Latest / AST SpaceMobile Podcast / Kook’s Weekly - October 27

Transcript

Kook’s Weekly - October 27 · AST SpaceMobile Podcast

0:06
This is the AST Space Mobile podcast.
0:10
Where we just basically come your phone be seamless
0:14
regardless of where you are. We don't want the user even to
0:16
know that it's connected by satellite.
0:21
Listen, the opportunity that we have is very, very, very large.
0:29
OK, beaming everyone. That was a sick last minute
0:32
touchdown by Aaron Rodgers, but I guess not enough.
0:36
So tonight we have quite a lot going on.
0:38
What a action-packed week. Again, I'm still a little bit
0:44
sick, so I might there might be a little coughing on this, but I
0:47
started to think about it. You know, this King Tut guy, I'm
0:51
thinking, you know, is there a curse?
0:53
You just can't be too sure. I mean, Steve Larrison now me.
0:59
So just be careful who you follow on the Internet because I
1:01
think we got to just do a little test on whether this King Tut
1:03
guy kills all the all those who interact with him.
1:07
But hopefully I'll get better by the end of this week.
1:10
So illness notwithstanding, let's let's talk about our
1:15
favorite stock. So we had a convertible bond.
1:20
And so imagine my surprise when this company issued a billion
1:25
dollar baht just wide. And so we've now had three
1:31
convertible bonds this year. All of them are trading great.
1:36
Actually, I don't know how the the last one's trading.
1:38
It was a little bit of a train wreck for these hedge fund guys
1:41
that were going to get hedge off.
1:44
And I'll get a little bit into how that works in a second.
1:47
But the key thing is that there is roughly a billion dollars of
1:52
proceeds. It's going to probably have
1:54
what's called the green shoe exercise, which is going to take
1:58
the total offering up to 1.11.15 billion.
2:03
Then there's fees and things like that.
2:06
It's a 2% bond struck at $96.30. There's no cap call this time,
2:15
which is interesting. We had the first two bonds had
2:17
cap calls, which effectively shift the strike price or the
2:20
conversion price of the bond from the stated conversion
2:24
price, which is applicable to anyone that buys the convertible
2:28
bond. But basically the company
2:29
typically is layered in a call spread on top of that.
2:32
And I guess some level, if I were the board, I'd say, you
2:36
know, enough is enough. Like if we're now having stock
2:40
issued at 100 bucks per share, the dilution on that is so tiny
2:45
that let's not, let's not spend, you know, whatever it would be
2:49
$200 million on a, on a call spread.
2:53
And also I, I started the questioning whether or not the
2:56
market can bear the size of those call spreads anymore,
3:01
because remember the company still has those two existing
3:04
call spreads outstanding. Even when the convertible bond
3:06
goes away, the call spread remains because even though it
3:12
is, it has an intrinsic value to the convert the call spread
3:17
because the tenor of it is so far out, there's actually a lot
3:21
of option value left in the short call of the higher strike.
3:25
And so that means that the company really is better off
3:27
just kind of waiting to burn off that time value of money to get
3:31
the full intrinsic value versus if you liquidated it today,
3:35
you'd get kind of like $0.50 on the dollar.
3:37
Then there's a point where their balance sheet is going to, I
3:39
haven't done this math, but their balance sheet, I haven't
3:42
done this math for sure. The balance sheet is going to
3:45
have, you know, hundreds of millions of dollars of these
3:46
call spreads, which is a weird asset, but an asset number less.
3:54
And so for example, the again we're done that call spread is
4:06
worth intrinsic $50 million and then call spread of the July
4:16
bond it yeah, but sorry, how is it the 25 bucks is worth?
4:30
And so no, I'm sorry because I forgot the lower bound of that
4:35
cost rate. I mean $2.00 in the upper bound
4:37
is 120 basically just working around 25,000,000 bucks right
4:42
now. But at the upper limit that cost
4:43
rate is worth almost $4 million. So if you take the company's
4:48
already a half a billion dollars at the upper tray.
4:51
And so my thinking is the company basically just sort of
4:55
like tapped out on how my calls were.
4:56
They do doesn't really matter. Oh, let's just think like, well,
5:01
what's to do all these converts? And so I see Tanner giving me a
5:04
bunch of thumbs down. So let me see if he had comments
5:08
to see if I did something wrong. And now everyone's giving me
5:11
thumbs downs. Hopefully people can still hear
5:15
me. But anyway, let's look back.
5:22
And now people are saying the audios poor shoot.
5:33
OK, let me just do some comments real quick and just see if my
5:38
microphone is correct. People are saying it's better
5:45
now. OK, maybe I just wasn't speaking
5:46
clearly into it. So let's just look back
5:49
historically at whether these convertible bonds are are good
5:55
or not. And so when we look at the first
5:59
bond which was basically taken out because it was flushed, the
6:03
way I would look at that is what would have happened if we had
6:07
issued straight equity versus the convertible bond inclusive
6:12
of the cap call. And so you can see this is a lot
6:15
of numbers here and I realize it might be kind of difficult for
6:17
people to follow it all. But when you see that blue line,
6:24
it shows the total shares issue at the flush, which is when they
6:28
kind of took the bonds out that was 9.6 million shares.
6:33
And then you have to adjust that for the benefit of the call
6:37
spread they put on. And so that and I, I use what's
6:41
called Treasury method to adjust for that.
6:43
So that means that they effectively issued 7.6 million
6:46
shares on that January convertible bond.
6:50
Now what would have happened had they issued straight equity at
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the time, assuming a 15% discount to last, which is
6:57
anyone's guess whether or not they could issue a bond at that
7:01
spread. And my calculation show that
7:03
they would have had to issue roughly 11.8 million shares to
7:07
7.6 million shares at the end of the day versus 11.7 now at a
7:12
stock price of $74 more or less. That saved the company $300
7:18
million of value. Pretty good When, when all is
7:23
said and done until the whole point of a convertible bond is
7:27
effectively to minimize dilution.
7:29
And you're training off the fact that you're giving people a
7:32
senior call on the, on the enterprise value because of the
7:36
bond feature. And so it's a, it's a little bit
7:38
of a bet that you know, your stock will go up.
7:41
In this instance, it did. And the company, you know,
7:44
somewhat meaningfully reduced dilution by doing this to the
7:47
tune of, you know, roughly 1% of the shares outstanding.
7:51
So that's that's why they're doing it.
7:53
The other thing that we're seeing is their use of the ATM.
7:59
So the other update we got was that today they've used roughly
8:03
$300 million of the ATM. And so now when we look at the
8:09
sources and uses, I have, I have my own model that I keep as
8:13
people might imagine. And so when kind of adjusting
8:16
what we know, they gave us a, a period and cash number, which
8:19
was actually coming in really close to what my model was
8:22
saying. I thought they would end the
8:23
quarter at 1.3 million, sorry, $1.3 billion of cash and they
8:28
ended it like 1.22. So they probably pull forward
8:32
some CapEx or something like that.
8:34
And so now taking into effect the convertible bond, taking
8:38
into effect the ATM, taking into effect some modest cash flow.
8:42
And so they gave some guidance. We'll see if they if they hit it
8:44
for revenue from Block 1. And then I, I have a big cap X
8:49
number for Q4 and and I could be too high on that.
8:53
But in any respect I have them ending Q4, which is the quarter
8:58
we're currently in with $2.2 billion of cash.
9:03
And at this point, we'll, we'll be pretty deep into the
9:08
satellite construction program and so pretty nice to advance,
9:15
advance the ball. I don't know how many of the
9:18
satellites will be fully, fully done, but we know that they
9:21
have, you know, something like 40 satellites and some degree of
9:24
completion. And, and so you have to think
9:27
about it as the $2.2 billion of cash that they'll have at the
9:30
end of the period, plus the money that they'll have on the
9:33
balance sheet for work in progress WHIP.
9:36
And that's really the, you know, the 2 numbers to watch against
9:40
the full CapEx of the constellation.
9:45
So now none of this matters if you're not putting the birds up.
9:48
And So what we also found out this week is some updates from
9:51
ISRO. And so the latest updates coming
9:55
out of ISRO are that a Prime Minister Modi is going to
10:00
announce the launch, which is pretty cool.
10:03
And then that the launch could be in early December.
10:07
So that's all tracking pretty, pretty well.
10:13
And what we don't know is whether or not FM 2 might
10:18
actually be launched first. And so we're watching really
10:20
closely any tell tales of FM 2 leaving the facility to go to
10:25
Cape Canaveral. And the company had guided that
10:28
that satellite would be ready to ship within October.
10:31
I think what we learned in August is that the definition of
10:35
ready to ship will ship sort of the, you know, the Bill Clinton,
10:39
what is the definition of is can be somewhat in the eye of the
10:43
beholder. And so we'll find out if the
10:45
layman's term of ship of satellite on a truck, not in
10:50
Netherland, which is certainly a strict definition of ship is
10:54
going to be met this week. Or if we're going to be into
10:57
November, you know, for, for it to actually match up in terms of
11:01
when SpaceX can take delivery of the satellite.
11:03
I don't think the market's really going to care at this
11:05
point because it's very obvious that the company is cranking.
11:10
And after that we have again, just the research that people
11:15
figured out that the Indian Prime Minister is, is going to
11:19
announce the formal launch date just tells you what a big deal
11:22
this is. It's really exciting.
11:25
It's going to be international news.
11:29
This does matter for the stock price because people go, well,
11:31
what is this thing? You know, I always am amazed
11:34
that how simple the world can be where people just hear it.
11:38
You know, what is AST space mobile, you know, and they they
11:41
look at a stock chart, they do some basic work and you're going
11:44
to start to have, you know, billion, billions of people
11:50
start to be exposed to hear this name for the first time, which
11:54
is exciting. Some of those people are just
11:56
going to convert. And you always think about this
11:58
as supply and demand for a stock.
12:00
This is certainly going to create net net more demand for a
12:03
stock. So now let's just think about
12:07
launch itself. Something a lot of us have been
12:10
thinking about for years is just simply the idea of orbital
12:15
pollution. And so the other day we actually
12:17
had what we think was a SpaceX satellite hit a plane as it was
12:22
deorbiting. And so this is just sort of the
12:24
law of large numbers. When you have thousands and
12:27
thousands of satellites, there is just a higher probability of
12:31
a deorbiting going wrong then when you have 100 satellites,
12:36
just simple probabilities. And so this idea of Space XS
12:44
approach of sending thousands of satellites to achieve a thing
12:49
versus a constellation like AST Space Mobile that can do the
12:53
same thing with 100 satellites. At some point someone is going
12:57
to wake up and realize that the regulations need to be aware of
13:02
this difference. I think ASTS has been very
13:06
deliberate in their strategy. And we even have Jennifer Manor,
13:09
who's our head of public. What is she?
13:13
She's the VP of our I kind of think of her as our spectrum
13:16
lady, but she is our regulatory affair and international
13:19
strategy person, very talented. And she says, quote, unlike some
13:24
larger constellations, we need 96 satellites for global
13:27
coverage. And so while ASTS is ultimately
13:32
going to have more than that 248 is what they've applied for,
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they're very clear that they are not talking about thousands of
13:40
satellites and therefore this D orbital risk is lower.
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This is something that I do think will matter.
13:49
Ending orbital pollution will become a thing.
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I, when I made this investment, I really thought about orbital
13:55
scarcity. And I thought about it the same
13:57
way that, you know, my great, great, great, great grandfather,
14:02
if he were a kook, would have probably thought about
14:04
speculating on railroads and thinking about who can lay track
14:09
the fastest to get all the land grants.
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That's the, the way I look at this.
14:15
This is a, a rule of capture business because orbital real
14:19
estate is something that isn't yet priced.
14:23
And so imagine if you could get all the air rights in Manhattan
14:26
before people thought about charging for that.
14:29
Get a call you imagine if you could lay track and then grab
14:33
all the land adjacent, you know, over the, you know, the the
14:37
expansiveness of the the great West of America and just figure,
14:41
well, maybe there's some mineral rights there.
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Get it all. And so ASTS is getting into
14:47
orbit. They will then have priority of
14:49
those orbital slots, but at the same time, someone's going to
14:51
wake up and realize it's not in the societal best interest to
14:54
have a constellation has thousands of satellites with all
14:58
the environmental damage that's that's occurring for us to that.
15:01
I think that bill will be paid by SpaceX at at some point.
15:06
And so we continue to see our partners very excited.
15:12
John Stankey of C of AT&T, you know, can't help himself and
15:18
just reiterated how excited they are to be working with ASTS and
15:23
really just the excitement of these Leo technologies.
15:26
So it's good to to see that, you know, make sure our partners
15:30
continue to reiterate what we believe to be true.
15:33
And then we are having some new people show up in, in the press.
15:39
And so Vodafone has been very active with these labs.
15:42
They've started in Malaya, which is part of Satco, and that's
15:47
where they have a test bed where they're helping other M and OS
15:49
around Europe as well as other players experiment with the
15:52
technology and new testing and name that keeps coming up is
15:56
Meta quote. The inaugural project within the
15:59
library will involve A collaborative effort with Meta.
16:02
The initiative seeks to optimize and ensure the high quality of
16:06
WhatsApp audio and video calls once the services are launched,
16:09
guaranteeing excellent communication across hybrid
16:11
space and terrestrial networks. The hyper scalers will care.
16:18
We've we've always thought that was going to be the case and now
16:22
it is. And so I really shouldn't be a
16:26
big surprise. On the opposite end of the
16:29
spectrum, what better way to alienate yourself from the MN OS
16:35
and from the hyperscalers than to show that you are going to
16:40
compete with them. So an interesting article came
16:42
out about Samsung, which is developing quote an AI powered
16:48
xenos modem chip for SpaceX with an integrated MPU.
16:53
Not quite sure what MPU stands for, for satellite
16:55
communications aimed at enabling directly O satellite
16:58
connections. So this article, and then
17:01
there's another one about Apple and SpaceX was flying around.
17:05
And what's interesting about it is a plain reading, a Fudster
17:09
could go, oh look, Samsung's working with SpaceX.
17:13
A more detailed reading exposes all of the flaws in the SpaceX
17:17
design and so then Katzie in this link is provided.
17:21
It's under the tweet. Meanwhile, How to alienate
17:23
yourself from MN OS1O1 beat by SpaceX?
17:26
Katzie, as usual, just nails it with his redlined annotation of
17:31
the article. And so his point is that when
17:34
you have a solution that is garbled and and hacked together,
17:40
you don't have our first principal solution.
17:41
And therefore it's going to require all sorts of back penny
17:45
until what SpaceX has as a problem is to make IT service
17:49
work. It needs a dedicated ship
17:52
because right now it's power hungry.
17:53
It doesn't work, can't work with with unmodified phones.
17:57
And so when you have Florida architecture and you need to
17:59
start adjusting the, the handset and then you also have, the
18:04
problem is they do not have fixed earth sets, which means
18:08
when ASTS is making a connection with your phone to think of, you
18:14
know, something that's kind of locked on that beam is locked
18:17
onto your phone. And the beam is, is holding a
18:21
constant position to create that cell as opposed to a fix cell,
18:28
which is think of like a flashlight.
18:29
You're holding your hand just sort of moving over.
18:31
And to keep the light, you'd have to have a lot of
18:34
flashlights sort of cycling like a little carousel.
18:37
The problem is then you have all these handovers.
18:39
It gets very complex versus a constant beam which can hold,
18:43
you know, for as long as there's a look angle.
18:46
And so you have all sorts of problems with the SpaceX
18:48
solution. And now it looks like though,
18:51
they're trying to figure out more direct solves by modifying
18:54
the handset, which maybe it will create a functional service.
18:59
But that means then you have a very limited market because the
19:01
propagation of those chips. The other thing that was really
19:05
blasting around this week weekend is this Apple SpaceX
19:10
article. And again, of course, Apple is
19:13
going to work with SpaceX to make sure that it's spectrum can
19:17
be supported. Although I actually have my
19:18
debts as to why Apple would would really accommodate them at
19:22
all. So to me it was sort of like,
19:24
why would you enable that spectrum to to help this kind of
19:28
would be competitor. So I can see it both ways.
19:31
But then if it's really Apple having to accommodate T-Mobile,
19:34
well then I can kind of get it. And interestingly, it's coming
19:39
at a time where you had a lot of weird things this week between
19:44
the billion dollar convert, which could have just been
19:46
opportunistic, but it could have been something else, The Iridium
19:50
conference call, which was just bizarre.
19:52
It was total defeat by the management.
19:55
It's really worth a listen. And I haven't remembered a time
19:58
when I've heard a worst conference call by management
20:01
really just kind of saying like, well, yeah, our pants are around
20:05
our ankles right now and we're in public and aw, shucks, that's
20:08
embarrassing to have been caught.
20:10
Totally unprepared and I can think we have some value, but we
20:15
haven't really talked about it yet because we're not smart
20:16
enough to have communicated to people about our company and we
20:21
think that our business probably will last until 20-30.
20:24
But after that, I don't know. And that's a kind of a summary
20:27
of the call. It was really just bizarre.
20:31
As a side note, This is why you want to invest in founder LED
20:34
companies. This is just a case study of
20:37
what happens when you have finance guys run a business that
20:41
requires innovation. They went into CapEx holiday.
20:44
They got drunk on this silly concept of we'll just do capital
20:48
return and that will drive, you know, drive the stock higher.
20:52
Well, that works for a time. But when you have a competitive
20:54
industry full of change, if you're not reinvesting in your
20:57
business, all you've created is a cigar butt.
21:00
So those share repurchases aren't going to do a whole lot
21:03
if your business goes away in five years.
21:05
You know, those dividends are are great, but again, you can't
21:08
maintain them when your business goes away in five years.
21:10
And so now they're, you know, doing the the obvious
21:15
roundabout, but you have that, which is interesting.
21:18
And they they talk about space XA million times on the call,
21:21
but they never once mentioned AST space mobile, which is one
21:25
of those things where the silence is, is really deafening.
21:32
And then he had Global Star out there with a rumor, you know,
21:35
we're going to sell the company for $10 billion.
21:40
What makes you wonder? Nothing is ever really random in
21:43
life. And so my theory is that ASTS is
21:48
going to do something like a spectrum lease agreement with
21:51
Iridium, which would would be smart thing to do for Iridium.
21:55
They have spectrum that's not being utilized.
21:57
They don't know that they really have a hope to do it.
21:59
I think their best bet is to do what Charlie Ergen did and sort
22:02
of create, create a spectrum holding company, run, run off
22:06
their existing business and then get some equity in ASTS and
22:10
their spectrum was to fight another day.
22:12
That's one thing they'd be going on.
22:15
Another thing that would be awesome is if ASTS is about to
22:19
buy Globalstar. And so I don't know how you kind
22:22
of fix the Apple contract because you want the spectrum
22:26
really unencumbered. You don't want to be giving 85%
22:30
of your capacity to Apple for that service, but it would be
22:33
cool to provide the emergency services for Apple.
22:38
Grab all the S band spectrum, grab the cash flow, nuke the
22:44
obligation for the replacement satellites because you obviously
22:46
don't need that and I could I could see either one of these
22:49
deals. Being.
22:52
Realistic and and and frankly being a stroke of strategic
22:57
genius for AST Space Mobile. And because it would get you all
23:01
of a sudden global spectrum rights, potentially a bunch of
23:04
near term cash flow that then you can really high grade easily
23:07
on your own constellation. So you're basically just buying
23:10
a book of business that you could probably 10X just within
23:13
that customer base. And you also then just clean up
23:17
the market. 1 less chatterbox making false claims about being
23:21
an actual competitor. And so a lot of stuff going on
23:25
last week that makes me believe something is happening.
23:28
And when you look at AST Space Mobile, I mean, the jury's still
23:30
out. Do we have a Mark Zuckerberg at
23:34
the helm here in terms of being able to create hundreds of
23:38
billions of dollars to M&A? It's an interesting thing.
23:40
No one ever really thought of Zach, you know, 15 years ago.
23:42
No one ever really thought of him as, you know, the world's
23:44
best M&A guy. But but he is.
23:49
And what we have with AST Space Mobile, with Legato so far, you
23:52
know, early, but looks to be a masterstroke.
23:56
And I'm starting to see some angles here where you, you know,
23:58
might not seem obvious is, you know, hey, AST, you have this,
24:01
you know, incredible innovative growth company.
24:03
Why, why the hell would you want to go buy Iridium or Global
24:06
Star? But when I squint, and I'm not
24:08
an expert on those companies, but when I squint, I can see
24:11
some real strategic genius where the market would wake up and go,
24:13
holy shit, these guys just moved six spaces faster on the chess
24:19
board than we had anticipated. All of a sudden, you know,
24:22
again, buying these commercial portfolios, getting in this
24:25
global spectrum could be super cool, but I'll leave that to the
24:29
professionals to see if that's actually A, you know what, what
24:33
makes sense and B, what they can pull across the finish line.
24:37
We also have just another example of just how quickly this
24:41
market is developing. We have some news out of Japan
24:45
about what looks to be the groundwork for a Japanese first
24:49
net. And so eight of the major
24:51
carriers are seemingly getting together creating A cooperative
24:57
disaster relief system. And they're starting to test on
25:01
spectrum. And so we had some people
25:02
highlight to meet in in retalia. For one, flagging to me, you
25:07
know, there's some interesting frequencies that are being
25:09
tested. Make sense that the rest of the
25:11
world is going to follow the US for disaster relief.
25:14
Japan has this problem in spades with tsunamis and things like
25:18
that. And then a lot of remote
25:19
populations on islands, you know, fantastic thing for them
25:23
to roll out. And AST Space Mobile is going to
25:27
be right there to offer a solution.
25:29
And it really answers the why now question.
25:31
And so why now would all these countries and continents be
25:35
rolling out these new disaster relief systems?
25:38
Well, because now there's technology that offers truly a
25:41
unique way to solve this problem.
25:44
The initial way the US solved the problem after 911 is to
25:47
build a redundant terrestrial network that has its own
25:51
problems. Now you can address emergency
25:53
response sort of in hyperdrive where the cost, even the ASTS
25:59
should be a very low cost solution where cost is really
26:02
not the question. It's reliability of being able
26:08
to provide a service when you need it most.
26:10
And and that's the the why now this is exciting and I would
26:14
expect to see a lot more of this.
26:16
So let's go back to the convertible bond.
26:19
And so we had some interesting analysis just on the language in
26:25
the inventure. And so we have a keys that are
26:31
really nice analysis. This is under the tweet on my
26:35
tweet thread of convertible bond language change.
26:37
And this first thing goes through with the lawyer.
26:42
So lawyers are good for the step analysis and goes through the
26:45
the change in the disclosure from the old convertible bonds
26:49
to this one. And they wrote that the use of
26:53
proceeds is to fund development of its global constellation to
26:57
expand its space mobile service into incremental strategic
27:00
markets. They could have just said
27:03
general corporate purposes. So why the change?
27:07
Well, you change something because you either have to or
27:12
you really want to. But the default thing would be
27:16
don't change it because you generally don't have to change
27:18
from general corporate purposes. That's pretty clear.
27:20
And so the, the company's trying to tell us something and they
27:25
know we they know we would do this type of analysis.
27:27
So you can, you can say, well, OK, they're sending us a message
27:30
in a bottle. What is that message?
27:32
Incremental strategic markets. And so this to me could be
27:37
consistent with the M&A. There are a lot of incremental
27:41
strategic markets. For example, being an emergency
27:44
service provider to Apple would be a incremental strategic
27:48
market. Wouldn't that be exciting?
27:51
I could see Golden Dome, which might have its own captive shell
27:55
of satellites which they have to fund upfront.
27:58
We'll get to that in a second. That could be the case.
28:00
But it is something and hopefully we'll find out soon
28:04
what that is. But the company is trying to
28:06
tell you that this that there, there is something, there is a
28:11
pot of gold at the end of the pot here.
28:13
And so now let's talk about Golden Dome.
28:15
Golden Dome is a big project, but it's also a complex project.
28:21
So there's some interesting articles that came out this
28:23
week. And thank you for those who sent
28:25
sent me these articles. So Golden Dome's rapid timeline
28:29
collides with industry funding fears.
28:32
And so the problem with Golden Dome is they're using this
28:37
hybrid architecture. They're trying to use commercial
28:40
systems. As.
28:43
As the fence systems, but then you're not having the same
28:48
funding mechanisms as many defense contractors would
28:51
normally expect until a quote in the article.
28:54
Participants may have limited opportunities to recoup funding
28:57
via prizes awarded for completing certain gates or
29:00
demonstrations along the way. And so, quote, Such a proposal
29:05
is a tough sell, particularly for smaller companies with
29:07
promising but still emerging technologies or for those that
29:11
must justify their investments to shareholders.
29:14
And so they're making the companies fund these upfront,
29:19
which in a way could be actually great news for us because right
29:22
now we have access to capital in spades.
29:26
And so we're finally in the position where access to capital
29:30
is a competitive barrier or previously had been, you know,
29:32
something we're really worried about.
29:34
And Golden Dome seems to be one of these things where you are
29:39
going to have to take some capital risk to get into the
29:42
main running of it. And we're extremely well
29:45
positioned to to do that. Our tech obviously is
29:47
incredible, but now our ability to take some more merchant risk
29:50
on this is is also available in no small part to that
29:54
convertible bond. And then you know, the casual
29:57
quarter of a billion dollars we raised that no one noticed on
30:01
the ATM as the stock went from I think when the ATM was announced
30:05
it was like $72 and the stock ripped to 102.
30:08
And it just goes to show you now that anyone that sells the stock
30:12
on an ATM announcement is. Really.
30:15
Really not thinking that well and and the money is very
30:19
valuable. So then we also have another
30:22
really interesting find this week, which goes into, you know,
30:26
track the talent and so ASTS out of VPM engineering for federal
30:32
programs. And so Alan Chip Walcott is now
30:36
VP and Chief engineer of federal programs for the company.
30:40
He previously been director of radar technologies at General
30:45
Atomics. He had been a Raytheon for 22
30:49
years, chief engineer, missile defense programs.
30:54
If only the title of his job told us his expertise.
30:57
I mean, what possible duties could fall under chief engineer
31:01
of missile defense programs at Raytheon?
31:05
I don't know, Might have to run that one through ChatGPT.
31:08
And so the type of people that are being hired at ASTS could
31:12
not scream louder for Golden Dome.
31:17
So. You know you've been warned.
31:20
And then not to be left out, music, quick sip of water.
31:24
Is that cough Mexico. So there was a really
31:30
interesting deal that looks like a wholesale deal for Spectrum in
31:34
Mexico. What we know about Mexico is the
31:38
company has had a focus on this area for many, many years.
31:43
We just mute real fast while I cough.
31:51
All right, I'm back. They are where ASTS is working
31:58
with a company called Altman Reddis Mexican Public Private
32:01
Initiative. We just try and coverage in
32:04
Mexico. And so they've got a lot of
32:08
spectrum and now they're going to start testing on it.
32:10
And so our belief is that this is going to be a way to access
32:15
the MN OS in Mexico. We, we do know that the company
32:18
has had, you know, some sort of relationship with Carlos Slim in
32:24
America Mobile. And we know that Carlos Slim
32:28
does not like Elon Musk cause Elon Musk call him a drug
32:31
dealer. And so reason stands it on any
32:34
given day, we could expect to sweep Central America, which
32:38
would be very exciting. But just more behind the scenes
32:43
that show you the scope of our opportunity and the continued
32:47
sort of gathering one way or another of spectrum.
32:54
And then we also going back to the defense, Fairwinds is great
32:58
because they really just kind of tell you how it is.
33:01
And so we have Tanner finding a really nice article today or I'm
33:04
sorry this week with some Fairwinds people and they just
33:10
talk about how they're going to bring Asts directly to the
33:14
Warfire. And so quote, Fairwinds
33:18
technology is partnered with AST Space Mobile to advance this
33:21
technology within the military. We recently learned these are
33:26
testing in Hawaii, the Valley being pushed to cell phones,
33:29
which is a real game changer in the industry.
33:32
We don't have to carry such large equipment anymore and it's
33:35
available anywhere in real time. Well, there you have it.
33:40
And so the military business is going to be pretty exciting.
33:46
So then we talked a little bit about radium earlier.
33:50
And so, you know, let's just watch this because they have I
33:52
think it's 10 megahertz, I forget the exact, but they've
33:55
got these S band assets and you know, you have link in Omni
34:02
space now merging with SCSI, don't know where that's going to
34:05
go. But you're kind of you're seeing
34:07
people kind of realize they have to make some moves.
34:11
Iridium is a company that I think has some major strategic
34:15
challenges ahead of them. Stock market is telling you
34:17
that, management's telling you that.
34:20
And I still think that there's probably something to do with
34:24
ASTS. It's, it's now not a very big
34:26
company, $2 billion market cap. And so you could see ASTS buying
34:33
them for cash in stock. And, and frankly, what's crazy
34:35
is that ASTS wouldn't even miss a beat.
34:37
And then there'd be, you know, just imagine a, a broader
34:41
corporate takeover just for a minute.
34:43
And so let's say that were, you know, a billion dollars of cash
34:47
and then call it $2 billion of stock for you know, a 50%
34:51
premium for Iridium that would get them back to the trading
34:54
price. So if you know earlier this year
34:57
and then you wake up tomorrow and ASTS as worldwide S band
35:02
$500 million of EBITDA for narrowband service that they're
35:06
going to be able to roll over all those customers to very,
35:09
very different services over time.
35:12
I think that could be really exciting.
35:14
I think the spectrum alone, the, you know, the value use of that
35:18
spectrum for Asts would be worth multiples of the Iridium stock
35:21
price. And then in the meantime, while
35:23
while you're waiting, you, you have the $500 million, which
35:26
sort of buys down your deal price pretty quickly.
35:29
So it, it is interesting what happens as this industry flips
35:34
so quickly. You know, you are, I think seem
35:37
kind of a lot of parallels to what happened with the
35:40
hyperscalers with like Google arriving on the scene and all of
35:43
a sudden, you know, they start buying double click, they buy
35:46
YouTube, they buy Motorola Solutions, things like that.
35:51
You know, some of these older legacy companies, YouTube's
35:54
obvious not a legacy company, but some of these things tuck in
35:57
on these platforms and are then worth, you know, exponentially
36:01
more than they could have ever been worth by themselves.
36:04
And I think we're seeing history repeat.
36:06
And we had a talented C-Suite at ASTS.
36:11
You know, think about Scott, he's a banker and a good one and
36:16
a Bell has done M&A before. So I'm starting to be pretty
36:19
optimistic that we might again really be able to flip the
36:23
script on the speed at which the value creation happens.
36:27
Not that AFDS needs to do any of these, but I ain't Logato deal
36:30
again showed us just what's possible where you wake up one
36:34
day and you know you're happy with your M&O strategy for
36:36
spectrum, but then you have the opportunity to have 45 megahertz
36:40
of premium spectrum in the US and you go, holy crap, that's a
36:44
game changer. And then look at how fast the
36:46
industry just went. Oh my God, look at how these
36:49
satellite companies can now bring so much more to bear with
36:52
the M and OS. And so just keep, you know, keep
36:56
some mental flexibility on how fast a a Super Bowl case can
37:00
emerge with smart M&A. When you really think about the
37:04
value of something stand alone versus the value at use.
37:09
So maybe some big things will be happening.
37:10
You know, they call it merger Monday for a reason.
37:12
And the stock, let me just check where it was, Dude.
37:14
It was kind of ripping again overnight.
37:15
I was kind of surprised because I thought we'd still have some
37:18
panic insurance, you know, seen some SpaceX news and you know,
37:20
whatever. You know the.
37:23
Silly people are usually deprived of their shares.
37:25
But you know, I saw before I started this call the stock
37:28
versus up like 4 or 5%. And so it's almost like people
37:32
are conditioned now whenever they see the SpaceX kind of fake
37:35
articles come out, people know that that's just that's just
37:38
SpaceX front running some awesome news from ASTS.
37:41
That's certainly been our experience.
37:44
But then also if anyone's looking to get up to speed, the
37:48
report by Crossroads is is really great.
37:51
So I've linked that out. I found actually the full PDF so
37:53
you don't have to deal with the sort of gated way the crossroads
37:59
put it out. So that full report is there.
38:02
And then we had a really great spaces from and Pan man, this
38:07
guy Trone who wrote an incredible letter the other day,
38:11
I really enjoyed his shareholder letter to his own LP's and then
38:15
also with Ryan O'Connor of Crossroads.
38:17
So this is a 2 hour spaces that was done on Friday.
38:22
And then finally, we had B Riley showing up the winners that they
38:26
are increasing their target price to $95 from 60.
38:32
And just noting that the convertible bond quote removes A
38:35
funding overhang, which I don't think really was a funding
38:38
overhang. But now the the balance sheet's
38:40
just so bulletproof that people know these guys can go the
38:45
distance without having to come knock on doors unless they want
38:48
to. And I would dial this in as you
38:50
know also. Former for full.
38:53
ATM and so while there's a restriction on them using the
38:57
ATM 15 day care, remember a couple days just to give a hold
39:03
on guys, it stays the hedge. You know, I would imagine they'd
39:08
probably bang her or and then you'd be looking at your pro
39:11
forma cat. Gosh.
39:13
By Christmas out of you know, potentially Masabenos like the
39:18
three horse, which certainly gives the company all the
39:22
flexibility they need to push really aggressively on on growth
39:28
initiative. Previously they would have had
39:29
to rationalize, and I think one of these big opportunities is
39:33
going to be government work. So that's what we have.
39:37
Sorry for the port connection, the beginning of the spaces.
39:41
I heard from people just in the chat that it's back to
39:44
choppiness, so maybe that is a good reason to end the call.
39:48
Not quite sure why my internet's kicked out, but I hope everyone
39:51
has a great rest of your Sunday and a great week.
39:55
Bye. Thanks for listening to the AST
40:01
Space Mobile Podcast. If you enjoyed this episode and
40:04
you'd like to help support the podcast, please share it with
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others, post about it on social media, or leave a rating and
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review to catch. All the latest news.
40:13
About AST Space Mobile, make sure to subscribe.
40:16
Thanks again and I'll see you next time.
40:22
We're doing something. Very, very big and I think with
40:24
this technology we can really affect billion lives AFT space.
40:28
Nobody is the only company that has fluent technology to deliver
40:33
cellular broadband connectivity directly from space to the
40:37
everyday smartphone. People will just basically turn
40:40
their phone and be. Seamless.
40:42
But regardless of where you are, we don't want the user even to
40:45
know that it's connected by satellite.
40:47
Our role. Is to bring this into reality,
40:50
always in partnership with the animal.