Latest / AST SpaceMobile Podcast / Anpanman - Dancing with the Tiger: Starlink’s European Struggle and the Rise of AST SpaceMobile

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Anpanman - Dancing with the Tiger: Starlink’s European Struggle and the Rise of AST SpaceMobile · AST SpaceMobile Podcast

• 0:06
  This is the AST Space Mobile podcast.
• 0:10
  Where we just basically turn the phone be seamless, regardless of
• 0:14
  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.
• 0:27
  Everyone, thanks for joining this morning.
• 0:30
  I figured I'd do a short space here because there with some
• 0:34
  interesting comments that came out of T-Mobile at their
• 0:39
  presentation of Morgan Stanley's TMT conference.
• 0:41
  And then of course we did get some interesting comments as
• 0:43
  well from Deutsche Telekom CEO. And this is all in regards to
• 0:47
  Starling. So before I start, I, I did want
• 0:49
  to say obviously the market looks pretty rough out there.
• 0:53
  It, I think the economic numbers, it looks like jobs job.
• 0:59
  There was a, there was an estimate for positive jobs, but
• 1:02
  it actually came in negative, quite negative.
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  And so we're kind of we're in this environment where because
• 1:07
  of the the Iran conflict and of course oil spiking, the Fed
• 1:14
  potentially is is a bit hand tied because, you know,
• 1:18
  obviously folks are hoping for interest rate cuts.
• 1:21
  But then if energy prices continue to stay high and that
• 1:26
  drives inflation, then that makes it tougher.
• 1:28
  And so in a normal environment where these bad job numbers
• 1:33
  might have spurred the, you know, Fed governors to
• 1:36
  potentially cut rates, now they've got to be somewhat
• 1:39
  careful just given that energy prices are now spiking.
• 1:43
  And so we're kind of in this this no man's land where it's
• 1:46
  tough. And then, of course, the
• 1:47
  uncertainty of if the Iran conflict continues to go on for,
• 1:53
  you know, longer than expected period of time, and then the
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  uncertainty if that continues to unfold and, you know, expand
• 2:02
  beyond just a conflict with Iran, but then potentially
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  drawing in other Gulf nations. And so today, I think, you know,
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  you saw a negative economic, you know, economic numbers related
• 2:16
  to jobs. And then of course, you know,
• 2:18
  Trump, I think it was this morning tweeted that he wanted
• 2:21
  absolute unconditional surrender of Iran before they would stop.
• 2:27
  And then of course, you know, at that point he wants to put in an
• 2:31
  acceptable leader that from their perspective that they that
• 2:35
  that he would approve of. And so with those types of
• 2:38
  comments, you know, the market is, is not going to take that in
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  a positive way, obviously, because that if you're looking
• 2:47
  for absolute, unconditional surrender, that means probably
• 2:49
  that the conflict's going to keep going.
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  But I think it's important to keep in mind that Trump, this is
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  part of his brand where he will always come out with a very
• 2:59
  extreme position. And, and that's, that's how he
• 3:04
  negotiates, right? Like he, he will beat up, he'll
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  put up, put up something that seems impossible or the, the
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  party that he's negotiating against.
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  And whether that's like Europe or Asia or I mean, you pick any
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  number of countries, businesses, whatever, he'll put something
• 3:22
  out there that seems impossible and then he will walk it back.
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  And, and you know, that's kind of negotiations one O 1.
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  Maybe not. Well, his, his brand of
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  negotiations is quite extreme 'cause you know, you want it to
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  get to a point where you meet somewhere in the middle or
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  somewhere where you feel like you've gained something.
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  And I think Trump putting out these statements, it's, it's
• 3:44
  putting the Iranian theocratic regime on notice.
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  But I, I don't think he's going to stick with that level
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  extremity of, of extreme view. And so, I mean, that's where,
• 3:56
  for example, the whole motion of Taco came from.
• 3:59
  I won't, I won't come into what that acronym means, but for
• 4:02
  people following markets very closely, you know, he comes out
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  with something really strong. And then, yeah, there's this
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  perception that he chickens out or, or backs backs up, but
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  that's just his style. So yeah, it's going to be an
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  uncertain environment, you know, things are going to be somewhat
• 4:17
  rough. And just a reminder, you know,
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  AST, yes, it hit one O 4, one O 5 recently.
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  And that's, you know, kind of an interesting thought exercise
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  where if we didn't have this uncertain backdrop in the war,
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  where would AST be trading now? You know, I I would assume it's
• 4:34
  it'd probably be in the one 10120 levels.
• 4:36
  But here we are, we're at 90, which is not bad.
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  You know, last week we were at 80, you know, 7879 and so the
• 4:46
  post earnings that the stock is still up anyway.
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  But I I want to get back into before the market opens here, I
• 4:52
  want to get back into these comments and so on.
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  At Mobile World Congress, which concluded today, the Deutsche
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  deutsche.com obviously announced A partnership with Starlink that
• 5:04
  they've said, you know, service would arrive or get launched in
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  2028, which is predicated on the next generation Starling
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  satellites being launched. And the reason why that's
• 5:14
  important is that the current constellation of 650 direct to
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  cell satellites, those are what we all know as inferior, you
• 5:23
  know, technology where they can't they're they're moving
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  cell beams. They can't actually project down
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  service in a very precise way. And it's, it's low data rate as
• 5:32
  well. And so for a company like
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  Germany that has nations that border it, having a satellite
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  service that is able to intricately beam down service is
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  important. So, you know, Starlink's direct
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  to sell current service, one point O is not usable.
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  And so they did announce this agreement where they're planning
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  to launch in 2028. And that's predicated on V2
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  getting up. And that's, that's reliant on
• 6:00
  Starship becoming commercially viable.
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  On top of that, it is it also requires 2 gigahertz European
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  wide spectrum, which is coming up for reallocation in May of
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  2027. So a lot of things have to
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  happen and go their way. And Deutsche Telekom made this
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  announcement because obviously they're, they're going to try to
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  help Starlink and Elon Musk get A2 gigahertz spectrum
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  allocation, which, you know, they are essentially stepping
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  into the shoes of Echostar, which need to get renewed.
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  And so this is no small order. Deutsche Telekom CEO yeah, I
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  quote SpaceX. The Starling people are very
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  aware about the political role and the power we have it as a
• 6:42
  brand in Europe. And so it's clear that they they
• 6:46
  will need every ounce of political goodwill to, you know,
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  to go to bat for them in order to get an allocation.
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  Just given that, for example, you know, Elon Musk has said
• 6:58
  many times that the EU should be abolished and shouldn't exist.
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  And so from a regulars perspective, that probably put
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  you in a hard place, right? Because I think, you know,
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  obviously Starlink is a very important service and if you
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  are, you're trying to work in partnership with the US
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  regulators, do you upset them and not give Starlink a license
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  or which you know they're taking over Echostar's license?
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  Or do you give them a small location, maybe 5 by 5 and call
• 7:26
  them today? My guess is that's what they
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  probably do, but you probably don't go out of your way and do
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  Starlink any favors just given that the you know, the the CEO
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  of the company is calling for the abolishment of the very
• 7:41
  organization that you work for, which is the EU, right?
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  And so interesting dynamics there.
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  But I think one of the more important takeaways from this
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  interview that the the CEO did with a journalist over at the
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  information specifically, you know, the CEO hot, hot giz.
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  He pretty much said that they here, I'll read the sentence.
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  He added that deutsche.com will absolutely work with other
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  direct to sell providers in Europe if they can compete with
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  Starlink. And so we all know that
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  Satellite Connect Europe, which is being anchored by Vodafone
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  and then you know, Orangish and Telefonica are in, in that
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  partnership as well as a few other European carriers.
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  My guess is that they're talking to Deutsche Telecom, right.
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  And so if, if that entity does get a spectrum allocation and
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  services launched and it's good, I would expect Deutsche Telecom
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  to work with Satellite Connect Europe, right, Because that
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  service is going to come online sooner than Starlink V2, which
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  is 2028. Recall that that service also
• 8:50
  requires that that new mobile phones be used because the
• 8:56
  current mobile phones can't utilize that MSS spectrum.
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  And so you're going to need an entire ecosystem to form in
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  order to get that spectrum deployed.
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  And the same goes for AST, by the way, if they get an
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  allocation of that two gigahertz spectrum.
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  However, Satellite Connect Europe, which will be part of
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  that, they can launch service sooner because AST is going to
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  utilize carriers, cellular spectrum, which is what the
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  Block 2 satellites, what the constellation that's being
• 9:23
  currently being put up, it's going to utilize.
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  And so if you had asked me in 2024, right before the news hit,
• 9:33
  you know, hey, do you think Verizon would ever work with AST
• 9:37
  Space Mobile and ATTII would have told you, you know, go, go
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  pound sound. There's no way that that could
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  happen because AT&T from a competitive perspective, you
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  know, why would they let somebody else in?
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  They're going to, they're going to have all the marbles.
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  But then lo and behold, AT&T decided to bring Verizon into
• 9:56
  the fold because they, they, they saw the opportunity to
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  bring in a competitor and lock up the US market.
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  And from a, you know, from a competitive standpoint, you
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  know, take subscribers from T-Mobile.
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  The other thing is like, you know, we're, we're, we're very
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  weary of, of Starlink as a potential competitor.
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  And so Verizon brings their subscribers and spectrum and
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  mark market muscle. Maybe, you know, we'll be in a
• 10:21
  better place on the spectrum side.
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  Obviously Verizon owned a significant, you know, if you
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  can imagine a puzzle piece, they owned a big piece of the puzzle
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  of 850 megahertz spectrum and then AT&T owned the other piece
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  of the puzzle. And so by joining together, they
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  were able to create nationwide 850 megahertz spectrum that AST
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  will be able to use. And so it made strategic sense
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  to bring them in. And, and the reason why I bring
• 10:46
  Verizon up as an example is that back then I, I thought there was
• 10:50
  like absolutely no way that this could happen, right?
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  But it did. And there were actually some,
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  some clues of around that where if you looked at FCC filings,
• 11:00
  the FCC actually kind of forced this to a degree to happen under
• 11:05
  Jessica Rosenhorse, where, you know, the part of the
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  supplemental corporation space requirements were that you
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  needed contiguous spectrum, or at least in the first iteration,
• 11:16
  you, you needed contiguous spectrum.
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  And so it kind of, I remember Kook when we were looking at
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  these filings, he's like, Hey, you know what the way that this
• 11:23
  could work is that Verizon and AT&T would work together.
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  And, and he actually tweeted about this and, and I was like,
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  you're out of your mind and of course ended up being right.
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  And so these are like the little bread crumbs and Nuggets that
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  you look for of things to come, right?
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  And so for Deutsche Telekom here you have the CEI mean it's
• 11:44
  coming straight from the horse's mouth like one.
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  We don't, we're leery of working with, you know, Starlink.
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  I mean, specifically he said, you know, today the financial
• 11:53
  size of our Starlink deal is pretty small and they don't plan
• 11:57
  on investing in Starlink's IPO. And then he said this.
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  I'm not naive, I know it. This is dancing with the tiger,
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  Hawkins said of working with Musk.
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  And so he's acutely aware of the competitive dynamics that one
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  day enabling Starlink could be detrimental because they, they,
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  because they will have, they're building global MSS spectrum.
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  It's not ideal for a cellular service.
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  You know, obviously it doesn't have coverage and propagation
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  characteristics, but it's going to be a service, right?
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  And so he knows that that that's something that they need to be
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  aware of. And by entering into this
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  agreement and trying to help them out, there's a ton of
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  optionality for deutsche.com, right?
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  Like it's, it's not going to launch until 2028.
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  They're going to see how this plays out.
• 12:43
  And he and because of what we learned in this this article,
• 12:48
  it's not exclusive, right. So which is all come can totally
• 12:51
  work with AST space mobile once the service is up and running.
• 12:56
  And so anyway, I think, oh, you know what guys, I got AI
• 13:00
  actually got a hop because someone is here.
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  But I, I will just add at the end that T-Mobile, T-Mobile will
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  today the CEO pretty much said that they will not enable
• 13:15
  Starlink to become a mobile virtual network operator.
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  And so that was one of the most critical strategic questions I
• 13:22
  had in mind where if T-Mobile was willing to just give away
• 13:26
  the marbles and allow Starlink to become a, a full-fledged, you
• 13:31
  know, mobile network operator. And here Trini Gopalan pretty
• 13:35
  much said like, we have no interest in doing that.
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  And that's probably going to be music to AT&T and Verizon's
• 13:42
  ears. But I would say the, the
• 13:46
  important strategic implication of that is you're seeing some
• 13:50
  thawing, right? And so if you could imagine a
• 13:51
  world where Gopalan goes to AT&T and Verizon and says, hey, I
• 13:57
  don't want to enable these guys, but I, I don't want to initially
• 14:00
  work with them. Can you guys let me in on this
• 14:03
  AST space mobile service? If you don't let me in on it,
• 14:05
  then I'll enable Starlink to become a mobile virtual network
• 14:09
  operator. You could see a world where AT&T
• 14:12
  and Verizon say, OK, you know what, that's worth it.
• 14:14
  We don't want Elon Musk as a as a full-fledged competitor.
• 14:17
  We'll let you in. And so that's a potential path
• 14:20
  where T-Mobile could work with AT&T, Verizon and AST Space
• 14:26
  Mobile. But anyway, I got to hop.
• 14:28
  Unfortunately, I've got an appointment here, but I just
• 14:31
  wanted to drop a few comments. I'll talk a bit more about this
• 14:33
  perhaps over the weekend. But this is big news.
• 14:37
  And so I think, yeah, the market sucks.
• 14:40
  You know, it's going to do what it's going to do, but do not, do
• 14:44
  not miss the discounting of this news because it's big.
• 14:48
  It means that Deutsche Telecom is open to working with
• 14:50
  Satellite Connect Europe and there is a pathway for T-Mobile,
• 14:54
  which by the way, the other exclusivity with Starlink ends
• 14:57
  this summer. There is a path, a strategic
• 15:00
  path where they end up working with AT&T, Verizon and AST Space
• 15:04
  Mobile and that would be to counter any potential star like
• 15:09
  move to become a full-fledged operator itself.
• 15:12
  So on to there. Thanks very much for joining and
• 15:14
  we'll talk again soon. Bye.
• 15:17
  Thanks for listening to the AST Space Mobile podcast.
• 15:21
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  sure to subscribe. Thanks again and I'll see you
• 15:36
  next time. We're doing something very, very
• 15:42
  big and I think with this technology we can really affect
• 15:44
  billion lives. AFT Space Mobile is the only
• 15:47
  company that has proven technology to deliver several of
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  mobile connectivity directly from the state to do everyday.
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  Smart people will just basically turn their phone and be
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  seamless, regardless of where you are.
• 16:01
  We don't want the music even to know that it's connected by
• 16:04
  satellite. Our role is to.
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  Bring this into. Reality always in Parma to the
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  animal. Listen, Waffles.