Buried within the positive news of share buybacks and growing Demonstrated Intent, Anterix’s Q3 2023 earnings call hinted at a potentially massive, yet surprisingly subtle, strategic shift: a push into the vast and largely untapped market of rural electric cooperatives. While analysts are buzzing about buybacks and the promise of imminent contracts, this quiet expansion into the co-op world could be the real game-changer for Anterix, setting the stage for a dramatic, even exponential, growth spurt in the coming years.

Anterix has been laser-focused on investor-owned utilities (IOUs) since the beginning, and rightfully so. These large, regulated entities represent the bulk of the US electricity market and offer predictable revenue streams. However, the US is also home to over 2,000 electric cooperatives, serving primarily rural areas and often facing unique operational challenges. These co-ops, independent and member-owned, haven't been a central focus for Anterix—at least not publicly. But recent developments suggest a change in the wind.

The Q3 call casually mentions Anterix's support for multiple Department of Energy (DOE) funding applications under the Bipartisan Infrastructure Law. One seemingly innocuous line stands out: "One submission included a collaboration with the Southern States Energy Board and a national organization representing the Rural Cooperative Utilities, known as co-ops." This collaboration, focused on a scalable shared communications platform, is specifically designed to "extend Anterix’s 900 megahertz spectrum to the co-op community, addressing the 2000 plus universe of cooperative electric providers.”

Let's unpack the significance of this statement. Anterix isn't merely supporting DOE applications; they're actively collaborating with prominent co-op organizations to craft a funding proposal tailored for the unique needs of the co-op community. This is no passive endorsement; it's a deliberate and calculated strategic move, one that could unlock immense value for Anterix.

Why is this such a big deal? The potential co-op market for Anterix is enormous. Consider this: IOUs, Anterix's current focus, represent around 70% of the US electricity market. The remaining 30% is served by co-ops and municipalities. This means, in a very simplified model, that Anterix could potentially expand its addressable market by almost 50% just by tapping into the co-op world.

But there's more to the story than simple market share. Co-ops, often located in remote and challenging environments, face pressing needs for reliable communication systems. Think about wildfire mitigation in vast, sparsely populated areas, or the complexities of integrating distributed energy resources like rooftop solar across expansive rural grids. These are precisely the scenarios where Anterix's 900 MHz spectrum, with its superior propagation characteristics and suitability for private networks, can deliver significant value.

The "shared communications platform" model, highlighted in the DOE filing, is particularly intriguing. This suggests Anterix is exploring creative solutions to address the cost sensitivities often present in the co-op world. A shared platform, leveraging economies of scale and potentially involving partnerships with regional utilities, could provide a cost-effective pathway for co-ops to access Anterix's spectrum and unlock the benefits of private LTE.

While the Q3 call doesn't offer specific financial projections for the co-op market, we can develop some hypotheses based on the available data. Anterix's current Demonstrated Intent scorecard, representing $1.1 billion in potential contract value, likely focuses almost entirely on IOUs. If we assume, conservatively, that the co-op market offers just half the potential revenue per customer as IOUs, and that Anterix can capture even a modest 10% of this market in the long term, we arrive at a potential co-op market value exceeding $100 million.

This is just the tip of the iceberg. Anterix's CatalyX platform, highlighted in the call, offers intriguing potential for generating recurring revenue from subscriber management and roaming services. As the co-op network grows and interconnectivity becomes increasingly critical, CatalyX could become a key revenue driver for Anterix, supplementing the upfront licensing fees with a steady stream of ongoing revenue.

Potential Contract Value Breakdown

This chart illustrates the potential contract value breakdown for Anterix, including IOUs and the potential co-op market.

The co-op strategy is still in its early stages, but the signs are clear: Anterix is making deliberate moves to position itself for a major expansion into this potentially game-changing market. While Wall Street is focused on the immediate gratification of buybacks and contract announcements, the savvy investor will recognize the significance of this quiet, yet potentially revolutionary, shift in Anterix's strategic landscape. The co-op world may be listening closely to Anterix's whisper campaign, and the future of the rural grid could be painted in 900 MHz hues.

"Reference from Q3 2023 Earnings Call Transcript: "Anterix is also advancing the market by supporting multiple filings to the US Department of Energy for funding under the bipartisan infrastructure law. One submission included a collaboration with the Southern States Energy Board and a national organization representing the Rural Cooperative Utilities, known as co-ops. The business model represented in the filing provides a scalable shared communications platform, where each regional utility can connect to improve grid resilience and deliver more affordable electricity to rural communities. This provide – will provide a channel to extend Anterix's 900 megahertz spectrum to the co-op community, addressing the 2000 plus universe of cooperative electric providers.” - Anterix Q3 2023 Earnings Call Transcript"

"Fun Fact: The 900 MHz band was originally used for cellular phone service in the 1980s! Now, Anterix is repurposing this spectrum to revolutionize communication for utilities and critical infrastructure."