Latest / AST SpaceMobile Podcast / Hennessy Funds - AST SpaceMobile: Transforming How the World Connects

Transcript

Hennessy Funds - AST SpaceMobile: Transforming How the World Connects · AST SpaceMobile Podcast

• 0:00
  The following is an audio reading of the Hennessy Funds
• 0:02
  article AST Space Mobile Transforming How the World
• 0:05
  Connects. A link to the article is
• 0:07
  included in the show notes. This is the AST Space Mobile
• 0:18
  podcast. We will just basically turn your
• 0:22
  phone and be simplest, regardless of where you are.
• 0:25
  We don't want the user even to know that it's connected by
• 0:27
  satellite satellite. Listen the.
• 0:31
  Opportunity that we have is very, very, very large.
• 0:36
  AST Space Mobile Transforming how the world connects AST is
• 0:42
  building the first and only space based cellular broadband
• 0:45
  network accessible directly by everyday smartphones with both
• 0:48
  commercial and government applications.
• 0:50
  With strategic investments from leading technology players such
• 0:53
  as AT&T, Verizon, Vodafone and Google, AST has the bold goal to
• 0:57
  provide uninterrupted broadband connectivity everywhere.
• 1:01
  AST's vision is to provide mobile broadband wireless
• 1:04
  coverage to existing cell phones in partnership with today's
• 1:06
  global mobile network operators, Mnos.
• 1:09
  Supplemental coverage from space through AST's satellites would
• 1:13
  be a breakthrough for the wireless and satellite
• 1:15
  industries, allowing satellite delivered mobile wireless
• 1:18
  service to expand beyond niche applications we see today to
• 1:22
  broad consumer adoption. Even in 2026, billions of people
• 1:26
  around the world have no or limited mobile Internet access.
• 1:29
  Among a global population of 8.2 billion, 5.8 billion unique
• 1:33
  cellular subscribers move in and out of basic and broadband
• 1:36
  wireless coverage daily, while more than 3.4 billion people are
• 1:39
  unable to access cellular broadband.
• 1:41
  Of these, 3 billion have a usage gap and 400 million have no cell
• 1:46
  coverage. In fact, 90% of the Earth's
• 1:48
  surface has no cell coverage whatsoever.
• 1:50
  Even in covered areas, there are millions of dead zones in Gray
• 1:53
  zones in existing terrestrial networks.
• 1:56
  AST plans to eliminate these gaps by providing an overlay or
• 2:00
  supplemental broadband service that mobile subscribers can opt
• 2:03
  into through their MN OS domestic service plans,
• 2:06
  resulting in broadband coverage for the unconnected billions.
• 2:09
  AST has announced plans to launch over 540 dual use
• 2:13
  satellites over the next seven years designed to eliminate
• 2:15
  global connectivity gaps for commercial and government users.
• 2:18
  4 separate constellations are envisioned, engineered to serve
• 2:22
  either C band, mid band and low band communication spectrum.
• 2:26
  The first constellation will consist of up to 248 low band
• 2:29
  satellites orbiting between 285 to 329 miles above Earth.
• 2:34
  Seven years in development, these lowband Bluebird
• 2:37
  satellites use a novel design, internally developed software
• 2:41
  and custom hardware that is then spliced into the wireless
• 2:44
  operator SCORE network through an equipment partnership with
• 2:47
  Nokia. This technique allows a cell
• 2:49
  phone to see a virtual cell tower broadcasting on either
• 2:52
  their MNO partners existing terrestrial spectrum or later on
• 2:55
  mobile satellite service MSS spectrum owned or leased by AST.
• 3:00
  If the war in Iran has taught us anything, it is that ground
• 3:03
  based radar is vulnerable to missiles and drones guided by
• 3:06
  satellite systems. If our ground based radars are
• 3:09
  knocked out, our defensive interceptors are blind.
• 3:11
  This vulnerability is being rapidly incorporated into US
• 3:15
  defense thinking. We have heard such comments
• 3:17
  repeatedly at several of the defense related conferences we
• 3:20
  recently attended. It is quickly becoming
• 3:22
  imperative that the US and allied forces have a second set
• 3:25
  of eyes in every global theater not subject to the same ground
• 3:29
  based risks seen in the Middle East.
• 3:31
  Our legacy missile defense systems, often composed of
• 3:34
  ground radar, Geo, geosynchronous Equatorial orbit
• 3:38
  satellites, and terrestrial interceptor batteries, are
• 3:40
  designed to neutralize traditional short and long range
• 3:43
  missiles. The trajectory of these missiles
• 3:45
  is predictable from shortly after launch, making them
• 3:47
  relatively straightforward to intercept.
• 3:50
  However, newer long range missiles such as hypersonic and
• 3:53
  advanced ICBM's can change trajectory during travel and
• 3:57
  sometimes include decoys and multiple warheads made to full
• 4:00
  existing missile defense systems.
• 4:02
  This makes these missiles much more challenging to neutralize.
• 4:05
  the US and its allies are vulnerable to these advanced
• 4:08
  weapons and need a faster, more accurate, and more distributed
• 4:12
  missile defense system in response.
• 4:13
  The unprecedented size and power of ASTS Leo low Earth orbit
• 4:17
  satellites make them especially well suited to assist in
• 4:20
  tracking modern missiles along with a variety of other high
• 4:23
  value function. Research reveals excellent
• 4:25
  effective isotropic radiated power output power of a signal
• 4:29
  when it is concentrated into a smaller area by the antenna and
• 4:33
  gain to noise temperature. How well the system can detect
• 4:36
  weak signals emits noise, enabling a variety of novel
• 4:39
  capabilities. ASTS work with.
• 4:41
  The federal government continues to build with both defense and
• 4:44
  communications applications in various stages of testing and
• 4:46
  development. In terms of defense, AST was
• 4:50
  awarded a contract with the Missile Defense Agency's SHIELD
• 4:53
  program, which is part of the broader Golden Dome strategy
• 4:57
  focused on building resilient, layered protection against air,
• 5:00
  missile, space, cyber and hybrid threats from all operational
• 5:04
  domain. The selection positions AST
• 5:06
  Space Mobile to compete for a wide range of future task orders
• 5:09
  across research, development, engineering, prototyping and
• 5:13
  operations of critical Missile Defense Agency systems that
• 5:16
  support US National Security objectives.
• 5:18
  Supporting high value military radar applications such as
• 5:21
  synthetic aperture radar, high resolution imaging using radar
• 5:25
  signal reflections, ground moving target indication and
• 5:28
  missile tracking. Assured and alternative PNT
• 5:31
  position navigation and timing providing a stronger jam
• 5:35
  resistant signal compared to existing GPS.
• 5:38
  Improving indoor reception in cybersecurity through
• 5:40
  authentication and encryption. Blue force tracking and identify
• 5:44
  friend or foe. Improving situational awareness
• 5:46
  of troop and asset locations. Reducing friendly fire
• 5:50
  incidents. UAS drone control.
• 5:52
  Enabling remote control of unmanned aerial systems.
• 5:54
  UAS in areas lacking terrestrial infrastructure.
• 5:57
  Signal intelligence. Detecting and reading
• 6:00
  electromagnetic emissions of the enemy.
• 6:03
  Signal jamming. Jamming enemy signals over large
• 6:06
  geographical areas, such as maritime zones and remote areas
• 6:09
  where terrestrial jammers are impractical.
• 6:12
  In February, AST entered into an agreement with the United States
• 6:15
  space development agency SDA for the Europa Track 2 Commercial
• 6:20
  Solutions program. The agreement has a total
• 6:22
  contract value of approximately $30 million.
• 6:26
  The Europa Track 2 effort is focused on delivering immediate,
• 6:29
  operationally relevant tactical communications capabilities to
• 6:33
  U.S. forces around the globe. While just an initial agreement,
• 6:37
  successful trials could lead to large recurring government
• 6:40
  service contracts that harness the dual reduce Bluebird's
• 6:43
  global reach, broadband capabilities and encrypted
• 6:46
  communications. AST is also poised to enable
• 6:49
  supplemental coverage for US first responders, law
• 6:52
  enforcement, fire, rescue, EMS, Emergency Management who require
• 6:56
  full geographic coverage and 100% up time, including during
• 6:59
  natural disasters, in order to provide mission critical
• 7:01
  services. AST is partnered with both AT&T
• 7:04
  and Verizon and integration continues with AT&T's first net
• 7:08
  partnership in the US AST recently announced A definitive
• 7:12
  agreement with Singapore's DSTA Defense Science and Technology
• 7:16
  Agency, which builds on a previous MOU.
• 7:20
  And we believe AST is working with numerous Mnos and or
• 7:23
  governments in Europe, the Middle East and Central and
• 7:25
  South America to expand public safety connectivity.
• 7:28
  We believe these hybrid partnerships will be an
• 7:31
  important and stable part of their business going forward.
• 7:34
  Most developed nations will want defense and emergency services
• 7:38
  capabilities similar to the US. For example, we understand that
• 7:41
  NATO's future SAT COM program is actively exploring using AST for
• 7:46
  5G direct to device service. And Vodafone, AST's joint
• 7:51
  venture partner in Europe, offers mission critical
• 7:54
  emergency services to 1st responders.
• 7:56
  They plan to add direct to device mobile broadband
• 7:59
  satellite services to this offering across the EU when it
• 8:02
  is available through their Satellite Connect Europe joint
• 8:04
  venture. To estimate AST's non-us defense
• 8:07
  opportunity, we begin with our US Dow revenue estimate of $1.00
• 8:11
  to $2.5 billion per annum. We haircut this by half to
• 8:15
  reflect smaller NATO and non NATO allied nation defense
• 8:18
  budgets cumulatively 0, $1.5 trillion versus $1.00 trillion
• 8:22
  at Dow and adjust further because these nations will
• 8:24
  likely spend a lower percentage of their budgets on satellite
• 8:27
  capabilities leveraging the US Golden Dome where permitted.
• 8:30
  In total, we estimate that AST will generate $300 to $750
• 8:35
  million in an annual revenue from non-us defense spending in
• 8:38
  the intermediate term. To estimate ASTS non-us first
• 8:43
  responder opportunity, we begin with our US first responder
• 8:46
  revenue estimate of $720 million per annum.
• 8:49
  We adjust our U number to account for differences in
• 8:52
  population in GDP across all developed nations X China and
• 8:56
  further adjust for the likelihood that AST will have
• 8:58
  lower first responder market share internationally.
• 9:01
  In total, we estimate that AST will generate $400 million in
• 9:05
  annual revenue from non-us first responders in the intermediate
• 9:09
  term. In total, as previously
• 9:11
  itemized, we expect AST will generate 2.4 to $4.4 billion in
• 9:15
  annual revenue from worldwide military and 1st responder
• 9:18
  opportunities in the intermediate term.
• 9:19
  Beyond this, the US National Intelligence Program has a
• 9:22
  budget of about $80 billion VS about $1 trillion at the Dow,
• 9:27
  which we do not specifically account for in this exercise.
• 9:30
  That said, it seems clear that many of the capabilities that
• 9:34
  AST is potentially providing to the Dow would also be valuable
• 9:38
  to intelligence agencies both here and abroad.
• 9:40
  Over the course of 2025, AST made enormous strides in the
• 9:44
  design, construction and assembly of its full size 2400
• 9:48
  SF dual use low band communication satellites that
• 9:52
  will become the backbone of its fleet.
• 9:54
  In December 2025, after the successful launch of the first
• 9:58
  full size Block 2 Bluebird 6 satellite, AST announced that it
• 10:02
  had stabilized the spacecraft and fully deployed its massive
• 10:05
  phased array. Our discussions with the company
• 10:07
  lead us to believe the satellite is performing as expected
• 10:10
  mechanically. The next step is to dial in the
• 10:12
  software used to control beamforming and RF
• 10:15
  transmissions. This requires an iterative
• 10:17
  process that involves software elements that control the
• 10:20
  satellite, the ground station antennas and AST's equipment
• 10:23
  that interconnects with the MNO's core network.
• 10:26
  Though time consuming, these learnings will be adapted across
• 10:28
  all the satellites launched in the coming years.
• 10:31
  In February 2026, AST shipped B to BB7 to Cape Canaveral for
• 10:37
  launch on a Blue Origin New Glen rocket in mid-april 2026.
• 10:42
  A successful launch on a New Glen rocket would represent the
• 10:45
  third global launch provider AST can use for launch services, and
• 10:49
  an important milestone as AST seeks to diversify its service
• 10:52
  provider network and keep multiple parties competing for
• 10:55
  its launch business. Though the boost stage worked,
• 10:58
  Florida State, the second stage, failed to lift B2BB7 to its
• 11:02
  intended orbit. While the satellite separated
• 11:04
  from the launch vehicle and powered on, the altitude was too
• 11:07
  low to sustain operations. Consequently, the satellite was
• 11:11
  deorbited a few days later and burned up in the atmosphere. 1
• 11:15
  consolation is that the cost of the satellite is expected to be
• 11:18
  recovered under an insurance policy.
• 11:21
  The FAA is leading an investigation into the second
• 11:23
  stage failure and it may be a month or more before the
• 11:26
  findings are released and Blue Origins modifications are
• 11:29
  approved and implemented. Blue Origin is slated to be an
• 11:32
  important provider of launch services in the second-half of
• 11:35
  the year for AST, but a thorough investigation is warranted
• 11:38
  before they can resume launches from Florida.
• 11:40
  AST is currently in production through Bluebird 32, with
• 11:43
  Bluebirds 8 to 10 expected to be ready to ship to Cape Canaveral
• 11:48
  by mid-May with production and launch cadence picking up from
• 11:51
  there as they ramp to six satellites per month.
• 11:54
  AST should be able to build and launch approximately 45
• 11:57
  satellites this year, which would result in activation of
• 12:00
  nearly continuous service in the US as well as parts of Europe,
• 12:03
  Japan and the Middle East. Their goal remains a
• 12:06
  constellation of approximately 90 to 95 B2 BBS in service by
• 12:11
  year end 2027. In the spectrum arena, the
• 12:14
  company continues its global efforts.
• 12:16
  They reached a successful conclusion of the Legato
• 12:19
  litigation, which will allow AST access to North American L band
• 12:22
  MSS for its Block 3 Bluebird satellites, the first of which
• 12:27
  is expected launch at the end of 2026 or early 2027.
• 12:31
  The B3 BBS will use mid band spectrum, both L&S band that
• 12:35
  will allow more data throughput at faster speeds than the B2 BBS
• 12:39
  Block Twos are more coverage focus while block threes are
• 12:42
  more capacity oriented. AST is pursing 2 gigahertz S
• 12:47
  band spectrum in Europe through regulatory channels and it's
• 12:50
  partnership with Vodafone and is working on MSS applications in
• 12:54
  Brazil, Mexico and other international locations.
• 12:58
  Starlink, a satellite Internet constellation wholly owned by
• 13:01
  aerospace company SpaceX, is best known for it's satellite to
• 13:04
  home Internet service. But four years ago Starlink
• 13:08
  teamed with T-Mobile USA to develop and launch a new and
• 13:11
  well funded direct to cell competitor to AST.
• 13:15
  However, Starlink's planned direct to cell voice and data
• 13:18
  service is now limited to simple text messaging, location sharing
• 13:22
  and a few essential apps that offer VoIP but no broadband or
• 13:25
  Internet connectivity. To work, the service requires
• 13:28
  users be outdoors with a direct view of the sky while their hand
• 13:32
  off puts a heavy strain on a cell phone's battery.
• 13:35
  Starlink plans a reboot with newly designed Direct to sell
• 13:37
  satellites with new capabilities.
• 13:39
  These are expected to launch on its larger Starship rocket after
• 13:42
  receiving regulatory approval. In April, Amazon announced that
• 13:46
  it will acquire Global Star, a mobile satellite services
• 13:49
  operator known for powering Apple's Emergency SOS feature,
• 13:53
  in a 12 Bibli transaction expected to close in 2027.
• 13:57
  This text only direct to sell offering will be paired with
• 13:59
  Amazon Leo, Amazon Satellite to Home Internet Service, whose
• 14:03
  satellites are just now being launched.
• 14:05
  Amazon Leo will ultimately consist of thousands of
• 14:07
  satellites and compete directly with Starlink Satellite to Home
• 14:10
  Internet services. It will likely be two to five
• 14:13
  year Ras before Amazon Leo has the capacity or coverage to
• 14:16
  compete with Starlake on home Internet services and we believe
• 14:19
  that AST will not see any additional competition from a
• 14:22
  revamped or reconstituted Amazon Global Star based direct to cell
• 14:26
  service before 20-30. We believe Amazon will receive
• 14:29
  the necessary regulatory approvals over the next year to
• 14:32
  acquire Global Star based on recent comments by Federal
• 14:35
  Communications Commission FCC Chairman Brendan Carr who went
• 14:38
  on record saying he supports 3 direct to cell competitors in
• 14:41
  the US. The question remains, will
• 14:43
  Amazon Global Star remain a bolt on service with the MN OS like
• 14:47
  Starlink Direct to sell or Apple SOS today or will it take the
• 14:51
  much more difficult route over the remainder of the decade of
• 14:53
  engineering a service that integrates into an MN OS core
• 14:56
  network as AST has already done? Supporting our view, we believe
• 15:00
  that AST Founder, Chairman and CEO Abel Avellan has assembled a
• 15:05
  first class space and wireless technical team Paired with
• 15:08
  strong commercial, regulatory and legal talent.
• 15:12
  They have now put in place a team of close to 2000 employees
• 15:15
  in five countries. Over the last five years, we
• 15:18
  have had the opportunity to meet many of their senior leaders,
• 15:20
  engineers, scientists and Midland Factory employees during
• 15:24
  our visits to headquarters in Midland, TX and during the
• 15:26
  launch events in Cape Canaveral. In addition to their employee
• 15:29
  growth, AST continues to add industry thought leaders and
• 15:32
  partners to its Board of Directors.
• 15:34
  The last six months showed increasing operational momentum,
• 15:37
  growing government interest, artful balance sheet management
• 15:40
  and new company forecasts of revenues approaching $1 billion
• 15:44
  in 2027, the first full year of continuous coverage across key
• 15:48
  markets. The company recently filed to
• 15:50
  increase its constellation shells to four and it's
• 15:52
  satellite count from 248 to 543 at the ITU National
• 15:56
  Telecommunications Union. These planned satellites will
• 15:59
  now include Mobile User Objective System, MUOS
• 16:02
  augmentation bands, low band and ACE band capabilities and circle
• 16:06
  the globe in staggered attitudes up to 740 kilometers in two new
• 16:10
  inclinations of 40 and 55°, including up to 28 Sun
• 16:14
  synchronous and 18 Equatorial satellite.
• 16:17
  Look For more information flow from Europe around their work
• 16:20
  with Vodafone on IRIS 2 Satellite Connect Europe and S
• 16:23
  band allocations over the course of the year.
• 16:26
  In the US, the FCC has granted AST full commercial
• 16:29
  authorization to deploy its initial shell of 248 non
• 16:33
  geostationary satellites, while the ITU application to expand to
• 16:36
  543 is pending. We continue to believe we are on
• 16:39
  the cusp of a new communication revolution with decades of
• 16:42
  potential growth in front of it and believe AST will play an
• 16:46
  integral role. AST is a special situation
• 16:49
  investment for the Hennessy Focus Fund as it does not meet
• 16:51
  the funds typical compounder model of historically producing
• 16:54
  a sustained mid teens or higher rate of earnings growth.
• 16:57
  However, we believe it presents a very compelling emerging
• 17:01
  compounder profile with a favorable risk return profile at
• 17:04
  today's price. Thanks for listening to the AST
• 17:14
  Space Mobile podcast. If you enjoyed this episode and
• 17:18
  you'd like to help support the podcast, please share it with
• 17:21
  others, post about it on social media, or leave a rating and
• 17:24
  review. To catch all the latest news
• 17:27
  about AST Space Mobile, make sure to subscribe.
• 17:30
  Thanks again and I'll see you next time.
• 17:36
  We're doing something very, very big and I think with this
• 17:38
  technology we can really affect billion lives.
• 17:41
  ASP Space globally is the only company that has food technology
• 17:46
  to deliver cellular broadband connectivity directly from space
• 17:50
  To do everyday smartphone. People will just basically turn
• 17:53
  their phone and be seamless, regardless of where you are.
• 17:57
  We don't want the user even to know that it's connected by
• 17:59
  satellite. Our role is to bring this into
• 18:03
  reality, always in partnership with the MMO.
• 18:12
  Listen, Waffles.