Latest / AST SpaceMobile Podcast / Fireside chat with Scott Wisniewski

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Fireside chat with Scott Wisniewski · 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 server.
0:21
Listen, the opportunity that we have is very, very, very large.
0:30
Very happy and grateful to have Scott from AST join us.
0:35
So Scott, thank you again for for coming out.
0:39
I was going to invite Scott to maybe kind of, you know, start
0:41
higher level for anybody in the room or listen to webcast to her
0:45
who are not as familiar with AST space mobile.
0:50
You know, also the stage a little bit, you know, part of
0:53
the, you know, rapidly growing, you know, high interest, you
0:58
know, Leo space constellation universe today with, you know,
1:03
some probably some companies you're familiar with, some
1:06
you're less familiar with. But yeah, I think AST has a, you
1:09
know, very unique and differentiated strategy and
1:12
technology and, and how they're attacking that space and a Tam
1:16
that we at B of A at least estimated, you know, somewhere
1:19
in the roughly 30 billion range for the Tam.
1:23
Scott can discuss maybe if they have different estimates and how
1:26
they in how they get to them. So, so Scott, thank you again.
1:30
And you know, would love to hear maybe a brief overview.
1:33
Great. Well, thank you very much for
1:35
having us. I'm very appreciative.
1:37
ASD Space Mobile, we're building a space based cellular broadband
1:41
network that connects to today's cell phones, the 6 billion
1:44
phones in circulation today. This is something we've been at
1:48
for a long time. We created this industry, had
1:50
some of the foundational patents and the the hope is really to
1:54
make your phone and everyone's phone work better and work when
1:58
it doesn't otherwise work. And we think that's a big
2:00
opportunity. It's a big problem to solve.
2:02
It's valuable to the mobile network operators, it's valuable
2:05
to the consumer, it's valuable to the US government.
2:07
And we've been building it for a long time.
2:09
We've been public now for four years and we're at the stage of
2:13
the growth where we're giving revenue guidance for the first
2:16
time for the second-half of the year and expect to grow very
2:18
quickly with commercial service in 2026 and fleshing out that
2:23
service in the years to come. So we're, we're an exciting
2:26
moment for this company. We're at the intersection of a
2:29
lot of exciting trends like you mentioned space connectivity, US
2:34
space investment, U.S. investment in space and, and
2:38
we've always been very excited about the story where we're
2:39
founder LED. Our founder and controlling
2:42
shareholder of Bell Avalon is a classic builder entrepreneur,
2:46
has been very successful in the past and has has built this
2:48
company and is, is what you want when you're building a new
2:51
company like this. You want that founder who's
2:53
sleeping on the factory floor building the network.
2:55
And so we're at an important inflection point and we are
2:59
hoping to bring space into the cellular landscape in a real
3:02
meaningful way. Historically, space has been a
3:04
small market. There's a couple of small tans
3:07
out there today, but we're really building this new direct
3:09
device vertical in a way that is very beneficial to the cellular
3:14
industry. And that's why we've attracted
3:16
investment over time from AT&T, Verizon, Google, Vodafone
3:20
rackets and Mobile Bell Canada and American Tower and why we're
3:25
partnered with over 50 mobile network operators globally who
3:28
have a Tam or have a have a service base of almost 3 billion
3:32
Subs. So this is a big problem.
3:33
We've got really cool technology that solves it that's very
3:36
differentiated and it's relevant to very, very important markets.
3:41
That's a It's a great overview. And yeah, for for investors or
3:46
anyone as old as me, you know, our memory is that over time,
3:49
last 25 years have been a number of attempts to build Leo
3:53
constellations to provide broadband either in like a less
3:56
developed countries or other business models.
4:00
And I think every single one failed or at least went through
4:03
bankruptcy once, you know, so you know, full dozen investors
4:07
might have that memory. How is AST, how is AST
4:12
different? You know, maybe this address the
4:15
funding question, you know, are you, are you fully funded for
4:18
your projected constellation And you know, then you know, also
4:23
touch on just the technology differentiation which you
4:26
mentioned briefly before. I think it's important to note,
4:29
you know how that's different the previous technologies even
4:32
competitors today. I know it's a fascinating
4:35
question and it's informed by the historical record, right?
4:38
So when you look at space history and I really came into
4:43
it about 10 years ago with the re energization of the Leo
4:47
efforts, you know, there's been several shots on goal, serious
4:53
shots on goal on building a global constellation.
4:55
And conceptually from a financial perspective, it sounds
4:57
like a good idea you if you could provide access to
5:00
connectivity globally. There's a lot of markets there,
5:02
there's a lot of people to touch.
5:04
And So what makes us different is that we've, we've come in at
5:08
a point in the cycle where costs have come down meaningfully.
5:14
Electronics have been made very efficient and cheaper and
5:18
smaller. And, and now we've come with a
5:20
new idea years ago, which was you don't need a dish.
5:24
You don't need to pay $1000 for a dish to get service.
5:26
You can just use the phone in your pocket.
5:28
And by solving a series of technology challenges and, and
5:31
bringing the wireless partner, the wireless companies along as
5:34
our partner and go to market strategy leveraging their
5:37
spectrum and customers while we bring the network, we created an
5:40
ecosystem here that we think is very powerful and can give birth
5:43
to this new industry. And so we think it's different
5:46
this time. We think the our our record and
5:48
our execution in the last six years has has shown that out.
5:53
We're we're well capitalized. As you indicated, we've got
5:55
$1.55 billion on the balance sheet pro forma June 30th, which
6:00
fully funds us for our initial network of approximately 50
6:03
satellites in the low Earth orbit 2.
6:06
We've executed on the technology and done series of
6:09
demonstrations. We're flying five of the largest
6:12
satellites ever put in the low Earth orbit commercially and
6:15
we're about to launch one that's even three times the size.
6:17
And that's important because it helps you connect with a small
6:19
low powered cell phone from hundreds of miles away.
6:23
And we're doing this with a business model and a business
6:26
plan that's segmented in sequential and has allowed us to
6:29
get to this point pretty efficiently for our shareholders
6:32
and for for for our goals and our partners.
6:35
And ultimately we're trying to deliver service as soon as
6:37
possible because we hear that demand signal.
6:40
Our customers, the operators want this service.
6:42
They want the service for the consumer.
6:44
Consumers feel very excited about this.
6:46
They want connectivity and they want it all the time, and they
6:50
don't understand when they don't have.
6:53
It you know you mentioned the relationships with the with the
6:56
major operators both in the USC and globally.
6:59
Can you just remind us how many satellites do you need to have
7:03
have launched an operational to to provide service on more than
7:08
an intermittent basis? Yeah.
7:10
So again, this is, you know, some of the mass mistakes of the
7:12
past were, you know, having engineers build big beautiful
7:15
business plans and not able to execute on them.
7:17
And So what we did with both the engineering and technical
7:20
expertise, but the the businessman's mindset is
7:23
segmenting. So we built and launched and
7:26
operate 5 satellites that's generated, you know, 10s of
7:29
millions of dollars in revenue from the US government above up
7:32
from there 25 satellites we estimate will get us, you know,
7:36
cash flow break even, which is nice.
7:39
And 45 to 60 is our current target.
7:42
That is how many we need to hit 24/7 coverage in the markets
7:46
that matter like the US, Europe, Japan and for the United States
7:50
government. And so that's really how we've
7:51
organized the business plan and the funding strategy, the
7:54
timeline are vertical integration, vertically
7:57
integrated manufacturing strategy.
7:59
And it's really important for all those things to come
8:01
together at the same time. And that's how we've always
8:04
built the program and that's how it's evolved over the years.
8:07
And, and we think that's the path to success, bringing all
8:11
those all together at once. And he just reminded on the
8:14
government side, I want to break down the revenue in different
8:16
piece perks on the government side.
8:18
Can you just remind us, you know what services you're providing
8:23
U.S. government today? I think most of payments have
8:26
been milestone payments in the US government, but then there
8:30
are future revenue opportunities that aren't currently baked into
8:33
the numbers. And maybe walk us the thinking
8:35
around that including Golden Dome and other other initiatives
8:38
in the US government from the government side and you know how
8:41
you've been paid so far, what you're providing and then future
8:45
opportunity for revenue growth. Yeah.
8:48
So I always say if we built a space company and didn't have
8:50
revenue from the US government, we would be the first.
8:52
So the US government has evolved to be an important part of our
8:57
our our revenue expectations for the first couple of years of the
8:59
constellation. Going back to your question
9:02
about the technology, we are operating the largest satellites
9:06
ever commercially in low Earth orbit and we're doing that at a
9:09
price level that's fact multiple orders of magnitude lower than
9:13
is traditionally done for large satellites usually you see in
9:16
Geo. So being able to put up large
9:19
arrays in the low Earth orbit and build a constellation with
9:21
it is a new capability for civilization and that has both
9:26
communications and non communications applications.
9:30
So why is that important to the government?
9:31
So the government, the US government buys connectivity
9:35
services today. They like buying connectivity
9:38
services from space, having multiple vendors to do that,
9:41
being able to use both dual use strategy, which means the same
9:45
infrastructure that commercial uses, as well as avoiding vendor
9:49
lock, which means having multiple vendors for a service.
9:51
You know, there's a, there's really good buying trends on the
9:54
Comm side. And so as you probably know, one
9:58
of the dynamics we're working with now is perhaps the most
10:00
positive U.S. government investment in space backdrop
10:03
since the 60's. The space race and Golden Dome
10:05
just recently got a interim funding package of 25 billion
10:10
passed that wasn't signed by the President.
10:12
So it's a great backdrop. We have a lot of the traditional
10:16
comms business use cases and we also have a couple of non comms
10:20
use cases. And on our earnings call we
10:21
talked a little bit about all these.
10:23
We think there's about 10 up to 10 really distinct individual
10:27
use cases relevant for the US government and that each of
10:30
those have the opportunity to become programs of record at the
10:33
end of the day, which is usually code for, you know, $100 million
10:36
plus opportunities per year. And then specifically the one
10:39
we're developing now and that we've been doing testing with
10:43
the US government in orbit. Well, the phase one and phase
10:46
two contract for the space development agency is doing non
10:50
communications testing in orbit with applications that are there
10:54
that are pretty broad and and and and fit within some of the
10:58
priorities, the recent national security priorities.
11:01
Does the US government have any preferred partner economics or
11:06
pricing or anything based on their early involvement and
11:09
investment in in AST or is each contract going to be negotiate
11:14
individually at market rates? Well, I'd say the process for
11:22
government contracting is bespoke.
11:24
I think the priorities that they have had in the last couple of
11:27
years started in the prior Trump administration with the
11:29
development of the SDA and then other funding vehicles since
11:33
both under Biden and now Trump since January.
11:38
Their approach is they want fixed cost pricing.
11:40
They don't want this cost plus stuff.
11:42
They want to know what they're getting.
11:43
They want their vendors to move fast and they want to know what
11:47
they're buying. So I think all of those models
11:49
which we've developed what you know, we're not, we're not a
11:52
company for the US government. We are commercial company that
11:55
commercial players need to understand, investors need to
11:58
understand and we need to be able to articulate clearly this
12:00
is not a cost plus model. So I think we're ideally suited
12:03
for that environment with the government where they want from
12:06
fixed pricing and clear value for payment.
12:09
That doesn't mean small contracts, that doesn't mean
12:12
smaller contracts. And historical at what it means
12:14
is you know what you're getting and you know that it's able to
12:18
be deployed because you can see it today.
12:19
And that's the basis I think for for those contracts, how they
12:22
look, how big they get, you know, we'll we'll talk more
12:25
about that over time as as those contracts are awarded.
12:29
OK. Shook the carrier side, which I
12:33
think is how most investors think about the core revenue
12:37
growth opportunity for, for your, for your company.
12:41
Can you explain the economics of those of those relationships?
12:45
Is it, is it a revenue share, you know, is it, you know,
12:49
paper, paper separate usage based model?
12:52
How how does the how does the revenue model work with the
12:55
carriers? Yeah.
12:56
So this was another important concept to kind of get
12:59
engagement from the cellular community early on.
13:02
So one of the things and and our our founder and CEO had a great
13:06
relationship with AT&T through a prior company and has built on
13:09
that throughout the globe with all the relationships I talked
13:13
about earlier. And so the way we built it from
13:16
the beginning was you know, we're going to provide an add on
13:18
service allocate offering similar to an international
13:23
roaming pass. When you land in France, you get
13:25
a tax, you click yes, you get access for the day, same sort of
13:29
model. And the reason for that is we
13:31
want to provide alignment with the operator.
13:33
We want to be a cost center. We don't want to be something
13:35
they think about when they're doing their CapEx budget.
13:37
We want to be a source of revenue growth and we probably
13:41
won't be a big percentage of the revenue overtime, but we could
13:43
be a big percentage of the revenue growth and what's often
13:46
mature industries. And so that's always been our
13:48
focus. How do we bring the wireless
13:51
operators along with us to drive revenue growth both for us,
13:55
which that's our core focus is, is refereeing obviously and for
13:58
them, because revenue growth is, is valuable and capturing that
14:02
growth not through traditional just pricing markups, but giving
14:05
value to their consumer. And so that add on model that 50
14:09
revenue share that's kind of been enshrined in all of our
14:11
contracts. I think as we watch the industry
14:13
evolve a little bit, there's value and perhaps including it
14:17
in some of their super premium plans because you can drive
14:19
makeshift that has a large piece of value for the operator, which
14:23
would be paid on the back end. And then separately, you know,
14:27
we want to help them generally with their brand.
14:30
I think we think that by delivering connectivity all the
14:32
time, it fulfills the promise of connectivity, the consumer, for
14:35
better or for worse. I don't believe that wireless
14:37
companies get the right amount of credit for putting one of the
14:41
most valuable tools in our pocket.
14:42
We have the world's information in our pocket and it works 9590
14:45
six, 99% of the time, but that when it doesn't work, you're
14:50
incredibly disappointed and emotionally so.
14:52
And So what we found through initial applications of this
14:56
type of service and through reviews of and market research
15:02
is that consumers want this and it's emotional and it's what's
15:07
tangible and intangible. It's emotional and rational.
15:09
And by giving them that comfort or that insurance policy or that
15:13
promise of connectivity all the time, it's valuable.
15:16
And I think it's appropriate that that structured with an add
15:19
on and a revenue share and that's how it's always been
15:21
organized. How does it work if it's, if
15:26
it's included in the premium plan, right?
15:28
So you mentioned that earlier, right, because at one point we
15:31
all paid for LD and that got kind of rolled up and you know
15:34
one point we all paid for international roaming and a lot
15:37
of the premium plans include that too.
15:39
So I guess at some point you know, Verizon, AT&T mobile, they
15:43
include you know, satellite connectivity in the premium
15:47
plan. So is there in your agreement
15:50
did that, would you they just pay you per sub in those premium
15:54
plans that include the functionality or would they have
15:58
to allocate some value to that? And it's tough, I got the
16:01
mechanics of how that would work versus a pure revenue share,
16:03
which is much simpler, right? They charge $10, they keep 7,
16:07
you keep 3, whatever the numbers are, right?
16:09
How does it work if it's included in a premium plan?
16:11
Yeah. The core principle for us is
16:13
revenue share and that aligns interest how that plays out
16:17
market by market, operator by operator, I think we'll give
16:19
more clarity over time. But the the important principle
16:23
is that we maintain alignment on, on revenue, I think OK.
16:26
And that's that's really important to us over over time.
16:29
Will there be other payments? Will there be minimum revenue
16:32
commitments? Those are all things that make
16:33
sense. They're very standard in the
16:34
industry. But for a novel offering like
16:38
this, it's been very typical historically to have a la carte
16:42
for for for the consumer. OK.
16:44
Thank you for letting me walk through the questions on the
16:46
revenue build and it's important for investors to to understand
16:50
that. I I wanted to go back to, you
16:52
know, the technology and some of the differentiation.
16:55
Can can you just walk through the spectrum utilizing today to
17:00
deliver service? And then you obviously have
17:02
legato agreement that would bring in more spectrum which I
17:05
think is also different than maybe with some competitors or
17:08
that competitors where others are are doing the market.
17:10
Can you, can you lay that out for us?
17:13
Yeah. So our our core strategy has
17:16
always been to partner with the operator.
17:19
They bring spectrum and customer, we bring network and
17:22
we use their spectrum on a non interference basis in places
17:25
they're not using it. Now that allowed us to bring
17:28
AT&T and Verizon together in the United States with the 850
17:31
megahertz strategy and and and others around the world.
17:35
And so we've always been focused on that approach and it was a
17:40
smart one because it it allowed us when we were young and we
17:43
have spectrum to kind of build a model on the base of our
17:46
technology. And and when we think about this
17:48
industry, spectrum is very important.
17:49
But we've always felt that the technology enables the
17:52
capability and that's why we've developed the largest satellites
17:55
ever put in a low Earth orbit because that large satellite
17:58
facilitates broadband, It facilitates non interference,
18:03
you know, in the other wireless Airways, because wireless
18:05
airwaves are the most heavy traffic we have and we can't
18:08
kill the golden goose and impact terrestrial operations.
18:12
And, and also allows us to be very efficient with our with our
18:18
power, because we're able to collect power from the sun with
18:21
the entire size of the array. And so you put all that together
18:24
and it's a pretty good solution for what we need and it's pretty
18:28
differentiated and it allows us to service a lot of frequencies.
18:31
So often satellites would service one frequency or two
18:34
frequencies. We service the 15 or so
18:36
frequencies in low band that matter for three GPP and those
18:40
are the frequencies that are in phones today.
18:42
So country by country, as the satellites going overhead, we
18:44
can create locations that have up to four different frequencies
18:49
potentially from different operators that will switch as we
18:52
go from US to Mexico, Mexico to Brazil.
18:55
You can change that over. And by having all that
18:56
flexibility on board with satellite, we're a very valuable
19:00
tool to fill in the gaps and cracks in today's wireless
19:03
cellular networks and take advantage of the 6 billion
19:05
phones that are already in service.
19:07
You mentioned you know as of January we started talking about
19:10
and announced our kind of enhancements to that strategy
19:14
with MSS Spectrum. So we signed an agreement to get
19:17
long term usage rights from the L band 20 megahertz in the
19:21
United States and Canada. And since then we've announced
19:24
AI 2 filing acquisition to get SMS band rights around the world
19:29
in various countries where it's not already allocated.
19:31
And so those strategies are all think of them as enhancements to
19:35
the core strategy. They add more lanes to the to
19:37
the wireless superhighway that we can push more traffic and
19:40
more subscribers through and it allows us to build the business
19:43
over time with a strategic asset now within our four walls.
19:49
So if I heard you correctly, what you were saying was that
19:52
you know your, your constellation in in Leo orbit,
19:56
right? You know, as it's, you know,
19:59
passing over different areas you can dynamically switch between
20:02
spectrum bands to support the carrier spectrum needs in that
20:05
specific area. Is that?
20:07
That's right. That you're saying, OK and then
20:10
well, well your newer Bluebird 2 satellites, are they built to
20:16
currently support the L and ES band?
20:18
No. So our current our current
20:20
network build is focused on the low band 6-7 hundred 800 and in
20:26
the range of 709 sixty. And so those are all the low
20:29
band frequencies, or at least the vast majority of them over
20:33
time, we can incorporate mid band satellites into the into
20:37
the network. And that's the intent as these
20:39
spectrum acquisitions get approved through the regulator
20:44
as they, the frequencies are get deeper into the into the phone
20:48
installed base. So the sequencing works out
20:51
pretty well for a medium term strategy.
20:53
But think of, think of that as a, you know, approval in 2026,
20:57
you know, big strategy in 2027, but right now we're focused on
21:00
low band. And I skipped over a bit, but
21:04
but the Legato transaction, you know, currently even trying to
21:08
get approval there for people not as familiar, can you tell
21:11
us, you know, where, where that is, what's required for final
21:14
approval for you to find, get access to or to get that
21:17
spectrum, which you've already done some funding for?
21:20
So that's already backstopped. So there's a lot there, but
21:24
basically you know cellular frequencies, there's about 1000
21:28
megahertz of cellular frequencies, maybe more between
21:30
low band and mid band and that's why we started there.
21:32
But then there's also these MSS or space frequencies called L&S
21:38
which each is about 20 to 40 megahertz globally and some of
21:43
them are used and some of them are not used.
21:44
And so starting with L which is what we did with the legato
21:48
transaction, L is, is pretty heavily trafficked around the
21:51
world. It's it's definitely used today
21:53
except in the US and Canada where it was cleared and for
21:56
terrestrial use or intended for in terrestrial use years ago.
22:00
And so that has what we did here was we got the long term rights
22:03
to use that cleared spectrum. So it's 20 + 20 megahertz, which
22:07
is a fantastic allocation. It's 1.5 and a .6 gigahertz
22:10
lower mid band, which is really great propagation
22:13
characteristics and it's not in use.
22:15
So as soon as we're able to light it up, we're able to do
22:17
that and bring that back to space for its original intent
22:22
has been a very strong message and and and the original intent
22:25
of the transactions. So we are expected to file with
22:29
the SEC to bring those rights to bear in the coming months and we
22:33
expect that to be a 2026 time frame for us.
22:36
But this transaction basically will give us long term 80 plus
22:40
year access rates to 20 + 20 megahertz in the US and Canada.
22:43
And we've signed definitive agreements with the Ligado
22:48
shareholders without those were approved in May by their
22:52
bankruptcy court judge. And so at this point, it's only
22:54
subject to SEC approval and we'll make those filings in due
22:58
course. OK, fair.
23:00
Fair enough. So I, I, I want to move on to
23:03
the to the launch cadence, right.
23:06
You know, you already, you already mentioned satellites
23:08
required to provide continuous, continuous service.
23:12
So what does the launch cadence and visibility look like for the
23:16
next 12 months? Yeah.
23:17
So on our earnings call, we announced kind of detailed
23:20
launch timing the first time. So we laid out the satellites
23:24
we're producing for the next 13 launches, which essentially
23:26
corresponds to that 45 to 60 target that we've we've laid
23:30
out. Importance of 45 to 60
23:31
satellites is it gives us 24/7 coverage in the markets that
23:35
matter, which is the key enabler for a consumer service.
23:39
Now we can service the US government with last we can do
23:42
IoT and enterprise and beta and better than nothing.
23:45
But but I think the in order to hit the mass market, you want
23:48
someone to be able to be in a place without their phone
23:51
working how to work better, sign up for the service, like it,
23:54
keep it. And that's really the success
23:56
factor for the mass market. And and so that target we laid
24:00
out in earnings call, the high lines high level summary is that
24:04
we plan to do a launch every month or two on during 2025 and
24:09
2026 starting very soon. Our first big satellite FM 1 was
24:15
our most recent disclosures is ready to ship in August and
24:18
we've had no no major issues in final testing or preparations
24:22
for shipment and we're working with our launch provider to get
24:25
that up. But otherwise we've got the
24:27
factory humming. Like I said, our founder is
24:30
sleeping on the factory floor as you if you want to hear and
24:33
expect and getting to A6 satellite per month
24:36
manufacturing cadence in order to fulfill that 13 launch plan
24:40
is our key objective right now. And so we've, what you hear,
24:43
what you hear from us is vertical integration.
24:44
So manufacturing of which we control was built over 8
24:48
satellites worth of kind of active payload, which is the
24:51
hard stuff to put together. So we expect the satellite
24:54
manufacturing LAMP ramp to be quite nice.
24:56
And those launches, we're working with multiple launch
24:58
providers to kind of manage that portfolio.
25:00
For us, that ticket to space is more than half our CapEx and one
25:04
that we actively manage and one that we have flexibility on.
25:07
We built the satellite so we can work with multiple launch
25:09
providers, but hitting that as network deployment timelines are
25:12
very, very important because we want to get to that target of
25:15
24/7 coverage as soon as possible.
25:17
Sure. And there are a few pieces in
25:19
there, right #1 the manufacturing cadence in the six
25:22
satellite per month cadence to hit the launch at the large
25:26
timeline. I'm sorry if I didn't, if I
25:28
missed it. I mean, you said it, but where,
25:30
where are we now for the manufacturing cadence?
25:32
How many satellites per month are at today?
25:33
And I know you have the one ready to ship whenever they're
25:35
ready to take it over in India. But where are we with the
25:37
manufacturing cadence today? So because we're vertically
25:41
integrated, there's a lot of different elements of that,
25:43
right? So we've, we years ago we took
25:46
all the testing on site. So as you're putting the other
25:50
systems and subsystems, we're testing it, moving it back and
25:52
forth from annex to annex at the factory.
25:55
And that's been a key time saver for us.
25:57
We do, you know, just to give you a sense on solar panels,
26:01
the, the, the initial element we get into our factory from
26:04
outside is basically a chewing gum stick sized kick and that we
26:09
lay out on solar panels, you know, 2400 square feet in size.
26:13
So and on the antenna side, we get individual antennas, we
26:16
install them as part of the microns and then we also build
26:19
the, the bus, the control side ourselves.
26:20
So each one of those systems and subsystems I think are at
26:24
different levels of maturity. As of right now, we feel best
26:27
about the microns, which is the active payload.
26:29
And that's why we gave the guidance that by the end of Q3
26:34
coming up soon, we expect to be at about 6 per month cadence and
26:37
then by the end of the year we expect to be at the full
26:39
satellite cadence. So now I, I'd estimate, you
26:42
know, we're, we're somewhere in the probably 2 to 3 range on
26:44
average, but we need to keep ramping that and the first one's
26:48
the hardest. So we feel good about hitting
26:51
those targets and their key to enabling the the 2026 goals.
26:55
OK. And then the launch is I guess
26:58
the second gating factor and launches are always uncertain,
27:01
right? I mean, I kind of, I've heard
27:03
satellites for years now track launches, they get delayed, you
27:06
have catastrophic failures. It's it's hard to, it's hard to
27:09
launch things into space. But why do you think as I'm
27:14
tracking it, you know, I'm seeing this.
27:15
What, why do you think that some of the recent launches and not
27:18
just you, but even like planned launches this globally, whether
27:20
the India or Blue, Eric Origin or SpaceX have been, have been
27:24
pushed out. And you know what makes you
27:26
think that the broader launch cadence globally, it's going to
27:29
pick back up end of 25 beginning at 26?
27:33
Well, I'd say the launch industry in the supply of launch
27:38
experienced some challenges starting a couple of years ago
27:41
with basically the we don't really have access to China
27:43
launch as U.S. companies. Russia launch is not accessible
27:48
by U.S. companies. So really the big, big provider
27:51
of launch today is SpaceX. Blue Origin is coming up behind
27:55
them, which is why we've made a point of having a good
27:57
relationship with them, signed a big contract with them.
27:59
They have a new Glen launch vehicle that's twice the size of
28:02
the Falcon 9 and can launch twice as many satellites for us
28:04
in one go. That program backed by Jeff
28:07
Bezos, has an incredible amount of investment and people behind
28:11
it and is doing very nicely. They're going to have their next
28:14
big launch coming up, hopefully in the coming weeks.
28:17
And between the two of them, plus India, we signed an
28:20
agreement with the India Space Agency in order to launch on
28:23
their human space rated vehicle. So All in all, you know, SpaceX
28:28
has a nice cadence, lots of launches.
28:31
Blue Origin has a fantastic vehicle.
28:33
We expect great things out of that in 2026.
28:36
And it's twice the size. So we can get a lot of
28:37
satellites on and want to go. And then there's multiple other
28:40
providers around the world. And so when we looked at launch
28:43
three years ago, two years ago, we made our our partner choices
28:46
based on how we thought the landscape would play out.
28:48
And there's a couple new launch providers coming up behind them
28:51
as well. So we see Type 25, Type 26 and
28:55
then launch opening up a lot of thereafter.
28:58
But we really like the plan we put in place with Blue Origin,
29:02
SpaceX in in Israel. OK, that's very, that's very
29:05
helpful. And I, I, I touched it earlier,
29:07
but then I, but then I skipped over it.
29:09
You know what, when I opened, I said that's a ton of interest in
29:12
this space right now. And there's also a lot of, you
29:16
know, existing and growing competition.
29:18
So just to help to help investors, you know, think about
29:22
your offering, your technological capabilities
29:25
versus say what you know, Starlink offers today.
29:28
T-Mobile, I think it's text only what they're offering through
29:29
them or you know what, Amazon in their Cooper, I'm probably
29:33
pronouncing it wrong. What they're going to be an
29:34
offer from a technology perspective, you know, what,
29:38
what kind of capability are you offering?
29:40
And you know, how, how is it different whether, whether you
29:43
want to talk about kind of like, like, you know, megabits per
29:46
second, what, whatever, whatever the right metric is, you know,
29:49
how is that different than the others that are out in the
29:51
space? Yeah, the thing we're offering
29:53
that's different is broadband to 6 billion phones around the
29:56
world. So that one of the key
29:58
challenges with the historical space communications business
30:02
has been the need to fund or get someone to buy $1000 a dish.
30:07
And if you're a customer that has to buy a 500 or $1000 dish
30:12
or you're a supplier of services who have to discount that dish,
30:17
it, it implies a business model that requires ARP US of $100 or
30:21
so per month. And and that ARPU level doesn't
30:24
really work outside the US. That's the Mcclassic issue with
30:26
that business plan. And so being able to go direct
30:29
to the phone was, is the reason I'm here.
30:31
That's the reason I think all of us pay attention to this story
30:33
because you don't need to put a new phone in people's pockets
30:36
that so that, that upfront charge is 0.
30:38
And then you can further split up the service as much as you
30:42
want. You can offer GB plans in the
30:44
United States for broadband. You can offer hundred MB talking
30:47
text plans and sub-Saharan Africa for a dollar or less.
30:51
And we make good money on all those plans and we service those
30:53
markets with good value. And that is really our strategy
30:56
and what's differentiated with our our tech and our our go to
31:00
market strategy and our technology and architecture
31:02
strategy. How that plays out over time.
31:05
We think that you need a big satellite.
31:07
We think that's the right answer.
31:08
It it gets broadband, it gets it, it manages interference
31:12
issues and very narrow wireless channels.
31:15
And we think that's one of the reasons why we've attracted the
31:17
following from the operators that we have.
31:19
Overall, how does that play out over time?
31:21
We think this is a great new market.
31:22
You know, this is not the competitive historical fixed
31:25
broadband communications space market.
31:28
This is a brand new vertical that's entering the wireless
31:31
Tam, which is enormous. And we're adding real value both
31:34
to the operator and the end user.
31:36
And so at the end of the day, we like and think we've been
31:40
successful and will be successful because we've been at
31:42
the birth of this new industry and, and it's, it's tapping into
31:45
something that we most of us know is a problem.
31:47
You know, when a phone doesn't work, I often am on calls with
31:51
customers and on the phone drops off in the middle of the call, I
31:53
always come back on and say, sorry, that wasn't for that
31:55
wasn't intentional, that's was not planned.
31:57
I just dropped even though I was in Greenwich or whatever.
32:00
And and that's really the strategy.
32:02
So we're, we feel like we're differentiated, all
32:05
technological advantages displayed over time.
32:08
So it's, you know, we expect we have a 5 to 10 year advantage
32:11
and that's one of the reasons why we have the spectrum
32:14
strategy we have because we're pairing our technology lead with
32:17
long lived assets that'll that'll preserve that strategic
32:20
advantage over time. And you do have I think over
32:23
2000 patents and the number, right.
32:27
Do any of your patents protect that technology advanced when
32:29
we're trying to get or think about it is, you know, through
32:33
their, you know their, their denser satellite constellations.
32:37
Could you know, could a Sterling what what's to prevent a
32:39
Sterling from off also offering a direct to device solution over
32:43
time if they are strategically shifted or made some tweaks.
32:46
There were satellite builds. I'm just have to figure out, you
32:49
know what, what's the barrier to them also entering that market?
32:53
Right. So we have over 3700 patent,
32:55
patent pending claims underpinning our satellite
32:58
technology and and the network architecture that's important.
33:02
We've built 1st and smartly and and and built to go to market
33:06
strategies in the relationship for the ecosystem which is
33:08
valuable. We've overcome many of the
33:10
threshold issues with getting the space that you described
33:13
earlier that remain and you put all those together feel great
33:18
about the bears of entry. If you pair that with what do we
33:22
think the world looks like in 10 years, we think So what you said
33:26
about a Tam of $30 billion, you know it's not going to be able
33:29
to take home market. You know this is going to have
33:31
multiple. You agree with that rough Tam
33:33
size? Yeah, that's.
33:35
That's broadly consistent with where market research is and,
33:38
and how people think about it. And when you think about it in
33:41
terms of reasonable our poos and reasonable penetration, you can
33:44
easily support 10s of billions of revenue for this market and
33:47
and it has a lot of value to the consumer and we think the
33:50
consumer is there. And so when you put it all
33:53
together, there's going to be multiple players.
33:56
This is a classic carrier neutral type of outsource
33:59
service that you see across other industries.
34:02
Each and each market has three or four communicate wireless
34:05
players. They have different spectrum
34:06
positions, different strategies, different approaches.
34:08
They run a want dual sourcing. I mean this is not a winner take
34:11
all market. We expect to be a leader in this
34:13
market and in the early years we expect to be the the primary
34:16
player, but and it's it's hard to see more players, but you
34:20
know, we we're not going to be the only.
34:22
One, yeah, that probably focused maybe even too much just in the
34:25
revenue opportunity from developed wireless markets like,
34:29
but the US we're all bit provincial, right?
34:32
There's also that enormous opportunity from, from unserved,
34:36
right, people that don't even have access to a terrestrial
34:39
wireless network today that presumably you could also, you
34:43
know, help to serve with even basic wireless connectivity in
34:46
addition to, you know, direct to device.
34:48
So how, how are you thinking about that?
34:51
You know, how are you going after that market?
34:54
And for any of us trying to model this, how, how do those RP
34:57
assumptions maybe differ from what you might be modeling in
35:00
for a for AUS market for example?
35:04
Yeah. And this is a key area of our
35:06
our relationship with Vodafone. Yeah, Vodafone has an incredible
35:08
footprint in both Europe and Africa.
35:12
And so the key difference here is that because we don't have to
35:16
put a new phone in people's hands and because we can sell
35:21
plans by the GB or the 100 megabyte, we can hit different
35:27
markets and and with different ability to pay and provide value
35:30
added services to all of them. So I think what what I mentioned
35:35
some pricing earlier, but you can, you can give talk and text
35:38
plans for for relatively little impact on our on our network.
35:42
And that's something that could be very valuable in Africa or in
35:46
parts of Asia. And and and some of us forget
35:49
here in in the United States, but Africa is very, very large.
35:52
It's a 40 plus countries, a diverse array of ability to pay
35:58
across different markets, diverse backgrounds, languages,
36:02
different impacts. There's multiple large players
36:05
of which Vodafone is 1 and there's a large portions of the
36:08
continent that are covered, not great or they're still covered
36:12
by 2G. And this is a, you know, this is
36:14
cellular broadband service. So there's an upgrade from 2G.
36:16
And so when you put all that together, we, we still think the
36:20
biggest opportunity is in the developed world where if there's
36:23
so many of us who go in and out of connectivity and, and, and
36:25
value that, that, that stopgap or that supplement to that
36:30
insurance blanket. But yeah, there's, there's,
36:32
there's billions who are unconnected still.
36:34
And when we look at those markets, we see big
36:36
opportunities and, and, and, and Africa as chief among them.
36:40
And that's a, a key part of our strategy with Vodafone.
36:43
But another point point I'd make with Vodafone though, is we'd
36:46
recently formed a joint venture with them in Europe, go after
36:48
the European opportunity. And me historically, I've always
36:51
thought has very good connectivity.
36:52
You'd think this would be perhaps a poor application for
36:56
that, but we've had great successor.
36:59
Our team there has signed up 21 of the 28 EU member states to
37:03
initial indications of interest and that's above and beyond the
37:06
vote for markets that we already have under contract.
37:09
And what they've found is that the consumer really values that,
37:14
that that X Factor, whatever it is, you know just kind of
37:16
fulfilling the promise of connectivity.
37:18
And so we really see as we get in deeper that the the value
37:22
prop for both developing world and the developed world is, is
37:25
pretty strong. It's different, but it can be
37:27
serviced uniquely by our flexible tech.
37:30
OK. I'll open up the audience here
37:33
in a minute. If you have any questions out
37:34
there, just, you know, please raise your hand.
37:35
There is a microphone that can be passed around.
37:40
You know, let me just go ahead and jump in with one more of my
37:42
own if I, if I could please. So we talked about, you know,
37:46
that the US government opportunities, something we have
37:48
not talked about our local government opportunities.
37:51
You know, we're all very well aware of, you know, connectivity
37:54
issues during natural disasters and otherwise.
37:56
And so is that another market that you could that you could
38:01
pivot to with, with local government, you know, first
38:03
responders and you know that opportunity?
38:08
Yeah, Corridor strategy with AT&T has been their first net
38:11
program. So yeah, they they want a
38:13
concession from the US government to build out the
38:17
first net network for first responders.
38:19
They have a couple million subscribers under that, under
38:22
that plan. It's been a great growth area
38:24
for them. And the industrial logic is
38:26
clear, right. The value prop is clear.
38:29
First responders need their need their technology to work.
38:31
They need their communications to work.
38:33
And if they can't, lives are on the line.
38:35
And so whether you look at kind of classic first responder
38:39
networks for governments around the world, or you look at what
38:42
do you do when power goes down for 12 hours, Spain hadn't had
38:45
knowledge last summer that was pretty scary.
38:47
We've all seen flooding and natural disasters and fires in
38:50
the United States where networks go down, being able to flip a
38:54
switch and turn on capabilities over a broad area.
38:59
You know what, it might be hard to serve millions of folks with
39:01
broadband, but we can tailor the network so that, you know, text
39:04
and voice calls can get out and that would be very powerful.
39:06
So that is a a big use case for us.
39:10
It's it's an important one. I think for the mission, it's
39:12
important for the operators. How that fits in is kind of a
39:16
second tier use case in a second tier revenue opportunity will be
39:19
very interesting for us. But we like that and that's that
39:23
that's natural. I think when you when you stack
39:25
the, the, the end markets for us consumers very big at the end of
39:28
the day, U.S. government will be good sized.
39:30
Then you can start looking at enterprise IoT disaster
39:33
recovery, first first responder. Those are those are really nice,
39:38
nice little markets for us that could that could make a big
39:40
difference for our for our business model, which is the
39:42
flow through margins are are very high.
39:45
OK. And for maybe one more for those
39:47
of us watching, what's the next big milestone in Catalyst we
39:51
should be looking out for? We're very excited to kick off
39:55
our network deployment campaign. So that's one I'd point to.
40:00
You know, folks tend to look at the FCC and regulatory approval
40:04
timelines. We feel really good about those.
40:05
But that is one that has been kicked into high gear with the
40:08
new administration and we're very excited to keep seeing
40:11
those drop and ultimately commercial agreements with our
40:14
partners We. Expect to roll out our initial
40:18
our network initially to our our closest partners and and those
40:22
agreements can start coming through anything else.
40:24
So I think All in all look to our network deployment timelines
40:29
and our our go to market strategies and commercial
40:31
agreements with our customers in.
40:32
In what will we hear on the new commercial agreements, We will,
40:35
we see, you know, press releases, we get more details on
40:39
on the agreements what what will we see when those come out.
40:44
That's exactly right. I think these commercial
40:45
agreements are important. This is don't think of this as a
40:48
5 page bolt on. This is a native cellular
40:50
service that they can have their Subs completely roam onto.
40:53
And there's huge, huge implications of that for the
40:55
network for for legal frameworks.
40:57
And we're creating these, we're, we're putting these aircraft
40:59
carriers in the right direction to drive revenue through.
41:02
And so these commercial agreements are very important.
41:04
They're important milestones for the relationship and they're
41:07
important guideposts for investors, I think, on how
41:09
revenue will start to take shape.
41:11
Great. Hey, Scott, thank you so much
41:13
for coming out. It's a pleasure to have you
41:14
here. Thank.
41:15
You very much. OK.
41:16
Thank you all. Thanks for listening to the AST
41:23
Space Mobile podcast. If you enjoyed this episode and
41:27
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41:39
Thanks again and I'll see you next time.
41:45
We're doing something very, very big, and I think with this
41:47
technology we can really affect billion lives.
41:50
AFT Space Mobile is the only company that has full technology
41:55
to deliver several of mobile connectivity directly from space
41:59
to the everyday smartphone. People will just basically turn
42:02
their phone and be seamless, regardless of where you are.
42:06
We don't want the user even to know that it's connected by
42:08
satellite. Our role is to bring this into
42:12
reality, always in partnership with the animal.
42:27
Listen, Waffles.