Latest / AST SpaceMobile Podcast / Fireside chat - Scott Wisniewski speaks at the UBS Global Media and Communications Conference

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Fireside chat - Scott Wisniewski speaks at the UBS Global Media and Communications Conference · 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.
0:28
Hi everyone. I think we'll get started.
0:30
My name is Kurt Scholl and I'm with the Communications and
0:32
Media Research team here at UBS. Today we're pleased to have
0:35
President and chief strategy author Scott Wisniewski from ASC
0:38
Space Mobile. Just before I get started, I
0:40
need to quickly read. As a research analyst, I'm
0:42
required to provide certain disclosures relating to the
0:44
nature of my own relationship and that of UBS with any
0:46
company. I wish I expressed a view today.
0:48
These disclosures are available at www.ubs.com/disclosures.
0:52
Alternatively, please reach out to me and I can provide them to
0:54
you after the presentation. So maybe starting off, Scott,
0:58
it's been another very eventful year for the company.
1:00
Maybe just kind of recap over the key milestones for AST in
1:04
2025 and what are your priorities as you look out into
1:06
2026? Sure.
1:08
And thank you very much for having us.
1:10
So 2025 has been a fantastic year.
1:12
It's very much built on 20/23, which was about technical
1:16
demonstration, 2024, which is about partners and 2025 has been
1:20
about about about scaling the business.
1:22
We've done that with a lot of capital raised, 2 to $3 billion
1:26
raised over the course of the year.
1:28
We've got our manufacturing plant almost up to rate as well.
1:31
That's very important because we're a vertically integrated
1:33
story and which means we control the input to production and can
1:37
move fast and innovate and keep that low cost.
1:40
And we've also added additional partners, put a couple
1:44
definitive commercial agreements in place, including with Verizon
1:47
and Study Telecom Group. And for the first time as we
1:50
exit the year, we're having revenue guidance in place for
1:54
the second-half of the year. And we've guided to over a
1:57
billion dollars of committed revenue as of our last earnings
2:01
call. So it's been a real exciting
2:03
year to scale the business across commercial strategic
2:07
capital and manufacturing. And on top of that, we were able
2:10
to kick off a lot of excitement this year around MSS spectrum
2:14
with our long term rights access agreement that we put in place
2:19
last January. And that really secured for us
2:22
additional spectrum within our four walls, a real strategic
2:25
asset that we didn't have before to complement our cellular
2:28
strategy. Maybe we can just start with the
2:31
launch calendar. Can you just give us an update
2:33
where does the launch cadence flow for Bloomberg Bluebird 6:00
2:37
and 7:00 here in the coming weeks?
2:40
So we're at a fantastic moment where we're deploying network.
2:43
You know, I think we've spent the last decade building an
2:46
incredible new vertical within satellite and cellular industry
2:50
and doing it from scratch in the face of folks not believing it
2:53
could happen to suddenly being something that everybody talks
2:55
about. And that was a long journey.
2:58
But where we find ourselves today is that we're not talking
3:00
about the tech or even capital or even the customers.
3:03
We're talking about network deployment and services.
3:06
And so that's what it's all about now is we're deploying
3:09
network over the course of 2026, a launch every month or two.
3:13
On average, each launch will have up to 6 or 8 satellites on
3:17
it. And that will get us to our goal
3:19
of 45 to 60 satellites in order to offer commercial grade
3:22
service continuously in the United States, Europe and other
3:25
markets that matter around the world.
3:27
So that's the vision that's been the plan for about a year now.
3:30
We're executing on that vision and that is about to kick off
3:34
with our first next generation satellite launch out of India
3:38
within the next two weeks, one to follow shortly thereafter and
3:43
then up 13 launches total through the end of 2026.
3:47
And I think last earnings call you reiterated you expected 5
3:50
launches by the end of one Q. Can you just remind us through
3:53
the different rocket providers, how many satellites can fit fit
3:57
on each of the different rockets and what that might imply for a
3:59
number of satellites in orbit by the end of one Q?
4:03
Getting to orbit is a strategic topic for us.
4:07
We have the technology within our four walls and an ecosystem
4:12
that we've created with the operators to make cellular
4:16
service on a broadband basis available to the 6 billion
4:19
phones in circulation today. It's a very powerful tool that
4:24
we're deploying. And to do that we need to get to
4:27
orbit. And so our strategy there has
4:28
been to make our satellites compatible with all the major
4:31
heavy and medium launch providers out there.
4:33
And we've signed up launch contracts with three big
4:37
players, SpaceX, Blue Origin and Israel out of India.
4:41
There are other launch providers and more launch coming online
4:43
and we're compatible with all of them.
4:45
So for us managing that ride to orbit with multiple different
4:51
providers and buying an excess of launch under contract more
4:55
than we need to get to that 45 to 60 number has been our
4:58
strategy all along. And you'll see us on each of
5:02
those operators. We're going to have one
5:03
satellite on our first rocket with Israel here in the coming
5:06
weeks. We'll have 3 or 4 satellites
5:09
over time with SpaceX, and we'll have 6 or 8 satellites over time
5:13
with the Blue Origin New Glen rocket.
5:15
And you mentioned the different launch providers.
5:17
Can you just talk a little bit about the flexibility you have
5:19
as you try to work towards that 45 to 60 satellites by the end
5:22
of next year? Do you have the ability to pivot
5:24
between the different providers? Any color there would be great.
5:28
The short answer is yes. I joke with my friends in the
5:31
launch industry that they have a tough time with their customers
5:33
because they're basically a venture capitalist.
5:35
It's hard to know when people will be ready to go to orbit.
5:37
And the great thing about us is we plan to launch more on edge
5:42
to space in the next couple of years than pretty much anyone on
5:45
planet, with the exception of two or three players.
5:47
So being able to do that and do that with a vertically
5:50
integrated strategy means we're not waiting for some prime to
5:53
give us a notice quarterly. We're not waiting when the
5:56
satellite's up in orbit to see if it's going to unfold properly
5:58
or not. Our founder who has 80 million
6:01
shares and folks works on this 24/7 is there with the satellite
6:05
suits and nuts along with an entire very big team that's done
6:08
this multiple times before. So for us, getting that right is
6:13
incredibly important, being in a position to have multiple
6:18
stacked options with multiple different providers so that we
6:21
can hit our cadence with a lot of extra cushion in the system.
6:26
Is there a strategy and we'll continue to push on that
6:28
strategy over the course of 2026 and 2027.
6:31
And I think the the first block 2 satellites have a little bit
6:36
later than maybe first envisioned.
6:38
Can you just talk about what drove this ship, this just
6:41
natural growing pains and once you get past the first block
6:44
tube being launched it do you have confidence that there's not
6:47
going to be any sort of bottlenecks that materialize
6:49
here over the next? 12 months, yeah, we've been very
6:51
fortunate that for a lot of reasons, some or are making some
6:56
not, we're not really exposed to supply chain issues that you see
6:59
across strategic industries. On our last launch a year ago,
7:02
we did have some slowdowns based on two different component
7:05
systems, but we're able to bring those in house.
7:07
So those are now resolved. And so in terms of rolling out
7:10
our next satellite, which is the largest ever communications
7:14
array put into low Earth orbit commercially and three times
7:18
larger than our prior, which was the largest in of itself, being
7:23
able to do that is something that we could uniquely do
7:27
because one, we're vertically integrated and two, we actually
7:30
use many of the same components from the first program.
7:32
So by not changing each program, we've been able to move fast and
7:36
basically updating a program with a 3X larger satellite in
7:40
about 12 months time is pretty unprecedented in the satellite
7:43
industry. So the factory is now nearly at
7:46
pace. The staffing and floor space we
7:49
need for that is in place and we've already started to think
7:52
ahead, including acquiring a fourth site in Midland, TX where
7:56
we're based that'll be focused exclusively on our microns,
7:59
which is our solar panels and components, which are applicable
8:03
for any satellites we build and many other applications.
8:07
You mentioned the new ASIC trip will be incorporated into the
8:10
satellite starting in one Q, Can you just remind us what that
8:13
does for the total processing power and capacity on the?
8:16
Block 2 satellites. So there's a number of
8:21
challenges in deploying this architecture and orbit that
8:24
we've overcome. The principal ones are making
8:29
the phone wait. You know, phones are keyed for a
8:31
tower that's a couple miles away.
8:33
So the speed of light is just too slow in space.
8:35
So we solved that problem a number of years ago.
8:39
Another is managing the narrow airwaves in the cellular
8:42
industry. This is not satellite band where
8:44
you have 100 megahertz and 20 megahertz guard bands.
8:46
You've got 5 megahertz back-to-back to back.
8:49
And by having our large satellite, we can manage the
8:52
interference so that we don't hurt AT&T's network, we don't
8:56
hurt Verizon's network, we don't hurt anyone else's network.
8:59
And being able to put that together is is really important.
9:04
And I'm sorry, what was the question?
9:07
So just remind us with the ASIC trip what it does for total
9:09
capacity and the total processor?
9:11
The ASIC doesn't solve those problems.
9:12
It solves the next problem, which is how do you continue to
9:15
scale and grow the business to hundreds of millions of
9:17
subscribers. And so the ASIC chip, we'll just
9:19
give you a progression. Our test satellite in 2022 gave
9:23
us 100 megahertz of processing power.
9:26
Our satellites that are in orbit now since late last year give us
9:30
1000, you know, 1 gigahertz of processing power.
9:33
Our 3X satellite basically gives us 3X BAT.
9:37
And now with the ASIC, we'll be able to get to our full promise
9:39
of up to 10 gigahertz of processing power per satellite.
9:41
So it's basically tripled capability of the satellite
9:45
apples to apples. And then you mentioned the
9:47
manufacturing milestone of reaching 6 satellites per month
9:51
by the end of the year. It seems like you're close.
9:53
So is it fair to say that these new facilities in Florida and
9:57
Texas, they're fully operational?
9:59
And it also feels like that pace is maybe a bit faster than what
10:03
you're launching now. You need to be at six satellites
10:05
per month or is eventually, do you anticipate that on an annual
10:09
basis you will be launching that many satellites going forward?
10:14
So one of the keys to our success is that we've run a lot
10:16
of parallel processes. So, you know, we're not waiting
10:20
for anything. If at some point some part of
10:23
the program slows us down, that'll be true.
10:27
But at the moment, no, we are getting to 6 satellites per
10:30
month and we're pushing on that very hard.
10:33
And the additional manufacturing locations that you mentioned are
10:37
two of several that we brought online in the last six months.
10:41
Those two are still ramping. So they're not actively
10:44
contributing, but what they're going to do is give us more
10:46
resiliency in the system and allow us to continue to produce
10:51
and pull efficiencies out of it as well.
10:53
There's a lot of what we do is we've thrown labor at things to
10:57
make them move faster to meet our timeline and, and, and, and,
11:01
and, and used the fact that there's very regular rigorous
11:03
testing on the ground to manage yield.
11:05
So even if something doesn't work, we find out through the
11:07
testing process and we we swap it out.
11:09
Going forward, what you're going to see is a highly automated,
11:14
very efficient set of organized manufacturing that allows us to
11:19
not only hit that 6 satellite per month target, but also have
11:23
flexibility to go beyond it and also flexibility to grow with
11:27
new growth opportunities ahead of us.
11:30
Maybe just shifting over to the commercial momentum that you
11:32
cited earlier, so over 1 billion of revenue commitments with your
11:37
carrier partners, over how many years do these contracts
11:40
typically run and how will these revenues ultimately be
11:44
recognized? So we've been very fortunate
11:47
from the beginning to have a really good following with the
11:50
operators. I think it's because we solve a
11:53
very real problem they have on the network deployment side,
11:56
which is how do you cover all of population globally with
12:00
terrestrial towers. It's an almost impossible task
12:03
and space is so well suited to it.
12:04
So from the beginning they've been in the room with us as part
12:09
of the conspiracy, building the technology, helping us on
12:13
regulatory, contributing capital on a on a group basis so that
12:17
everyone's contributing a little bit.
12:18
And this is very much a network for the operators there.
12:23
We're the partner of choice in the direct device build out.
12:26
They own 20% of our equity and sit on our board.
12:28
So the the operators collectively we have over 50
12:32
agreements and cover nearly 3 billion subscribers.
12:34
So our our ecosystem is profound and we're very excited about
12:39
that. And the last part of the
12:42
question. Just how did the revenues get
12:45
recognized and how long are these contracts typically like?
12:48
So as we've started monetizing or monetizing putting into
12:52
contract with definitive commercial agreements, these
12:55
relationships, we've I think our strategy is pretty much to sign
13:00
longer term contracts rather than short term.
13:02
I think our customers view this as infrastructure, even though
13:05
it's very much growthy at the moment and a new offering, it's
13:08
very much infrastructure, right. So you've seen that theme across
13:12
the board. So we've signed agreements for
13:13
five years, six years, 10 years and one for two years.
13:17
And those commitments you can think about, it's kind of, you
13:20
know, we're not going to give weighted averages, but, but
13:22
based on that layout, you know, pretty, pretty weighted towards
13:25
the front, I would say on average.
13:27
But you're going to see more of those from us and, and, and you
13:32
know that they're going to build up over time.
13:34
So but, but they're not back end weighted at all.
13:37
Those are those are definitely heavily weighted towards the
13:39
front. And I think in it was September
13:41
when you announced the new definitive agreement with
13:43
Verizon. Can you just help us understand
13:45
how did that agreement expand upon the initial partnership you
13:49
announced back in May of 2024? And how did this definitive
13:52
agreement stack up to prior definitive agreements in terms
13:55
of the revenue share elements or even just the go to market
13:58
approach that you're thinking? Sure.
14:01
So as we've built out the ecosystem, you know the
14:05
sacrosanct North Star has been a 5050 revenue share for add on
14:10
revenues. We want to be a growth engine
14:13
for the operators which typically operate in a more
14:15
mature industry, very valuable industries, the mature ones.
14:19
And so being a growth engine and a revenue source as opposed to a
14:22
cost center has always been our strategy.
14:23
So that 5050 Rev share has worked great for us.
14:26
We're dedicated to it and that's very important.
14:29
So all of our contracts layout that that revenue share as we've
14:34
expanded the relationships with the operators, these definitive
14:37
commercial agreements, they cover everything.
14:39
I mean, this is not a tack on tax texting service.
14:42
This is 100 plus pages bringing in 20 different cross functional
14:46
groups across the company, led by senior management to drive a
14:50
new product offering that that we we think it's going to be
14:52
worth hundreds, millions of dollars by customers.
14:55
So this is something that requires a lot of new thinking.
14:59
It's it it it pulls on historical roaming agreements,
15:02
but it's it's new thinking and and in that way very sticky.
15:07
It's complicated and that that we view that now having been on
15:10
the other side of a lot of these as a as a good thing for us.
15:13
And so we're going to continue to push through our customer
15:18
sheet and build out the initial markets that matter and those
15:23
who will have service in 26 and then from there.
15:26
And that's how we're going to structure and prioritize those
15:28
relationships. These agreements, they're not
15:31
only legally binding and provide minimum revenue commandments and
15:34
even significant prepayments in some instances.
15:37
They basically provide the vehicle through which we will
15:40
build a business together and really transform connectivity
15:43
for their users. And now that you have a few
15:46
definitive agreements in hand, are you finding that with your
15:49
other commercial partners that conversations are progressing
15:52
more quickly towards a definitive agreement?
15:55
Yeah. There's not an operator around
15:56
the world who doesn't want to meet with us and think about how
15:59
we can work together. The constraint has largely been
16:02
on us. We want to build out with our
16:04
partners, those who've been aligned with us, those who have
16:07
brought equity investment, minimum commitments, alignment
16:12
around spectrum strategies and prepayments.
16:15
And so that is our strategy. We're continuing to grow the
16:17
team in scale. You see that in Europe with our
16:20
joint venture with Vodafone that's going to allow us to move
16:23
into that medium and long tail faster than we otherwise would
16:25
have. But for US, 2025 was very
16:28
important to build out these initial agreements and build
16:30
consensus around what that market's going to look like.
16:33
And yeah, I expect a lot of these to come in 2026.
16:37
And then you also recently announced the the Saudi telecom
16:40
deal in October. Can you just talk a little bit
16:42
about the opportunity you see in that region and again, how those
16:45
terms might compare to some of your other relationships that
16:47
you have to date? Yeah, same, same type of
16:51
contract, very much built on the same principles of revenue share
16:56
and add on services, minimum commitments and prepayments and
17:00
we're very aligned. They are the leading operator in
17:03
Saudi Arabia, which is the largest cellular market and the
17:06
largest market in general in the Gulf.
17:08
They have a very, a broadview on businesses having made an
17:12
investment in Telefonica, growing a towers business and
17:15
they're, they're very forward thinking in how they, they look
17:18
at telecom and, and, and how they can support it with their
17:20
connectivity. And I think they think of us in
17:22
the same day. So we, this agreement is built
17:26
around their core market of Saudi Arabia, but it's across
17:31
various markets in the Middle East and North Africa region.
17:34
And this is something that from from the board on down, they
17:38
they feel very strongly about and we're really excited to have
17:41
them as their partner in the region.
17:43
And then maybe shifting over to the government side, I think
17:45
there's been a lot more headlines around the government
17:47
opportunity for your business here in the past year.
17:50
Can you just remind us how you're thinking about the Tam
17:52
and the types of use cases that AST might be well positioned to
17:55
target? So when we first went public,
18:00
government wasn't really part of our story.
18:02
But if, if if we had a story that didn't have the US
18:05
government, it would be the first space story ever.
18:07
So it's not surprising how things went out and over the
18:09
last three years, it kind of gradually integrated into our
18:13
our story and our revenue stream and, and today are a majority of
18:16
our initial revenue. So at the end of the day, what
18:19
we can do is deploy more power to orbit faster and cheaper with
18:26
larger arrays than anyone in the history of civilization.
18:29
So that is a very valuable tool for connecting 6 billion people
18:34
who go in and out of coverage as well as doing all the normal
18:39
communication stuff that the US government does.
18:41
Whether it's upgrading legacy services from from the last
18:46
millennia or it's moving towards more programmatic buys of
18:50
standards based services so that the troops always have
18:53
connectivity or have redundant connectivity.
18:56
All the way to enabling new devices, headsets, wearables
19:00
that are low profile, that look and feel like a cell phone, but
19:03
can enable next generation capabilities or drones.
19:06
And so there's a lot of communications capabilities that
19:09
we're going to enable. And then there's the non
19:12
communications capabilities. So because these are the largest
19:16
arrays deployed commercially and very close to the largest arrays
19:22
ever deployed and definitely the largest ever deployed at this
19:25
cost level, we can do other things with our frequencies,
19:30
including radar that support a lot of very strategic
19:34
capabilities for the US government and and its allies.
19:39
So that is what's brought us into the Golden Dome
19:43
conversation as it's evolved over the past year where we see,
19:47
you know, we had a very positive U.S. government investment space
19:49
backdrop over the last five to 10 years.
19:51
But with this year, it's really accelerated.
19:54
There's currently $150 billion RFP open for a lot of the stuff
20:00
that's involved. We'll be involved with Golden
20:03
Dome over time. These are really big use cases
20:08
that are really relevant where the government is looking for
20:12
dual use capabilities, which means government services, free
20:17
riding or riding on commercial investment, which is what we
20:20
are, as well as avoiding vendor lock, which means you're not
20:23
stuck in a, you know, a contract with one prime for a decade
20:28
because you've made some investment you want a dual
20:30
source of. So managing dual use
20:32
technologies and or deploying dual use technologies and
20:36
avoiding vendor lock are key strategies that AST Space Mobile
20:39
is in a perfect place to provide in addition to a capability that
20:43
we can offer that's never been offered before and can be
20:46
offered on the timeline of this administration.
20:49
I think within the government sector, the angle is usually
20:52
transitioning these initial use cases into programs of record.
20:56
What gives you confidence that some of these initial use cases
20:59
you're supporting for the government will turn into
21:01
programs of record? And what is the typical timeline
21:03
look for something like that? Yeah, We've talked about
21:07
programs of record before because it's a good way for
21:12
folks that don't traffic in the government industry to
21:14
understand how companies like us get big contracts and support
21:17
the US government. And so I think about a program
21:21
of record as over $100 million of revenue opportunity a year
21:24
and, you know, multiple use cases that we can support.
21:28
We've set up to 10 different use cases that we can compete for
21:31
over time. The way to think about this
21:33
cycle is usually a A2 to five year cycle depending on how
21:38
ingrained you are as a as a supplier generally.
21:42
And so some of these capabilities we've been working
21:43
on for multiple years and others are much more fledgling in early
21:47
stage. But we think that once we're
21:49
deployed, you know, at scale, the one thing to note is there's
21:55
only been 1 Leo constellation in the history of the world that's
21:58
gotten to the finish line without going bankrupt first and
22:01
both. And so, but the promise of
22:02
getting there has always been very strong if you could get
22:05
over the initial capital timeline and technical
22:08
difficulties which we believe we have at this point.
22:11
And so once you're built the the add on opportunities and the
22:15
marginal economics and barriers to entry associated with those
22:18
add on opportunities are profound.
22:20
And so we think that once we're at this baseline service
22:23
offering and low band globally that we'll be able to have a
22:27
number of these opportunities available to us and we're when
22:30
we're developing those in parallel to be to be ready.
22:33
Maybe if we shift over to the spectrum conversation, so it it
22:37
seems like your thinking has evolved hit a bit here since
22:41
when we first started speaking And so maybe just kind of talk
22:45
about why you think it's important for you to own your
22:47
own spectrum now as opposed to relying just on the carriers for
22:50
your capacity. So our strategy from the get go,
22:55
consistent with the partner ecosystem strategy I talked
22:58
about in developing the operators and developing the
23:00
system with them was using the spectrum because we wanted to
23:04
make their phones work better. We wanted to stand on the
23:07
shoulders of their investment in spectrum and building out their
23:10
customer base. And so naturally we had to solve
23:13
the problems and the idea of putting new spectrum on phone
23:15
seems like an insurmountable hurdle as well as the cost
23:19
associated with buying spectrum. So our service and our
23:22
capability and our technology is pretty uniquely set up to
23:25
capture the 1000 plus megahertz of low and mid band spectrum
23:29
that our operator partners own and deploy around the world
23:32
today. We can use it where they're not
23:34
using it and we can use it in an efficient way that gets more
23:37
value to them, more value to the regulator, more value to the end
23:40
user, the consumer, those of us who want our phone to work.
23:43
And so that is a really great strategy and having a lot of
23:47
power in orbit for the big satellite helps us do that even
23:50
on highly trafficked Airways. The Fast forward and you know
23:56
there's two big bands available in the world for mobile
23:59
satellite services, the L band and the S band.
24:02
And what we did earlier this year was we signed a long term
24:06
lease agreement for over 80 years to use 20 + 20 megahertz,
24:12
which is the majority of L band in the United States and in
24:15
Canada. the United States being the most valuable wireless
24:18
market in the world. So we've secured a very valuable
24:21
spectrum position that we can deploy in the years to come and
24:24
enhance the services for our customer, the M&O, which more
24:28
spectrum means more traffic, more subscribers, better
24:32
services and doing it in a strategic market.
24:35
We've also made taken steps to enhance that around the world in
24:37
different bands. But for us taking one of the two
24:41
in the most valuable market in the world has very profound
24:44
implications for how directed advice will evolve over over the
24:48
decades to come. And is basically how we with the
24:51
technology advantage today has secured ourselves in the decades
24:55
to come. When, when that, that, that
24:57
advantage may erode and, and you know, the industry becomes more
24:59
mature. So the simplest thing is we've
25:02
got this nice baseline of cellular spectrum and on top of
25:05
that we've added an own spectrum strategy that increases the
25:09
amount of services we can offer the more subscribers we can.
25:13
Maybe just to follow up on the S band deal you announced earlier
25:15
this year, you now have a a seat at the table to try to secure
25:18
these licenses on a country by country basis.
25:21
Where does that process stand? And outside of the US and
25:25
Canada, do you feel that you have everything you need from a
25:28
spectrum standpoint or could we see you be opportunistic to
25:31
secure other airwaves as well? We like our spectrum strategy.
25:35
The cellular strategy is a pretty strong one.
25:38
It gives us a lot of flexibility.
25:40
And outside the US and Europe, there's more spectrum more
25:44
available than you know you typically find in in our
25:47
markets. So it's a good strategy.
25:49
It's one where partnering with operators is key.
25:52
For instance, SPC has that span rights in Saudi Arabia
25:56
themselves. It's not owned by a satellite
25:58
company. So that is a strategy that's a
26:00
market by market dependent. It's a classic regulatory stuff
26:05
where you go and you bring your filing and you say, listen, I
26:08
can, I have network already deployed.
26:10
There's no build out requirement in terms of time or money.
26:12
And I'd like to offer services to your your citizens and help
26:17
them with work, travel, convenience and life and death
26:20
situations. And so that's a compelling
26:22
argument and one that we plan to take the regulators around the
26:27
world. In the US and and Canada, we
26:31
have our L band strategy. In Europe, we've formed a a
26:35
joint venture with Vodafone in order to participate in the
26:38
spectrum opportunities in Europe.
26:39
And then around the world, we expect other opportunities over
26:43
time to supplement our cellular strategy.
26:46
A frequent question we get talking to investors is about
26:49
competition in this space. Maybe can you just talk about
26:52
what you believe are the advantages your technology
26:55
offers versus what other players like a Starlink might be
26:58
bringing into the market? So we're standing up a new
27:02
market that could be worth 10s of billions of dollars.
27:06
It's basically making the $6 billion, six billion phones
27:10
around the world work when they don't otherwise work well.
27:13
And it's basically providing connectivity, which is a
27:17
lifeblood of society today, to people when their phone works a
27:21
little, doesn't work much and afford it.
27:24
There's no towers. You know, there's a lot of gaps
27:26
and cracks in these evolving and imperfect networks.
27:29
So that is a strategy that we think works really well.
27:34
What was the last part of the question?
27:36
It's all the technology you have compares to what someone like
27:39
Starlink is offering. And what advantages do you have
27:42
that maybe investors don't appreciate?
27:44
Yeah. Well, listen, we think this is
27:47
going to be a big market. So first of all, we're in a race
27:50
against ourselves to deploy this as fast as we can because the
27:52
operators that we're partnered with, over 50 globally, nearly 3
27:56
billion Subs amongst them. If we do a good job with that
27:59
group, we're gonna have a fantastic business and we're
28:01
very excited about it. We're partnered with two of the
28:04
three players in the United States.
28:06
We're partnered with Vodafone is the largest owner of Spectrum in
28:08
the world. Bell Canada is an investor,
28:11
American Tower is an investor. Google is an investor, racket as
28:14
an investor. So we like our playing field
28:18
very well and we believe that we are the partner of choice for
28:23
the direct to device industry. We play very well with partners.
28:26
We always have. It's very symbiotic.
28:30
And so the way we've built out the capability we're about to
28:33
start launching is we think we've done the right balance of
28:38
good for the consumer, good for government regulatory, good for
28:41
the operators and good for AST space mobile.
28:45
Our technology is broadband, which we think is the right
28:49
solution. It's, it's hard to compare
28:51
broadband with even voice, let alone text.
28:54
We're not talking about apples and oranges.
28:55
We're talking about apples and aircraft carriers.
28:57
These are, these are really different.
28:59
And and yes, we could have started with text 3 years ago,
29:03
but we went big out of the gate with broadband because we think
29:07
that's the the killer app for directed devices, cellular
29:10
broadband. So that's what you're going to
29:12
see from us launching next year, and that's what differentiates
29:16
us. But even still, we think it's a
29:18
big, beautiful new market that's going to have a lot of demand
29:22
and the operators need a solution.
29:23
And we think we're a fantastic solution for them.
29:26
We saw the the Echostar and Starlink announcement back in
29:30
September where they purchased a large amount of spectrum.
29:33
What implications of any business had for your business
29:36
and what what was your reaction to those headlines?
29:39
Well, it closely mirrored the transaction that we did in
29:42
January. There's basically 2 bands a
29:45
spectrum for this globally that are big.
29:48
One is L1 is F, We made one move in L and they made it some one
29:52
move in F So these are the two big bands that are available for
29:55
direct to device and these transactions cover the most
29:58
valuable market in the world which is the US.
30:00
So I think our view of that transaction was that one, it
30:05
validated that we had an important asset on our books and
30:08
it would make a good transaction. 2, that the market
30:13
is very healthy and going. It's going to be big in
30:16
expectation because otherwise the purchase price that was paid
30:19
for that spectrum would not make sense.
30:21
And 3rd, it will closely aligned us with the operators who we
30:26
plan to go to market with exclusively through the business
30:30
model that we described. So we're very and we think it
30:33
brought us close to the operators and enhance the value
30:35
of the asset we already had and it showed the value of the
30:37
market we're creating. I appreciate this question.
30:40
It's a little early, but can you just help us think about once
30:44
this constellation gets ill and you start to see the
30:47
monetization flow through the financials, how are you thinking
30:50
about the operating leverage of this business?
30:52
And maybe compare those that margin potential to what you see
30:55
from other satellite players that are public today?
31:00
So when you look through the history of satellite companies,
31:03
last 20 years when the businesses have been doing well
31:07
and growing, you see 85% margins for for wholesale businesses.
31:14
And when you dig into those companies even today where
31:18
there's attractive segments, there can be 90% plus marginal
31:22
economics, even a margin filter margins.
31:24
So for us, there's a big CapEx upfront.
31:28
We all know that. That's why we funded the
31:29
business the way we have. Once it's in orbit, very little
31:33
cost to maintain. There'll be a small maintenance
31:37
CapEx line item over time as the seven to 10 year cycle of the
31:42
asset is recycled. But our OpEx which is in the
31:46
Sixties, $1,000,000 per per quarter today might trend up a
31:51
little bit with growth. The opportunities we're seeing
31:53
are phenomenal, but if you're looking at that plus some lease
31:56
expense, you still have a pretty fixed market margin business.
32:00
We we have some revenue shares including with the operators,
32:03
but those will all come out of the before we get the gross
32:05
revenue on our back on our income statements.
32:07
So the flow through margin here and the operating leverage is
32:11
pretty, pretty special and, and, and, and we expect that to be in
32:18
excess of 90% overtime. And and you've made a lot of
32:22
funding progress over the past year.
32:24
I think on the earnings call you said you know how funding in
32:26
place to launch over 100 satellites.
32:29
As you look out into 2026, is, is it fair that we could still
32:33
continue to see you be opportunistic as you fund the
32:36
future business or is it going to be a little bit of a
32:38
digestion period there? So we've tried to be on our
32:43
front foot with funding since the beginning of the company and
32:48
be opportunistic and flexible and access different diverse
32:51
capital markets and and funding sources.
32:54
We've we've said, you know since early 2024 that we're really
32:58
want to develop our operator partnerships around prepayments
33:01
and minimum revenue commitments that could also support
33:03
financing efficiently. We've been doing that.
33:07
You see that accelerating including with a prepayment this
33:10
year of 175,000,000 as well as support from other other
33:15
operators over the course of the year.
33:17
And so we've been successful using the capital markets.
33:20
We think that the convert market in particular was very
33:22
supportive of us as a growth scaling company this year with
33:25
really unique and differentiated tech.
33:27
As we go into next year, you know with over 3.2 billion of
33:31
pro forma cash and and liquidity on the balance sheet, we feel
33:34
really well positioned for the opportunity.
33:36
And like we said have capital for over 100 million satellite
33:40
deployment, which is well in excess of our 45 to 60 target
33:43
for next year. And so we're gonna be reactive
33:46
and efficient, but management is very aligned with primarily
33:52
equity compensation, our founder and controlling shareholder and
33:56
24/7 support team. He's got 80 million shares and
34:01
doesn't take a salary. So we are organized around
34:03
maximizing the terminal value of the BCF.
34:06
And I think we're at a period now where you've pretty much
34:09
seen the major capital structure moves that we'll make and
34:12
everything else will be tidying up.
34:14
I think when we've talked about the the long term business
34:17
model, we used to talk about continuous coverage, I think
34:19
like 90 or 100 satellites. To to.
34:23
Meet your business goals, but if it's fair based on the demand
34:26
drivers you're seeing today, that your plans can go well
34:30
beyond 100 satellites over time. I think so.
34:35
So you know, we're building out a low band constellation now.
34:39
There's other frequencies that, that are relevant, there's
34:43
potential government constellations.
34:45
And once you've built out these shells, especially over time as
34:50
space gets more constellations, we think that we'll have a
34:55
really attractive position as an operator of a couple of these
34:59
very valuable shelves. And and what you see in
35:01
speculation in the market is what do you do when you have a
35:05
lot of power delivered to orbit in a very low cost fashion and
35:09
big markets in demand that support that and strategic
35:11
interest of governments to support that.
35:14
The add on opportunities are are really impressive and you see
35:17
that with all the data center conversations in the last week
35:20
or so. Whether it's communication
35:23
services, non communication services to the US government or
35:27
the next generation of commercialization of space,
35:30
we'll be in a great position to build that out.
35:32
Being vertically integrated and having this fantastic ecosystem
35:35
and then having an orbit architecture, I think that's a.
35:37
Good place to leave it. Thank you being with for being
35:39
here today, Scott. Appreciate it.
35:41
Very much. Thanks for listening to the AST
35:46
Space Mobile podcast. If you enjoyed this episode and
35:49
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about AST Space Mobile, make sure to subscribe.
36:01
Thanks again and I'll see you next time.
36:07
We're doing something very, very big and I think with this
36:09
technology we can really affect billion lives.
36:13
AFT Space Mobile is the only company that has full technology
36:17
to deliver cellular broadband connectivity directly from space
36:21
to do everyday smartphone. People will just basically turn
36:25
their phone and be seamless, regardless of where you are.
36:28
We don't want the user even to know that it's connected by
36:31
satellite. Our role is to bring this into
36:34
reality, always in partnership with the MMO.