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Anpanman - Globalstar for sale? Potential implications · AST SpaceMobile Podcast

0:06
This is the AST Space Mobile podcast and.
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We just basically turn your phone be seamless regardless of
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where you are. We don't want the user even to
0:16
know that it's connected by satellite.
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Listen, the opportunity that we have is very, very, very large.
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Anyway, let's talk about the latest news.
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I was away and then of course, this news hit and, and and yeah,
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I think the market was taken by surprise.
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Obviously there's been some mumbling, mumblings about it,
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which I can talk about. But yeah, let's talk about the
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implications of what this possibly means.
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I think first, the an important thing you should always ask
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yourself when this type of news gets leaked to Bloomberg or Wall
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Street Journal or Reuters is why is it being leaked and by who
0:59
and what's that? What's the intent?
1:02
I think now taking this article into account and then over the
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last the the other two information articles and then,
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you know, Tim Farrar speaking very in, in a, in the no way.
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I think it's pretty clear that this is all been leaked by
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global star because they're trying to generate strategic
1:21
interest. They put their the company up
1:23
for sale. They're in a pretty tough spot,
1:25
right? Like Apple owns 85% of capacity
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of their consolation. They're they're looking ahead at
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what's going to be a huge CapEx spends to put up a new
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consolation. And for those that are that do
1:39
follow the industry closely, NBA spaces down a lot Canadian
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tickers NDA and I think the US tickers NDA LF, but a big chunk
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of their future revenues we're going to we're going to come
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from Global Star and the new constellation they were there is
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a prime that was expected to build that.
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And so that's why the stock is off.
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But yeah, Global Star is in a really tough spot.
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They, they kind of sold the, they gave away the keys to Apple
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in exchange for I think it was a $1.8 billion investment.
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And so they're kind of stuck in a tough place.
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They do have an interesting portfolio of spectrum assets.
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They do have L band assets, 8.7 gigahertz or sorry, 8.7
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megahertz of spectrum and that's for uplink.
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And then they're downlink is S band which is 16.5 megahertz.
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And so they do have some interesting spectrum which is
2:38
global in nature. They also have a feeder link
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which utilizes I think C band. But yeah, so I think you know,
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some people have asked why, why would Starlink be interested in
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global star? Well, it's, it's primarily
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spectrum Starlink. We know that they bought
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Echostars AWS 4 spectrum, which is best banned here in the US.
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However, that's just one piece of the puzzle.
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They don't have global spectrum. And so by acquiring global star
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that would jump start their process to consolidate spectrum.
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And then my expectation is that over time they would just
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decommission Global * satellites and and their phones and then
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transition everybody over to Starlink.
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And so from a financial point of view, Global Star in terms of
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its asset value is really primarily the spectrum because I
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think the business itself doesn't generate that much.
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If you think about it compared to say Iridium, I think Gold
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Star this year is expected to generate 265,000,000 of revenue
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and EBITDA of $137 million. If you compare that to Iridium,
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which is let's see, Irrigium is going to generate $880 million
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of revenue this year, but then generate about 500 million of
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EBITDA. It's just in a much better
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financial position. But that said, Iridium spectrum
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position is not as good. So Iridium has just one sliver
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of LDN, which is about 10 a half megahertz in size, but I think
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they can only use like 7.8 megahertz of that.
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However, what's interesting is that that spectrum, so it's
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right next to Logato. And so there could be some
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interesting synergies there. But yeah, so I think what we're
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seeing right now is the landscape quickly consolidating
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because now that AC series and mobile's on the cusp of
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commercial launch and Starlink obviously it's out there in the
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market with their product and they're trying to upgrade that
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and they bought Spectrum to make it better.
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You know, I think I think it's important to take a step back
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and think about what Starlink's position is.
4:49
So they, they do have some M&O partners, but those partners are
4:59
there, there are few, there are few of them.
5:00
There aren't a ton of them. And part of it I think has to do
5:03
with the fact that Starlink's core business is, is fixed
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wireless and that competes with a lot of the M and OS.
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And so if you are a T-Mobile part of working with Starlink is
5:14
that you kind of have to look over your back to see whether or
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not eventually they're going to try to eat your lunch, right,
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because they, they compete with your core Internet business.
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But then eventually is, is, is Elon has alluded to in
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interviews, you know, they do have an interest potentially in
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competing directly with M and OS.
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And so global Star, interestingly, as an acquisition
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could bring them a a step further in doing that.
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Now, obviously, like the in the current state of where Global
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star is, you can't really compete against him knows.
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But if you were to, if if Starling were to develop much
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bigger satellites, which hopefully from their perspective
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that that'll happen with Starship, you know, much larger
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phase to raise, then they will have better connectivity and you
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could see Global star not replaced the treasure network.
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But definitely if if Starling Dick the core Global Star, they
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could provide some reasonable alternative in certain areas to
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your wireless phone service. And so I think if you're
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T-Mobile, this type of acquisition, you know, you
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should be shitting bricks right now because this just brings
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this just kind of like brings full circle.
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What ultimately start like what does want to do, which is eat
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your lunch, right? And So what it what's
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interesting about this potential deal is that you're now seeing
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and we've talked about there being a duopoly.
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The duopoly is, is, is pretty much being formed, right?
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It's going to be Starlink, that vertical and you know it, I
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think, I think Elon Musk has ambitions to go throughout that
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vertical stack. And so it's going to be
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connectivity. You know, that's Twitter
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payments, you know, AI, just any host of things, you know,
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connected devices, cars, what have you launch, of course.
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But then you're going to have this other stack, which is kind
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of what I would call like the open stack, which is going to be
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AST space mobile. And we'll talk about where Apple
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falls on this, but which is unclear.
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But then there'll be Google, you know, Microsoft, Amazon, I mean
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Meta, any host of company, number of company's that are
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going to be in direct competition with, with SpaceX,
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Starlink, Tesla Open, you know, Brock, whatever you want to call
7:34
that stack. But that's where I think now
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you're saying like lines being drawn and, and in some respects,
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like I think if you're Starlink and you're AST space mobile, you
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probably want you want this stuff to kind of evolve a bit
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slower. But my guess is that global star
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basically force the issue like they, they don't they have a
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tenuous relationship with Apple. Apple's kind of like, well, I'm
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not even sure I want to deal with these guys.
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And perhaps it was a mistake. And so they, and now it's
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pretty, it seems clear to me, like Tim Farrar, who's a who's a
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paid consultant by Global Star, pretty much like leaked a lot of
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this stuff to the information in January and then the most recent
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article. And then and of course,
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Bloomberg, somebody decided to go leak this to Bloomberg that
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yeah, Global Stars running a sale process And you know, there
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could be other bidders interested.
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And of course, like I'm sure AC Face Mobile and others are
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taking a look because why wouldn't you?
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You would take a look, But then, you know, they name SpaceX
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because of course, in any sale process, you want to name SpaceX
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as like the main bidder to try to get people up in their price
8:42
or to get interested. And so, so yeah, I think, I
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think this the leaks over over the last, the last few months.
8:54
And then of course, the article today I think is being driven by
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Global Star because I mean, for, for that specific quote from Jay
9:00
Monroe that he thinks he could sell the company for 10 billion.
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Like that's very specific. And that's also setting you
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price expectations for, for the market where we want 10 billion.
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If you in the sale process, which is kind of a risky gambit
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because as a former banker and an event driven investor, you
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can talk, talk things up and try to make a process look very
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wholesome and and real. But if that process fails,
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you're going to end up with a big egg on your face.
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If the company ends up not selling, then at the end of that
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process, however long it is, could I do think for the for a
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company like Starlink, I mean, SpaceX, they don't really need
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to move on Global Star. It's not as if Global Star is
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going to sell to somebody else anytime soon.
9:49
Apple's there. They have a right of first
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refusal. I'm not, you know, there's no,
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there hasn't been any disclosures about what rights
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Apple has. But I'm guessing, you know, you
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know, knowing that the deal team there and they've got probably
10:03
the best attorneys on earth, they probably negotiated a
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water, you know, a airtight contract where their rights of
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85% of, of capacity is going to survive any deal.
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And so if you are acquiring Global star, you're going to
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have to work around that. You're going to have to either
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appease Apple or you're going to have to negotiate something with
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Apple, but you're buying something that is going to be
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constrained because then that means like if you build some
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future constellation and it's like way better than what Global
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Star had, you're basically giving away 85% of it to Apple,
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I think. But unfortunately, we don't have
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the full like disclosures of that agreement.
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So it's unclear what you know, Apple has rights to, but that
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could be an impediment. And so what's interesting is if
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this deal does happen, let's let's assume SpaceX does buy
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Global star. What does Apple do?
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Does Apple, does Apple take part of that deal, which is possible?
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And then for Apple, it's probably good because you got a
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more capable partner that can provide you with service.
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But then that capable partner may not be the one that you
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wanted to end up marrying, meaning, oh, it's Elon Musk and
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he wants to develop his own phone and potentially compete
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for customers and own your customer.
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That's not necessarily a merge you want to to enter into.
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And so Apple's probably in a weird place, right, because they
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they also probably don't want to buy a global star because then
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you've got to operate a constellation.
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You become FCC regulated and there's a host of issues with
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that which you know, it's covered in some of these
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information articles. But let's say if SpaceX does buy
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a global star, then either Apple goes along with it or they say,
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you know what, it's yours. We're moving on.
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We're going to be kind of an open player.
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We're going to, which I think probably makes no sense for
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Apple. Like we're going to work with
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you and we're going to work with some of these other guys too.
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AST space mobile and, and perhaps maybe another player,
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which by the way, like if this deal happens and and then, you
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know, this player is taken out. I, I just don't see there being
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1/3 credible the player given kind of the table stakes that
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are required to compete in direct advice.
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So one interesting thing that I was thinking about this morning
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is that this Saudi telecom deal actually is quite eye opening in
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that I, I didn't realize this and some people had kind of
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pointed it out, but Saudi Telecom acquired 60 megahertz of
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S band spectrum in the country's auction back in 2022-2023.
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And so that spectrum by the way, overlaps with what Echostar has
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here in the US. Now Starlink has, it has control
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of that S band spectrum in the US, but they don't have control
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of it elsewhere, but they have, they have rights or they do
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have, I think some in Europe. But basically like for any of
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these players, they're going to have to go around the globe and
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kind of piece this stuff together.
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And interestingly, because of the Saudi telecom relationship
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with ACCS Mobile, we have a majority of the S band spectrum
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in Saudi Arabia. And the other interesting thing
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about that is Saudi Arabia also covers 15 other markets.
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And so being able to go to regulators as as a partnership
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of AST and Saudi Telecom, you would assume that you're going
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to have the ability to get those rights in all those 15 countries
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as well. So right now it's kind of a a
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spectrum grab. And I think for Starlink global
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star could be interesting because it gives you a global
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footprint of 16 megahertz of S band and what, what is it 8-8 or
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eight or 9 megahertz, No 8 megahertz of L band.
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And so you don't have to go, you know if the, the, the tough
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thing right now is that Starlink has to go to each of these
14:07
countries and try to get a procurement of that spectrum.
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Whereas AT space mobile hand in hand with an its M&O partner is
14:14
one of the regulator. And so to the regulator, when an
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MNO who already has customers, who already is, is familiar with
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the local markets, asks for a spectrum that ends it says, hey,
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we're going to put our financial health lefts behind it that
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probably looks more attractive to regulator versus just darling
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coming and saying, hey, we want some of us being spectrum and
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we're going to come in and, you know, sell service to your
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customers and and not have something that's locally based.
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And by the way, also doesn't protect your sovereignty because
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the the data is going to go over Starlink's network and not stay
14:52
in your country. And so yeah, this whole thing is
14:55
super complicated, but I think that Saudi telecom deal was very
15:00
eye opening and that it basically opens the floodgates
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for AST to get S band spectrum. And then the other thing, the
15:07
other wrinkle is that yeah, Alden spectrum too, because
15:12
interestingly, I I know there's like some legal dispute with
15:15
Biasat through the legato transaction where Biasat saying,
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Hey, you can't, you guys can't go get L band spectrum around
15:24
the world. You could you only, you're only
15:25
pigeon holed here in the US and, and, and Canada, whereas AST is
15:30
like, no, we didn't agree to that, which I mean that we,
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there could be another whole other space about this.
15:35
But I, I think AST is in the right surprise rise.
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But it's kind of funny because this Saudi telecom deal kind of
15:44
opened my eyes to the fact that AST doesn't need to go get that
15:47
help in. They can just let the MN OS get
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it right. And so in Saudi Arabia, LPN
15:53
spectrum has not been allocated. And so I would assume that AST
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is not going to go pursue it themselves.
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They're going to say, Hey, Saudi Telecom, you're, by the way,
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you're government owned and, and you know, your, your, your
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thickest thieves with regulators like why don't you go pick up,
16:07
getting out the allocation of that LDM spectrum?
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And then we will, we'll lease it from you.
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And then what's Vizag going to do?
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They're going to say, oh, that you can't use that spectrum.
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It's like, well, I don't own it. I Saudi Telecom owns it and I'm
16:22
just leasing it or I'm just, or they're renting our consolation
16:25
to use it. So anyway, I think, I think if
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Starlink pulls the trigger on this deal, I think it's to get
16:33
through a lot of these regulatory hoops ones which you
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need, you know, local M&O partners to get through, which
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Starling doesn't have today. Now that said, you know,
16:43
Starling has picked up a few M&O's like they, they picked up
16:48
the I guess the minor player in the UK today, I forget their
16:51
name. I think it's Virgin Media and
16:54
then or Virgin And then they also did pick up, I guess
16:58
according to the processors rumors that they picked up
17:01
SoftBank and NTT in Japan, which makes sense, right, because NTT
17:07
Dokomo, KDDI and Saltbank are the are three large players in
17:12
Japan and there's Rakuten and you would expect that, right,
17:15
because Rakuten has exclusivity in Japan for St. space mobile
17:19
service. So, so Starlink is going to pick
17:22
up some customers, but as we've seen like that has been a pretty
17:25
slow process and I think there's by acquiring global Star,
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there's this damned if you do damned if you don't moment where
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Starling their service is not the technology is not great.
17:38
They need more spectrum or they will need more spectrum for the
17:41
upcoming V3 satellites. Global star will help along
17:45
those lines. I mean, it's it's great it's
17:47
good. It's not great unless, you know,
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Starling builds much bigger satellites, which is Tim Farrar
17:53
said yesterday, you know, that's probably something they're going
17:56
to do, but but by doing this transaction, it's going to make
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M and OS think twice about what Starlink's ultimate goals are,
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right. So if you're if you're T-Mobile,
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it's like, Oh yeah, Starlink's our partner and we're working
18:11
together and then all of a sudden they buy Global Star, who
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by the way, like once you buy Global Star, you can sell
18:16
services directly to the consumers, right?
18:19
You, you can sell handsets, you can do all these things.
18:22
I mean, it's not great service, but eventually I'm sure Starlink
18:25
will keep iterating it and get to a point where it's pretty
18:29
decent, right. And so if you're T-Mobile, it's
18:32
like, well, how long, how long can I continue to stay in this
18:36
relationship where my partner is like eating parts of my body
18:41
and, and, and eventually I will get consumed.
18:45
And so, so yeah, it's a pretty interesting thing.
18:48
I mean, that said, I I'm talking about it as if like this deal's
18:52
definitely going to happen. There's a whole host of things
18:54
that can happen in the process where a deal doesn't happen.
18:57
Maybe it's not the right time, maybe the price doesn't make
18:59
sense. I think for Global Star, if
19:03
you're an acquirer and you've got this 85% of your capacity
19:08
sold to Apple, like how do you sell the 15% economics to an
19:14
interested buyer, right? And, and yeah, and you're able
19:17
to get some type of margin from Apple, but it's not as if it's
19:21
version spectrum where you can just do whatever you want.
19:24
You, you, you basically have like Apple over your head unless
19:28
like, maybe you, you pay Apple off.
19:30
So but anyway, what this does though, it is the landscape is
19:36
clearly shuffling, like the losers are now putting
19:39
themselves up for sale. And so, you know, we talked
19:42
about Iridium last week. Now we know why perhaps they're
19:45
talking, you know, the, the conference call seemed like a
19:48
funeral, like the writing's on the wall, right?
19:49
And so I think Iridium is pretty interesting to degree.
19:53
Like they've got some elegant spectrum, which is global.
19:57
It's not that wide of a channel, but it's good.
19:59
It's decent. It would be decent for coverage
20:02
and with the proper satellites that can really provide 3 bits
20:08
per Hertz and really leverage that spectrum and squeeze every
20:12
ounce of capacity. It could have allowed you right.
20:15
And so you could see a situation where ASD 6 mobile, you know,
20:19
let's say Starling does buy global star.
20:21
I think Iridium, there's only one partner left, right?
20:23
And I think the interesting thing is Legato spectrum is
20:27
right next to Iridium spectrum. There's like guard band in
20:30
between that's not used, which then if you combine those two
20:33
bands that you could use all of it, which there's a synergy
20:37
there. And then I think for Iridium,
20:40
you know, they generate a ton of free cash flow, right?
20:43
And so you could see a situation where if ASD decided to pull the
20:46
trigger on those guys that it could help fund the
20:49
constellation build up. However, if SpaceX does buy
20:54
Global Star, then Iridium is in a further compromise position,
21:00
right? And so it's a matter of waiting.
21:01
You do you do you do something an hour or do you wait for
21:04
Iridium to keep going down and then do something?
21:08
Because I think AST space mobile has a huge runway in front of
21:11
it. And so there's no need to do
21:12
anything strategic. Now.
21:14
There's no need to go buy Golbostar, go buy Iridium.
21:18
Whereas I think for SpaceX, for them to, and I know people are
21:22
like, well, they have their consolation up and so they're
21:23
ahead. Well, they do, they have a
21:26
consolation up, but there are zombie SAT's and the service is
21:29
poor. And so there's a reason why
21:30
they, they went out and bought Echostar Spectrum and, and
21:34
they're contemplating this deal because they really need to
21:37
catch up, right? And so, so I think, you know,
21:42
taking a step back, if you are someone else, I look in, you
21:46
might say, well, they're going to be more competitive.
21:48
And so that's bad for AST, right?
21:50
And it's like, no, actually, they're by playing their hands
21:55
now and showing what their ultimate ambitions are.
21:58
AST space Mobile becomes kind of the de facto.
22:02
I mean, you know, they have the technological leadership and the
22:06
Eminos have chosen them. But but now it's like, OK, we
22:09
really do need to go support this company AST and put our
22:12
eggs in this basket because, you know, Starlink is is a much
22:16
bigger competitive threat, right?
22:18
And so the rumors of, you know, AST having meetings with
22:23
Microsoft and some of these other companies like, yeah, they
22:25
become strategically much more important.
22:28
And so, and I think it's it's, you know, from the US
22:32
government's perspective, there's been this desire to
22:35
diversify suppliers and make sure that you don't have
22:39
critical services that are single sourced.
22:42
And so if, if SpaceX is buying Global Star, then yeah, your
22:48
your potential vendors goes down and those that remained,
22:51
especially the ones that are not named SpaceX become much more
22:54
important, right. And so, so yeah, I think I think
23:00
it'll be interesting to see if this deal does come to fruition.
23:03
And you know, we we've had this New York reaction, like ASTI
23:07
think when Echostar got announced that there was a New
23:09
York reaction that and the stock went down and then people kind
23:12
of digested and were like, oh shit, this is actually this
23:15
highlights the value what AST is doing.
23:17
And this is real market and the spectrum that Legato, that
23:23
spectrum, the spectrum that AST the rights for Vagato that they
23:27
bought are highly valuable. And so I think there's going to
23:30
be a similar type of reaction where people it's going to take
23:34
a few days, maybe maybe less than that for, for people to
23:38
kind of digest this information and think through what the
23:42
strategic implications are. Because I think, you know, if,
23:46
if this deal does happen, then there's, I mean, the, the, there
23:50
was already going to be this duopoly, but then I think it's
23:54
becoming much more solidified, right?
23:56
And so there's, as I mentioned before, there's going to be this
24:00
vertically integrated X SpaceX Starlink stack.
24:06
And then there's going to be AC space, mobile and all the M and
24:10
OS and you know, the other Amazon, Google, Meta, any number
24:14
of companies where connectivity is going to be paramount.
24:17
And and so having having an alternative, those two
24:22
alternatives are going to be key.
24:23
And I think when looking at the directive device market, which
24:27
initially started out as a, you know, coverage for dead spots,
24:31
But now because of the use of satellite spectrum, where you're
24:35
going to have 100% coverage and thinking about, you know,
24:38
connectivity for devices, whether that's IoT stuff,
24:42
drones, you know, vehicles, whatever it is, right?
24:45
Like them. I, I think the market is now
24:49
fully starting to appreciate what this means and the value
24:51
there. And so, so yeah, so that's those
24:55
are some initial thoughts. As I said before, I think these
25:00
leaks are from Global Star. They're trying to gin up
25:03
interest because they're trying to sell the company, obviously,
25:06
and they're they're throwing out the SpaceX name there.
25:08
And and you saw this before when Echostar was in the process of
25:13
trying to sell itself. And so I think the probability
25:16
of something Happy New Year is pretty decent.
25:18
But the wild card is Apple, right?
25:20
And so does Apple, are they OK with this?
25:23
Do they go long or do they do they actually buy Global Star
25:28
themselves, which I don't think they would do.
25:31
Or on the flip side, maybe they just let SpaceX have it and
25:35
decide that, you know, they're for a foray into the satellite
25:38
communications. Just let other people kind of do
25:40
it. And then we'll just focus on
25:42
handsets. But I think, I think what this
25:47
means for Iridium is that and and this is like if you put your
25:52
investment banking hat on, if global stars process is going on
25:55
right now and you kind of knew about it, then you would try to
25:57
put Iridium up for sale too. Because the last thing you want
26:01
to do is this be kind of the last player standing and then
26:05
not be able not be able to dictate your future.
26:08
And when you have an asset like global store Iridium, that is
26:12
kind of eroding in value over time as some of these newer
26:14
players become much more capable, you you try to get
26:20
strategic value now versus later because that that value
26:23
potentially be lower later. But I think I think like, yeah,
26:30
I guess a crazy scenario would be if this deal does happen,
26:33
then, you know, my guess is that the probability of ASD doing
26:38
something with Iridium at some point in the future goes up,
26:41
although that's not, there's no like rush to do that.
26:45
But then I, I think another potential scenario, just
26:48
spitballing is that maybe they do something and you get
26:51
strategic investment from some of these other players as
26:54
well-being. You know, we're going to support
26:58
this alternative and we want, we want it to be, we want there to
27:02
be alternative to, to Starlink and, and we're putting more
27:06
dollars behind it. But anyway, that's a lot that
27:10
I've just covered. I will look at any questions
27:13
here. Let's see, people usually have
27:15
pretty good questions. Any insight into which
27:21
investment bank Global star is working with?
27:23
I don't know. I'm going to guess.
27:26
Let me see here. I mean, I actually they don't
27:33
really have good investment banks that cover their own
27:37
research side. But yeah, I'm not sure they, I
27:40
mean, it doesn't matter who covers you on the research side.
27:42
You can, you can call out Goldman Sachs or Morgan Stanley.
27:45
And if it's a 567 billion dollar, $8 billion transaction,
27:50
like anybody will work with you. So, so I don't think that's an
27:54
issue. Let's see, could SpaceX buy both
27:57
Global Star and Iridium? The answer is unequivocally no.
28:01
That so from a oh, this is a good question.
28:06
So from a regulatory standpoint, I, I and of course I know the
28:10
Trump administration purchase regulatory matters quite
28:13
differently. But from an antitrust point of
28:16
view, SpaceX specifically would not be able to buy Global Star
28:20
Iridium because that would make them a dominant monopoly and
28:24
that would be dead on arrival, right?
28:27
So could Starlink by Global Star.
28:31
It's not a layup actually for regulatory standpoint.
28:34
They probably it would be a very rigorous review and there might
28:38
be concessions or or or changes that they would have to OfferUp
28:44
or divestments even of some spectrum to get the dual done.
28:47
The other thing too is that by acquiring Global Star that would
28:52
make the regulatory review for Echostar probably longer and it
28:56
could make that that review, you know, not as smooth, although I
29:04
think that you'll probably still gets done.
29:06
But but yeah, they would not be able to buy both.
29:09
They would I my guess is face X would be able to buy one of
29:12
them, but not both because there would be no other options.
29:17
If they were to buy both global star and radio, then they would
29:20
basically control at least the near term satellite, you know,
29:25
phone services, although over the medium term with AST is
29:30
coming in as competitor that perhaps the competitive dynamics
29:35
there would be OK, but I I don't think they would be able to buy
29:38
both. They would have to they would be
29:41
able to buy one, but not both. All right, there's no other
29:44
question. Apple owning so much of global
29:46
star capacity, how would a sale to another buyer work?
29:48
That's a good question. I'm not really sure if Apple
29:53
buys global star, then that's pretty straightforward there.
29:56
There's no, there's no issues there.
29:57
But if SpaceX buys global star and Apple's rights, 85%
30:03
ownership of capacity of, of the current and future consolation
30:08
come into play, then then, you know, SpaceX will have to work
30:11
that out with, with Apple in terms of whether maybe Apple
30:17
gets paid to just go away or Apple will say, hey, great, I
30:22
get 85% of your future consolation and I don't have to
30:25
do anything about it or, or Apple just says pay me, I'm
30:31
leaving. I don't want any more to do with
30:33
this thing. So, so yeah, it's unclear.
30:37
Let's see, when do you think Bezos Blue Origin will realize
30:41
that this project is going to be obsolete before the
30:43
constellation's fully deployed? Given that both AST and Starlink
30:46
are now racing to go constellations that won't
30:47
require use terminals, what steps might he take to mitigate
30:51
this disaster? Are there chances of partnering
30:55
with AST gone up significantly? OK so this person's asking about
30:59
project Hyper which is doing fixed wireless.
31:03
I don't think that changes. I think just given Amazon and
31:08
Bezos is, you know, financial heft and the importance of the
31:12
connectivity for AWS and you know, all the all the future
31:16
stuff that they want to do. I think that consolation is
31:19
going to be fine. And for fixed wireless, directed
31:22
device is not going to be a replacement for fixed wireless,
31:25
although in the future it could if the hand if handsets get
31:29
stronger. But you know, that's that's like
31:34
a different application. And and I don't think I think
31:38
they're going to be two separate distinct markets.
31:41
But that said, like, you know, could Bezos partner with AST
31:45
space mobile? Sure, yeah, it could.
31:48
I don't know why you would need to.
31:50
I mean, you, I guess you could like get some synergies in terms
31:53
of satellite manufacturing and and maybe offer the service in
31:59
combination with one another. But AST already partners with M
32:02
and OS, so they don't really need distribution.
32:04
And then, you know, Kuiper is going to be competitive with M
32:08
and OS. So that's not going to be that's
32:11
not going to be a great fit. But then you know, do you could
32:14
you see, could you see Amazon or Lou Origin partner with AST or
32:22
making a future investment? Yeah, sure.
32:25
And by the way, like the company doesn't need cash raised a lot
32:29
of money. And, but, but at the same time,
32:33
I think if folks want to make an investment just like, you know,
32:35
in the video, made investment in Nokia in order to kind of put
32:39
down a a placeholder of of strategic importance that this
32:44
company is important and they want to be involved.
32:46
And we, you know, maybe they get more observer rights or
32:49
something then then yeah, that that potentially could be
32:53
possible. But yeah, I, I, I think Bezos
32:58
and and Abell are, are, are friends and they're clearly, you
33:04
know, working closely together. So something could happen.
33:06
But I, I guess at this point I'm not, I wouldn't be betting that
33:10
something will Now the, the outside.
33:12
There's an outside chance that and, and I guess let me write
33:16
this is worth giving some level of background.
33:19
So before it Abell took took the company public, they did put in
33:24
place dual class voting structure where Abell has, you
33:28
know, super voting power. And so he effectively controls
33:30
the company. The reason why they did that is
33:33
when the company was raising their series B round, I forget
33:38
there was strategic interest and my guess is that it was American
33:41
tower and you know, maybe AT&T or some maybe Vodafone, who
33:46
knows, But they were interested in potentially buying the
33:48
company. And when you're faced with that,
33:51
when you're raising money and you, you have, you know, the
33:55
desire to build your company and go public and achieve your aims,
34:00
what you don't want to have happen is you don't have
34:03
structural defenses in terms of corporate governance where
34:07
perhaps someone's going to short circuit that process, right?
34:09
So if you don't have super majority voting, you know, you
34:12
have an activist come in or you have a hostel acquirer come in,
34:15
they buy a bunch of stock and then they basically try to, you
34:17
know, replace your board and force you to sell the company
34:20
because they want to buy your company.
34:22
That's what you want to avoid, right?
34:23
And so that's why this dual class voting structure has been
34:27
in place. It was to give a bell the, the
34:30
control and the time in order to, in order to build a company,
34:35
right. And so if you can imagine, like
34:37
when EST was trading at $2.00, it would have been easy for
34:41
Global Star Iridium to then try to buy some stock and then force
34:44
company into a sale, which in, in the current structure where a
34:48
Bell owns majority of the voting rights, that can never happen.
34:51
Which is why it's important that you do have in some of these
34:54
types of companies that are fairly strategic, that there is
34:58
a dual voting class structure where the, where the votes the,
35:03
and the control of the company is closely held, where you can't
35:05
be forced to sell before you get to your end goal.
35:09
But that said, I, I know a bell wants to build this company and
35:15
he's not a seller. He's not, he's not a proactive
35:17
seller. He's not interested.
35:19
He truly, I mean, I think someone had talked to IRR after
35:23
they raised the last convert and they the IR specifically said to
35:26
them like Abell didn't sell any stock in 100 and and because he
35:30
thinks it's worth much more than that, right.
35:31
And so, so that's his mindset. And so I don't think even if
35:38
Google came tomorrow with like a check for 100% premium or 200%
35:43
premium, whatever it is like I don't think Abell's a seller.
35:47
And I guess while we're on the topic, you know what potential
35:51
buyers could fit for AC space mobile.
35:53
Well, you know, sometimes people say, well, why doesn't Verizon
35:56
or AT&T buy them? Well, that that would actually
35:58
be value destructive. I mean, sure, they could pay all
36:01
cash and that, but then it would be value destructive for the
36:03
enterprise in that if your business follows to partner with
36:07
M Nos globally and be kind of this neutral party that just
36:10
does wholesale wholesaling, you do not want it to be owned by
36:13
MNO. You want to be neutral in that
36:16
regard. And so selling to an MNO just
36:19
doesn't make sense because then if you sell to AT&T, then
36:22
Verizon's going to be like, well, I'm not sure I really want
36:24
to work these guys anymore. And so that wouldn't really
36:27
work. I think there are a few
36:30
potential buyers where it could work, ones who work with MN OS
36:34
or are semi friendly and the business models compatible.
36:39
And so you know, naturally that would be Apple could be a
36:42
potential buyer, Google, of course, because of Android, that
36:46
could be another buyer. The the tower guys to an extent
36:51
like American tire, I think could do a deal, but then that
36:53
would just be just given where AC trades now, it would just be
36:59
really difficult to live for them financially because it
37:01
would be very dilutive. So I don't think, I think the
37:04
tower guys could have did it before, but not anymore.
37:08
But yeah, it could be probably one of those tech players.
37:10
I mean, a meta could do it, a Microsoft could do it as well.
37:15
But I think in terms of strategic fit, Apple and Google
37:19
make the most sense. That said, like, I don't think
37:23
they need to do it. And I mean, financially it would
37:28
make a lot of sense and strategically make sense.
37:30
But they also can just play with nicely with with the AST and
37:35
Starlink, right? Although I guess for Apple,
37:38
because of manufacturer hardware and handsets are important for
37:41
them, that could be a problem, right?
37:43
And so that that could prompt them to do something.
37:47
And so, yeah, this is the fascinating time to be invested
37:50
in the company. You know, it was only, I mean,
37:54
if you were to ask people like a year ago where things were when
37:58
the company was trading at 2:00 and Iridium was on this like
38:03
CapEx holiday and, and global star partnered with Apple was
38:08
like rolling out the their SOS, you know, messaging service or
38:12
people start using it and Starlink started to roll out
38:17
some data services on its, on its constellation.
38:20
My, how things have changed. Right now you've got global star
38:23
being forced into a sale and Iridium for intense purposes is
38:28
being forced into a sale. And it's unclear whether that
38:31
will be a, a good sale or a bad sale.
38:35
But both of those players, you know, they see the writing wall
38:37
and the terminal value is not great.
38:39
And so they're basically what their value today is, is
38:42
spectrum value. And, and right now there's only
38:46
two players that can really utilize that spectrum.
38:48
There's HT space mobile and Starlink.
38:50
Like those are the, those are the players that have the
38:52
satellites that can utilize the S&L band spectrum efficiently,
38:56
right. And and with Starlink, on the
39:00
one hand, it's great. They've got lunch and they're
39:02
vertically integrated. So that's wonderful.
39:04
On the other hand, they compete with M and OS.
39:06
And so there's like this uneasy aspect of their business model,
39:10
which is going to put them at some type of disadvantage.
39:16
But then you've got HD space mobile who doesn't have launch.
39:18
But then as we've discussed, launch is becoming something
39:22
that's that's heavier, becomes more plentiful.
39:25
You've got you've got SpaceX, you've got Blue Origin, you've
39:32
got Rocket Lab, eventually you've got Mitsubishi, which
39:36
launched their H3, you've got Israel.
39:37
I mean there's a whole host of, of launch coming to market. 2026
39:43
is still going to be somewhat tight, but then 2027 is when the
39:46
floodgates are really going to open.
39:48
And so but yeah, but you've got AST who has Spectrum, has the
39:54
M&O partnerships, has a capital, has a technology.
39:57
And so, so yeah, it's a fascinating time to be an
40:00
investor. And I think with these
40:02
headlines, you know, people kind of have this leisure reaction
40:06
and think they kind of do something in this instance.
40:09
Yeah, you don't have to do anything.
40:11
If anything, like I bought a little bit of AST on the dip.
40:15
But this this stuff should come as no surprise and it should be
40:20
expected, right? Like Iridium and Gold Star will
40:24
ultimately not They will not survive.
40:27
And will be consolidated as part of Starlink or AST at some
40:32
point, maybe not today, maybe not in a few weeks or months,
40:36
but at some point in the future, it's going to happen because is
40:39
is our favorite cat would say Spectrum finds its way to the
40:45
highest value and most efficient uses.
40:47
And clearly the legacy consolations like that's not
40:51
where it's at anymore. And so that's why you're seeing
40:55
these deals happen. You know, you saw AST kick it
40:58
off in January by Aquarium Legato spectrum rights.
41:03
And then you know, what was it 2 months ago?
41:07
SpaceX buying Global stars or sorry, Echo stars, AWS 4
41:11
spectrum. And now you've got, now you got
41:15
the rest of, you know, you got the leftovers, right?
41:17
You got Global star and Iridium figure out what they need to do.
41:20
So anyway, you just see if there's any more questions.
41:25
Let's say Global Star is ass. I used it on my iPhone, could
41:29
barely send a text, 5 to 10 minutes for a small text
41:31
message. Yeah, that's, that's the problem
41:34
with Global Star and that's why they've got to sell because that
41:39
is, yeah, they're, it's a tough, it's a tough service.
41:43
They're, they're limited on their service and they've got
41:45
this huge CapEx spend to put up and do consolation, which who
41:49
knows if it's going to work well.
41:50
I mean, they're, they're relying on MDA space to build those
41:53
satellites for them. And as we all know you, you
41:55
typically want to do everything in house because building a
41:59
satellite, testing it, optimizing it is not something
42:02
that you can just contract out. You actually need to do it
42:04
yourself. Let me see here, there's more
42:09
questions. Kind of crazy.
42:15
I'm doing all these spaces though, I guess.
42:18
I guess it's busier. Stay out.
42:23
There's a few more questions Lee's asking.
42:33
Is either Iridium or Global Star worth more to SpaceX from a
42:36
spectrum perspective? Why one over the other?
42:40
They're both valuable, right? So, but I think Global star has
42:44
more spectrum. It has, as I mentioned before.
42:47
Let me just look, I, I keep track of this stuff like 8
42:50
megahertz of L band spectrum for uplink and 16 megahertz of S
42:55
band for down leak. And then they've got, they've
42:59
got a whole bunch of C band spectrum for their feeder.
43:02
I don't know if that's exclusive though.
43:04
So, but yeah, I mean, I think it's a given for any of these
43:09
companies that that have old constellations, the value is not
43:14
running the, you know, running status quo value is shutting
43:19
down the old constellations and and reusing that spectrum under
43:23
your new constellation. And so that's where all the
43:26
value is, is, is the spectrum. And so global star has more
43:30
spectrum. Iridium has global L band
43:32
spectrum, which is about 10 1/2 megahertz, which I think could
43:36
interestingly fit with AST because there is that sits right
43:41
next to L band, but Gato spectrum.
43:43
And so there there's potential synergies there.
43:46
However, the issue with Iridium is that it's just a single band
43:49
of spectrum. So they actually do, I think
43:53
it's something similar to TDMA where you do time division
43:57
multiplication access or whatever.
43:58
I forgot what it's called. But but you basically you have
44:01
these signals wet that will send up and then you wait and then
44:05
send signals down. But you basically communicate by
44:08
directionally on the same channel.
44:09
But you have to do that in a sequentially timed way.
44:14
And so it's not as ideal. But then if you're if you're one
44:20
of these new players and you're getting your hands on other SNL
44:23
band spectrum anyway, then just adding iridiums of band spectrum
44:27
to your portfolio like that's that's pretty attractive because
44:30
it is global in nature. But but yeah, it's because it
44:34
doesn't have dedicated uplink and downlink.
44:38
It's not as valuable, although they do have a a nice little
44:41
business that you know, eventually overtime is going to
44:43
your Rd. But but yeah, I think I think
44:48
for Starlink or AST, either company spectrum would be quite
44:53
valuable. But that said, I don't think I
44:58
don't think Starlink or AST probably would care to do a deal
45:03
now. They probably would wait because
45:05
these two companies are in a tough spot.
45:06
And you would kind of let them you know, the whole the melting
45:09
ice cube analogy, you would just let them kind of go downhill and
45:13
then hopefully buy them on the cheats later.
45:15
But, and this is kind of the, the risky gambit I think that
45:19
Global star is running is that they've put themselves up for
45:21
sale and they're hoping that someone's going to pull the
45:24
trigger at, at the price that they want.
45:26
And so sometimes you have these leaks and the company's for sale
45:32
and then you don't really read anything for months.
45:35
And then all of a sudden they're, you know, stock can
45:37
drop and then it's like, oh, the the sale process failed.
45:41
And then, and then the company's in a tough spot, right?
45:43
Because they tried to sell the company, no one was there.
45:45
And then they're back to Sport 1.
45:47
And so, so yeah, we'll see, we'll see how it goes.
45:51
But I think I think there is value here.
45:52
And whatever deal, first deal happens, then it's likely that
45:57
the second deal eventually happens, but unclear when.
46:01
But anyway, we need to see if there's any more questions.
46:08
Rock thinks there's a 90% chance that Apple takes a stake in the
46:11
St. of SpaceX by Global Star. Interesting.
46:14
Yeah, I mean it's like all these AI chat bots will tell you
46:20
whatever you want to hear or they tell you kind of awful
46:23
stuff. Is it possible to Apple take
46:25
strategic investment in AST and then tells SpaceX like we're
46:30
fine and go ahead and buy global story?
46:32
Yeah, it's possible. But it's also possible that
46:34
they're totally happy with with SpaceX and they try to further
46:39
integrate into, you know, Spacex's ecosystem, which I
46:44
think I think ultimately, like if Apple does decide to sell
46:47
Globalstar, they'll probably just end up playing nice with
46:51
everybody. And you've already seen hints at
46:53
this where even though they own Goldstar, Apple is trying to
46:57
shape the the next three GPP standard that integrates NTN non
47:04
directional network structures, you know, satellites.
47:06
And so they're trying to drive standards around Legato
47:09
spectrum. Echostar globals are like
47:13
basically all the satellite players that we're trying to
47:15
determine or or shape that framework.
47:18
And as they should, right, because they're a hands up guy.
47:21
They want to make sure that their phones work with all these
47:24
current and future potential services.
47:27
And so, yeah, I think I think for Apple to make a strategic
47:32
investment post transaction, whether it's in Global star or
47:37
ASTI mean that that obviously would be that would be pretty
47:41
powerful and interesting. But but yeah, I don't know.
47:45
It's it's I think for this type of situation, you kind of have
47:50
to put your chips into what what company is going to carry the
47:55
day strategically, like who is built a good business model and
47:59
what makes the most sense, right.
48:00
And so I think for, for Starlink, there's still quite a
48:04
few questions. And, and by the way, like buying
48:07
companies, buying these companies is not a panacea.
48:10
It's not a, a, a solution. It's not as if like I buy Gold
48:14
Star or I buy Iridium tomorrow and then I shut down the
48:17
constellation and then I, I can like light up their spectrum.
48:21
Is anyone who's been involved in an actual merger?
48:24
It's pretty complicated. And so I would assume, you know,
48:27
you would slowly over time, you would harvest, you know, you
48:31
would run these things for the cash flow, but then you would
48:33
start shutting things down. You know, merger integration
48:37
would be so a pretty decent lift, right?
48:40
And so, and then, and then over time you would decommission
48:44
satellites. You'd have to go through a
48:45
regulatory process to repurpose that spectrum for Leo use.
48:50
I mean, there's a, it's not as if tomorrow you can like snap
48:54
your fingers and the deal's done and, and immediately like you're
48:57
off to the races. There's a, there's a lot of
48:59
steps that have to take place in order to get to a point where
49:03
you've you've closed down the other, the old consolation and
49:07
then you're lighting up the spectrum of the new consolation.
49:11
But, but yeah, I think if you're planning for the long, long
49:15
term, which is what ACCS Mobile has been doing and, and of
49:20
course, I'm sure struggling as well, then then yeah, you're
49:24
probably willing to take that type of bet and, and go through
49:28
that process, which is going to take a while.
49:31
But anyway, I've been talking for a while.
49:33
I'm going to end it there. Maybe we'll have another space
49:36
at some point with as more news comes out, but I'll be writing
49:39
more about this. And yeah, I think I think you
49:44
got a really, you know, I've seen these these situations over
49:47
and over again where you've got like this, Do you got new, new
49:53
players in this market? And then there's it's like a
49:57
huge opportunity. And then but it happens the
49:59
other way around it actually large players come in and buy
50:01
the, the, the small guys because the markets are big and
50:04
strategic. Whereas here you've got the new
50:06
players that are worth more than the old players.
50:09
And then they might, they might go consolidate and buy them.
50:13
But I think it's important to note that this market is going
50:17
to be a two player market. There's already alliances and
50:21
battle. You know, the, the lines are
50:24
being drawn. And so, you know, there's
50:27
Starlink, it's a private company, you know, it's highly,
50:30
highly valued, you know, 270, two, $180 billion.
50:33
And you got HD Space Mobile, the scrappy company out of Midland
50:37
who has developed over 50 global MNO partnerships around the
50:42
world. You know, now we've got what, 4
50:44
definitive commercial agreements, one that was
50:47
announced with Saudi Telecom. They're paying $175 billion
50:49
upfront and you know, the contract is worth, depending on
50:54
how you read it, maybe it's $1.8 billion.
50:56
And and these are minimums over 10 years, which that deal also
51:02
opens up S band spectrum in in Saudi Arabia and probably over
51:08
15 other countries. And you know, we've got St.
51:11
investment from Google, American power.
51:14
I mean, these are all things sometimes we forget and you
51:17
know, a lost partnership with a whole host of, you know, SpaceX,
51:21
of course, Lorgen, Israel and perhaps a few others in, in
51:26
probably in the next year we'll get inked.
51:28
And so, yeah, it's an exciting time.
51:30
And I think I think for anybody, whether you are a SpaceX
51:33
shareholder, you should be quite happy.
51:36
And if you're an AC space mobile shareholder, you should be quite
51:38
happy because I think this ecosystem is going to evolve
51:42
down to two players, which are those two.
51:45
And the economics that they are going to be able to charge are
51:49
going to be very high. And the, the service, the value
51:53
of the service is going to be very high.
51:55
And it's going to be dual use, right?
51:56
It's not just going to be consumer, but it's also going to
51:59
be defence and government applications as well.
52:02
So as we think about like AI in the connected future and what's
52:07
required, Yeah, I think, I think these two companies are going to
52:10
stand out. And yeah, we're, we're, we're
52:15
lucky to have caught lightning in a bottle and now we're seeing
52:20
the power of these two companies that are basically now putting
52:24
the old incumbents out of business and taking over.
52:27
They're not even taking over their businesses.
52:28
They're just, they're like, I'm going to buy you for your
52:30
spectrum because I can use it much better than you.
52:34
And so that's, that's a pretty powerful statement.
52:37
But anyway, I'm rambling now. I'm going to end it there.
52:41
We'll cock again. And yeah, if you guys have any
52:44
questions, feel free to add it to this tweet and I'll try to
52:48
answer them if I can, but we'll talk again.
52:51
Thanks. Thanks for listening to the AST
52:54
Space Mobile podcast. If you enjoyed this episode and
52:58
you'd like to help support the podcast, please share it with
53:00
others, post about it on social media, or leave a rating and
53:04
review. To catch all the latest news
53:06
about AST Space Mobile, make sure to subscribe.
53:10
Thanks again and I'll see you next time.
53:16
We're doing something very, very big and I think with this
53:18
technology we can really affect billion lives.
53:21
AST space globally is the only company that has proven
53:24
technology to deliver several broadband connectivity directly
53:29
from space to do everyday smartphone.
53:32
People will just basically turn their phone and be seamless,
53:35
regardless of where you are. We don't want the user to know
53:38
that it's connected by satellite.
53:41
Our role is to bring this into reality, always in partnership
53:44
with the animal. Listen, Waffles.