly and and kind of frame that for us at all.

Christopher Guttman- Mccabe

Yeah, again Mike, it's Chris. I'll take it.
For a very significant percentage of the country from a county perspective, we could move forward, pretty quickly. And then for the rest of the markets, we're going to take it opportunity by opportunity. So as a utility wants to first of all obviously. A lot of work between now and a 5x5 report in order. But if that were to happen to the benefit of I would say spectrum policy and the utility sector we would enlist our fantastic spectrum teams who have already cleared more than 70% of the incumbents in the 3 by 3, and they would get to work on clearing for the 5x5.
I, we're very comfortable. That our team has that capability and they have the authority to cut the deals that we will ultimately need to cut to get us to 5x5 as we have contracts in place that where the utility wants to go to 5x5. One of the things that makes our offering really unique is the ability for utilities to do this incrementally.
Right, they can start with 3 by 3, hopefully fingers crossed. Ultimately they can go to 5 by 5. They can pay us in a way that matches their budget with zero debt, we're able to be flexible on how to structure these contracts and Ryan and our sales team have been very successful in creating a bespoke deal for each utility. And then just adding 5 by 5 to the mix gives us even sort of greater opportunity to be flexible and to be creative with our customers.

Oh, okay, thank you very much.

Thank you, Mike.

Operator

Thank you one moment for the next question.
Our next question line of Jonathan Chaplin from New Street Research. Your line is open.

Hey, thanks. Good morning. Thanks for taking the question, a couple actually, so for the counties where you've already signed deals on the 3 by 3.
Would the, would those customers get access to the 5x5 once it's sort of delivered automatically, or would they, would you expect incremental payments from them to get access to that? And would it be on the sort of the same megahertzop basis as as the deals that they've already signed?

I'll take the, I'll take that and then I might ask Chris or Tim can jump in but I would say that yes, I would say there would be demand for them to gobble up the 5 by 5 just to have it for future strategic reasons over the decades to come.
I would say yes, there would be a value is associated with that 5 by 5 that we would be looking to negotiate and that they would be very interested to be at the table with us negotiating that.
Specifically regarding the pricing for that, it's too early to say. We will need to do some work on it. We need, we would we will deal with that when that time comes and I do believe it's when that time will come. We'll sit down with it and and make sure it's the right value pricing to encourage utilities to expand their their availability to the 5x5.

And I get that you sort of haven't had any of these negotiations yet and so it's sort of really difficult to know, but as you're thinking that the utility of a 5x 5 is so much greater that the incremental 22 megahertz gets a higher price than what you've already done or does it work in the opposite way where if you've already bought 3, you get a volume discount on the incremental 2.

I would say it's, I'm not, I, the volume discount are your words, I don't think they're necessarily mine but I would say more spectrum is better than less spectrum. The 3 by 3, certainly with our 7 customers, the number of testimonials and use cases they're blown away by the fraction of the bandwidth they're using in the 3 by 3. That's what gives us confidence that There's years of bandwidth there that's left, but the 5 by 5 is valuable and I think they would they would want that. So there'd be a price to pay for that. And I think we would love for them to have it.
And I think I hope that answers your question fully but there's a lot there that, we don't want to get ahead of ourselves, as Chris said there's some work to be done. We are very pleased with the speed at which the which it is going through the process right now. We anticipate will continue to go well. It's hard for us to predict if that's going to be in the near term or medium term, and when that time comes as it gets closer we will be able to communicate more. With all of you regarding what that means to us and updating your models.

Is there any way to, is there anyone else in those markets that might be interested in the 2x2? Is there any way to create bidding tension, for the incremental piece?

Christopher Guttman- Mccabe

You, hey, Jonathan, it's Chris. The way the rules are proposed right now, the structure for applying is the same, right? So in the, overwhelming 95+% of the counties that will be in Turks. And, but I'm going to take your question in sort of a different way. We are laser focused on the utility sector. That doesn't mean that there are not inbounds from oil and oil and gas and pipeline and other uses and use cases.
In fact, one of our utility customers, their goal specifically is to serve other users within their footprint. Whether it be similarly situated utilities things like that. And so this additional capacity will give them that capability and and so that's where we see it.
But with regard to sort of applying for the expand from the 3 by 3 to the 5x5. Obviously we have to wait for the proceeding to come to fruition but the way it's set up right now is the entity that has more than half of the spectrum in the market licensed is the entity that gets to move forward and for the majority overwhelming majority of counties that would be [Anars] vast vast majority, and that's how it would play. We look at this as our evergreen commitment to the utility marketplace and also to this block of spectrum.

My last question on this, would you be expected to pay the FCC anything for the remaining 2 by 2?

Christopher Guttman- Mccabe

Jonathan, say that again.

Would you be expected to pay for the the incremental spectrum and and what would be the cost of it?

Christopher Guttman- Mccabe

Yeah, and so the way the again the rules proposed to to continue the same structure and under the current 3x3 structure there's an unjust enrichment payment that that the licensee Anterix makes and it is based on 600 megahertz auction prices, and they propose to to continue that in the next phase.
So any spectrum that comes off the shelf, that's the payment. So there is, there's no, we purposefully structured this to make it easy for the FCC to move forward, to give them another tool in their toolbox for spectrum planning and spectrum allocation and assignment and that includes making sure that there's no windfall no unjust enrichment.

Got it. Thanks, guys. I really appreciate all the questions.

Yes, thank you for your question.

Operator

Thank you. As a reminder that's 11 for questions, 11.
Our next question will come line of Jerome Darling from JPMorgan. Your line is open.

Hello, Jerome.

Hey guys, thanks for taking the question and congrats on the quarter. I'd like to see the cost controls here, the 20% reduction for fiscal year '26 is encouraging. How should we think about CapEx both in fiscal 4Q and for 2026? And then I guess on the 5x5, perhaps asking the question a little bit differently, how should investors kind of think about The value of the entire deal pipeline assuming 5x5 approval. You guys in the past have spoken about 60+ customers valued at $3 billion assuming 5x5 gets fully approved. One, can you serve more than that 60+ customers, and do you see a value in the pipeline of greater than $3 billion. Thank You.

Tim, do you want to take that first one regarding the, OPEC and the CapEx, please?

Timothy Gray

Yeah sure, Scott, and Jerome, thanks for the question. Just so the immediate savings that I talked about quarter to quarter was about $1.5 million with the majority of that coming out of G&A expenses as I discussed, and we expect to see continued savings as we move forward on the OPEC.
CapEx, the clearing we will remain consistent next year, probably in the $15 to $20 million dollar range, dependent on timing of customers, timing of spectrum delivery, etc. But that's our current view and I would expect this quarter that we're currently in to be about $5 million maybe a little less than that for what we're going to spend on clearing.

And then on the 3 by 3 and 5 by 5.

Yeah, okay yeah, regarding that I would say, it's the 400 million that we've signed today. Represents call it 15% of the total value when we look at the total value of remaining pots across the United States. It's a very large number. 5 by 5 makes that number larger.
And between those two things, which is why I'm so emphatic on recognizing that as the market leader, we have a responsibility with our existing customers and those pinned up customers that are next to drive that leadership position and bring this aggressively into the market.
So, where that lands I'm not prepared to give you an exact number today other than say it's a very large number. And it's right there at our fingertips and anything we can do to help this next wave of utilities move faster, we are going to do it and we have a lot of room to be able to do that. And just one last comment on that and I'm kind of looking at across the table at Ryan our COO.
We decided to launch this just over the last few days, and we reached out to some of the largest most respected utilities really in the industry that are up next that have shown an interest that we've been talking with and we put this out there in front of them a formal process where they get to really learn about the use cases, the deployments of what utilities are doing so far with 3x3.
And whatever we can do to take it off the table of what's holding them up of helping them understand both sides of the spectrum decision of pricing is one on commercial structure, commercial flexibility is another. And I was, I think we were both really, we were optimistic that people would want to participate in this, but it was near immediate yes responses to put the time and their best talent at the table to work with our team and our best talent, and that process is going to show us a lot over the next few months.
As to where this is and I think there we have the room, we have the flexibility to be aggressive on pricing. As I said, our market cap is still a fraction of what we've seen, even the lowest prices that we've had to go to, and if that's what it takes, then we're going to drive that value into the market. And see some performance from it. Brian, do you want to add anything to that?

Brian McAuley

I think it's a big part. I mean, I summarize it like this Jerome kind of the reaction that we've gotten and the interest we've gotten immediately to be able to participate, is highly related to kind of the demand side and where we've seen the accumulation of all the activities and the shared experiences, including the 7 customers and their success stories hitting the market over the last 4years to 5 years.
And you just can't underestimate kind of the importance that utilities who have been in this process for a while going through their understanding of the use cases spending time at organizations like Utility Broadband Alliance, getting prepared to go to distribute tech who understand, at a very deep level that broadband and its importance are critical as they look towards the future of either securing.
The grid enhancing reliability and resiliency connecting to like the point earlier, those those 40 million pops represent 20 million actual people, their homes, right, the consumers that this energy provides and their interest in participating, I think is very encouraging, as they want to engage with us directly in a more formal way under the under the context of this program.
To be able to explore not just the 3 by 3, but the journey to the 5x5, and that'll educate us a lot more, in terms of how we make sure we're meeting them where they are to, optimize the offering for everybody's interest and value creation for all shareholders.

Christopher Guttman- Mccabe

And one thing I just want to add right, so, Jonathan asked a question, Mike asked a question. Jerome, you asked a question about 5 by 5 value. We worked hard with 9 other organizations to put together a petition that is a win, right? And it was very purposeful. It is clearly valuable to Anne Tars and And Scott referenced that, it's, it could be an order of magnitude, right?
But it is clearly a valuable value to Antarctica. But it is also extremely valuable to our utilities and our utility customers, as evidenced by 30 entities filing in support. But let's not lose fact of the reality that it is valuable to the FCC in terms of really good spectrum policy and it's also valuable to the US Treasury. They're getting revenue for spectrum that sat on their books for the last 50. Years and so when we look at this is architected in a way that makes it, a positive outcome for all the elements of the folks that are engaged and impacted by this and that, that's been our goal.

Thank you.

Operator

Thank you. Showing no further questions in the queue, I'd like to turn the call back over to our CEO Scott Lang for Gloworks.

Thank you everyone for participating today. I want to do a call out to our existing customers, to the industry leaders that are going to be joining our effort on the 5x5 and the 3x3 move to broadband wireless networks to call out to my team, all of our partners.
I'm really fortunate to be here at this point in time. At Anterix and on the back of the 10 years of investment and hard work that went into it by our team and our investors and the entire ecosystem to get us here. When I look at this just 4 months in there's a lot to like market leadership, $400 million of contracts, $150 million left to collect from those contracts no debt great customers, big advocates, big pipeline.
Strong partners and a path on 5x5 that the innovation can continue to stay healthy for many decades to come. So it's a good place to be. I appreciate everybody turning in today and we'll look forward to updating you and keeping you updated on our progress as we move forward. Have a good day.

Operator

Thank you for your participation in today's conference. This doesn't include the program. You may now disconnect. Everyone have a great day.