Shares of Anterix (NASDAQ:ATEX) skyrocketed as much as 70% today after the company announced a long-term spectrum lease agreement. As of 2:30 p.m. EST, the stock had given up some of those gains but was still up a strong 38%.
The deal is Anterix's first long-term spectrum lease agreement and covers Ameren's (NYSE:AEE) service territories in Illinois and Missouri using the company's 900 MHz spectrum for a period of 30 years. Those airwaves will be used to deploy a private LTE network for Ameren, a regional utility company, as part of its ongoing digital transformation efforts. Anterix CEO Rob Schwartz is optimistic that the agreement will pave the way for future deals.
"Today's announcement officially launches the utility industry's capturing of the tremendous benefits of 900 MHz private LTE, a foundational element of a reliable and secure electric grid," Schwartz said in a statement. "As Anterix continues to collaborate with the fantastic team at Ameren to help achieve their broadband vision beyond these milestone agreements, we believe this partnership will also drive the utility sector's collective adoption of 900 MHz private LTE."
Anterix offered some additional details around the arrangement in a regulatory filing. The project is scheduled to commence in June 2021, and there will be an option to extend the term for an additional 10 years to bring the total lease term to 40 years. Ameren will prepay 50% of the total deal by June 2021, subject to Anterix delivering its spectrum licenses, with the other half expected to be prepaid by 2026. The total value of the initial 30-year deal will be approximately $48 million, before factoring in the additional 10-year option.