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Greenhaven Road Capital Investor Letter · AST SpaceMobile Podcast

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  This is a text to speech podcast episode read by Google Cloud AI
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  Original Source LinkedIn The podcast description Source
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  Greenhaven Rd. Capital New Investment.
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  AST Space Mobile Among the companies in our portfolio, AST
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  Space Mobile presents the widest range of potential outcomes.
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  AST is developing a space based cellular broadband network using
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  a constellation of satellites that will communicate directly
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  with unmodified smartphones using the same cellular bands as
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  terrestrial towers. If successful users will never
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  be out of cellular range. Their network will provide
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  coverage in areas where traditional cell towers cannot
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  reach, enabling users to stream Netflix in the middle of the
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  ocean using their unmodified iPhone.
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  Market Opportunity The market AST is addressing is enormous,
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  encompassing military applications, first responder
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  services, primary mobile Internet access and wireless
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  coverage for areas not currently served by land based cell
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  towers. The company plans to launch 248
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  satellites into low Earth orbit. Each satellite unfolds like an
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  origami creation to reach 700 square feet in size, half a
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  basketball court. The combination of low Earth
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  orbit proximity, satellite size and hundreds of patents enables
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  high speed voice and data connectivity from unmodified
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  smartphones. Strategic Partnerships.
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  AST will work with existing telecom companies leveraging
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  their broad reach spectrum billing systems and customer
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  support infrastructure. Current partnerships include
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  AT&T, Verizon, Google, Samsung, Vodafone, Rakatan and dozens of
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  cellular network operators that collectively reach more than 3
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  billion people. Current Status The company
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  currently has five satellites in orbit that are effectively proof
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  of concept and for testing. Their plan is to launch an
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  additional 60 satellites by the end of Q12026 management
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  projects. They will reach cash flow break
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  even excluding growth CapEx by the end of 2025 when they have
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  25 satellites in orbit. The revenue ramp should be steep
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  in the back half of 2025 as satellites come online.
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  The company has approximately S 1.5 billion in cash to fund
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  their next growth phase. Competitive landscape Starlink
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  is often cited as a competitor and has a partnership with
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  T-Mobile. However, Starlink entered the
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  direct to consumer space via acquisition and their current
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  T-Mobile service is limited to texting.
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  Similarly, Apple offers a satellite service with very
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  limited capability that remains free to users.
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  The market is large enough to support multiple players.
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  ASTS primary differentiation is their satellite size, which
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  provides both higher capacity and broadband capability on
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  unmodified phones. Defense opportunities.
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  There is potentially a very large government business
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  opportunity. One of Trump's executive orders
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  called for creation of a Golden Dome, directing the Department
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  of Defense to develop A next generation missile shield.
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  Trump's recently passed Big Beautiful bill provided $25
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  billion in funding for the Golden Dome, with AST and
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  Starlink cited as potential vendors.
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  ASTES role in the Golden Dome is not yet formalized, but there
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  have been indicators suggesting it could be significant.
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  The company can also provide GPS alternatives valuable to the
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  military where GPS is susceptible to jamming.
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  First Responder market. AST is also partnering with both
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  AT&T and Verizon on their first responder offerings.
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  This partnership will provide .11 coverage in national parks
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  and other areas with limited cell tower coverage.
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  While commercial details are not public, defense and 1st
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  responder applications are expected to provide the best
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  monetization of limited capacity during the initial years when
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  capacity constraints exist. Market sizing and economics
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  Given the early stage nature of the business, pricing and
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  adoption rates remain speculative.
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  Carriers will likely segment their markets with tiered usage
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  at different price points, catering to off grid residents
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  and outdoor enthusiasts at the high end and Peace of Mind
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  subscribers at the low end. Demand will also vary by
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  geography, with some regions like continental Europe having
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  better existing cell coverage than others.
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  Through current partnerships, AST has reached to nearly 3
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  billion subscribers globally. Many are in markets that will be
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  difficult to monetize at high rates, but focusing on the US,
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  Canada, Japan, Australia and Europe yields over billion cell
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  phone subscribers. Accounting for duplicate
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  subscribers, the numbers become compelling with greater than two
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  degrees penetration in these markets.
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  Before considering defense and 1st responder opportunities, the
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  economics become very attractive assuming higher adoption rates,
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  pricing, margins and valuation multiples.
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  Given the market size, various scenarios can generate
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  substantial free cash flow projections.
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  I am confident that if the technology works and achieves
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  modest adoption, the financial model will be successful.
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  However, given the wide range of possible adoption rates,
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  potential pricing, margins and investor multiples, presenting a
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  single scenario would imply a level of precision and
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  confidence. I do not possess investment
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  rationale. Many scenarios support
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  significantly higher valuations. This business has attributes
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  conducive to fast growth leveraging existing mobile
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  network operators, customer bases, AT&T, Verizon, etcetera,
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  as well as the billing and customer support infrastructure.
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  The company will also leverage existing hardware, requiring no
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  specialized hardware purchases from consumers.
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  ASTS share price has more than doubled since our initial
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  purchase, which began as a smaller starter position that
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  has grown through appreciation and additional purchases.
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  While AST carries more regulatory and execution risk
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  than our typical investments, it also possesses several
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  attributes. We seek high insider ownership,
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  CEO owns over 30% recurring revenue potential and operating
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  leverage due to very low variable costs.
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  Additionally, the outcome is potentially very asymmetric with
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  substantially more upside than downside.
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  I believe that it has a high expected value, albeit with a
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  very wide range of outcomes and uncertain timing, but multi year
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  runway acknowledgement. The AST investment would not
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  have occurred without Ryan O'Connor at above of Gods of
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  Crossroads Capital who flagged this opportunity for me in Omaha
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  at the Berkshire Hathaway meeting.