Analysts warm to Anterix

"Anterix offers electric utilities the right amount of spectrum in the right spectrum band to build the private networks that electric utilities want to build," wrote the financial analysts at LightShed Partners in a recent note to investors.

As a result, the analysts raised their price target on Anterix's stock to $96 per share from $64 per share. The company's stock is currently trading at around $63 per share.

The timing is noteworthy considering Anterix recently signed up another utility to test private wireless LTE operations on its 900MHz spectrum licenses. Tampa Electric – an electric and natural gas utility in Tampa, Florida, that counts 800,000 customers across four counties – is asking the FCC for permission to test a private wireless LTE network using spectrum from Anterix and equipment from Motorola Solutions.

"Tampa Electric is exploring the use of 900MHz LTE networks for various applications in support of its electric and gas utility operations," the company told the FCC. "These applications include Advanced Meter Infrastructure (AMI) backhaul, SCADA, Distribution Automation (DA), and LMR to LTE Mission Critical Push-to-Talk (MCPTT) convergence."

Tampa Electric joins a number of other utilities around the country in eyeing Anterix's 900MHz spectrum for private wireless networks. Motorola Solutions is one of several suppliers making equipment for such operations; Nokia and Ericsson also support Anterix's 900MHz spectrum.

According to the LightShed analysts, there are clear reasons why utilities are increasingly turning to Anterix's spectrum for their private wireless ambitions. "It gives them the control, security and performance that are needed to keep the electrical grid operational," the analysts wrote.

Importantly, the LightShed analysts speculated that Anterix will be able to lease its spectrum holdings for around $1.50 per MHz-POP. The MHz-POP calculation is applied to most spectrum transactions and reflects the number of people covered compared with the amount of spectrum available, though it can be affected by a wide variety of factors.

Anterix earlier this year inked a spectrum-leasing deal with San Diego Gas & Electric (SDG&E) for a whopping $50 million. That price implies a per MHz-POP of around $2.30, which Anterix executives have said reflects the value of spectrum in San Diego. They said the company expects to ink spectrum-leasing agreements based on the relative value of spectrum in different locations.

"We believe that $1.50 [per MHz-POP] will be at the low-end of the range at which Anterix can monetize its spectrum," the LightShed analysts wrote. "This change in assumption is what increases our price target to $96 from $64."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano