Latest / AST SpaceMobile Podcast / Anpanman - SpaceX / Echostar spectrum transaction strategic implications

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Anpanman - SpaceX / Echostar spectrum transaction strategic implications · AST SpaceMobile Podcast

0:06
This is the AST Space Mobile podcast.
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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 satellite.
0:21
Listen, the opportunity that we have is very, very, very large.
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Large. Everyone interesting morning
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never a dull day it seems with our favorite company SD Space
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mobile. Thanks everyone for joining.
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If people can give me a thumbs up.
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I want to make sure I don't have kook like AV issues.
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So I just want to make sure that people can hear me before I
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continue here. Just check here.
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And by the way, I am reporting this space.
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So to the extent there's any people who miss it or come late,
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you can feel free to listen to this afterwards.
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But I see some thumbs up, so I'm going to continue.
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Yeah, so interesting news out today.
1:12
This was a potential outcome that I think the market was
1:17
pricing in a relatively low probability, but it came.
1:21
So let's talk about the implications here.
1:24
So this morning, Echostar announced a deal to sell it's
1:30
AWS 4, AWS 3 spectrum to SpaceX and they also sold their H block
1:37
spectrum as well, which I believe neighbors the existing
1:42
spectrum that they're using for the T-Mobile direct to device
1:47
service, which is the G block. But but yeah, I think it's
1:52
important to take a step back. I think most people think or
1:56
obviously there was like some selling pressure this morning
1:58
and obviously people are concerned, you know, Oh my gosh,
2:01
it's SpaceX. They're getting their hands on
2:03
Spectrum. What does this mean for the
2:04
company is, you know, I think it's important to kind of look
2:09
at, take a step back and look at everything in totality and straw
2:14
in a very, you know, take a breath, meet breath and you
2:18
know, think about the strategic implications near term and long
2:20
term for what this means. So on the positive side, I think
2:25
importantly this validates AST's face Mobile's business strategy.
2:29
If I mean, as many shareholders, long term shareholders will know
2:33
that many in the industry, legacy players, whoever just
2:38
Pooh poohed this market just didn't think that there was real
2:40
meat here. That threat to device made any
2:43
economic sense that you know, would people be using it?
2:47
Is the technology going to work? I mean, today you just had
2:50
SpaceX laid down a $17 billion bet on Spectrum specifically for
2:55
direct advice. So I think that kind of puts the
2:59
bed any notion that this is not a real market or that it's not
3:02
going to be huge. And this is true validation for
3:06
the company that, you know, created this market back in 2017
3:10
and has been working relentlessly away at, at, you
3:16
know, putting up a consolation and, and service.
3:18
And so this is a huge validation.
3:21
I think it's also clear to the MN OS that just given the
3:26
backing that ASD space model was had and some interest from
3:29
SpaceX that this is where the growth and investments going to
3:32
go for mobile operators. It's going to be direct to
3:36
device. You're going to have to partner
3:38
with one of these two players, which I think now today's
3:42
Spectrum acquisition on behalf of SpaceX now so defies that
3:46
this is going to basically be a two player market.
3:49
I think for SpaceX, and I'll talk about this a bit more.
3:53
This is a transaction that they absolutely had to do.
3:55
And so it was a very strategic move for them and a very smart
3:58
move for them. But I think it brings them
4:02
closer to in terms of future potential, brings them closer to
4:07
parity in terms of what AST is doing, because they'll
4:11
eventually I, I think, you know, in terms of technology, they'll,
4:15
they'll iterate and iterate and they'll eventually get to
4:17
something that's that I think is going to be competitive with ASD
4:20
space mobile. The question from that point, of
4:24
course is going to be business model and partnerships, which I
4:27
think is a very critical piece that I think new people to the
4:32
sector don't fully appreciate, but they will as they kind of
4:35
feel back layers of the union. This also underscores
4:39
invalidates the company's spectrum of strategy, which I
4:42
think back in, I mean, it was only a few months ago in January
4:45
when when ASD announced a deal with Legato, a lot of people
4:48
questioned the strategic importance of that.
4:51
And you know, is it pivoting the business?
4:53
But I think the company is, if you talk with management, this
4:57
is always been something that they were contemplating for
4:59
years, that they in the end, you do want to have your own
5:03
spectrum and that there's a an abundance of S band spectrum
5:08
around the world, which which is up for grabs.
5:11
And in in in the current state of satellite technology, is it
5:17
being utilized or couldn't be utilized?
5:19
But with the advent of these new technologies will be properly
5:22
utilized and, and made quite valuable.
5:24
So I think it was, you know, a masterful move by the company to
5:32
to acquire the Legato spectrum out of bankruptcy with the 80
5:35
year rights they got those that that spectrum 45 megahertz
5:40
across the US and Canada for what is now really a song.
5:45
I mean, today's $17 billion transaction, I think
5:48
conservatively probably puts Legato's value around 20 billion
5:53
just given that it's, it's lower band than than the 80 VS 3 and
5:58
80 VS 4, which is 2 gigahertz. Legato's, you know, 1.5
6:02
gigahertz. And so, you know, I'll talk a
6:05
bit more about some of the parts value, but I mean if Legato's
6:08
worth 15 to $20 billion in AST Space Mobile, you know when it
6:12
got down to this morning, somebody sold, I don't know who
6:15
it was, but they sold it down to 36.
6:19
The enterprise value at that point was basically 12 billion.
6:21
So it was trading below spectrum value, which is, which is kind
6:25
of silly. Legato alone is worth more than
6:29
the current enterprise value of AST Space Mobile.
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So if you are a growth or sorry a growth at reasonable prices
6:35
investor or a a value investor, then I have a name for you
6:41
called HD Space Mobile. And you've seen for example,
6:45
some of these other companies that have spectrum, whether it's
6:49
Global Star or ViaSat, they've all traded up significantly that
6:53
that's for a reason. Because I think now direct to
6:56
device the the underlying satellite technologies are going
7:02
to be able to really thoroughly unlock the value of S band
7:05
spectrum and utilize it in such a way that is going to be quite
7:08
valuable for consumers, which is how use it utilizing that
7:14
spectrum in a form factor. That's just your normal mobile
7:17
phone. It'll be added to chipsets and
7:19
then, you know, you'll have connectivity everywhere, whether
7:23
that's in dead spot, current dead spots or over water or even
7:28
augmenting, you know, bolstering an existing MN OS special
7:34
special coverage. You'll have that additional
7:36
capacity of, you know, whether that's from from Starlink, which
7:40
is going to have I think in the USI don't think it's like 50
7:44
megahertz of spectrum or AC space mobile, which is 45
7:47
megahertz. And that's just spectrum, right.
7:50
So we'll have to talk about the underlying technologies and and
7:53
what that means for speeds. And, and SpaceX has made some
7:56
claims in the press release today that the V3 satellites
8:00
will have higher capacity, which is which is good.
8:02
I mean, they're iterating their technology and it looks like
8:05
they have also gotten on board with their they're going to be
8:08
putting together their own ASIC, which makes sense, right?
8:11
You shouldn't be doing this stuff with Fpgas.
8:14
But anyway. But yeah, I think this
8:17
underscores the importance of ASD spectrum strategy, which now
8:20
has been validated as well. This also, you know, by having
8:26
spectrum, it gives you an additional tool that you bring,
8:31
you know, it's a, it's a carrot and a stick to M&M negotiations
8:34
that you know, we've got spectrum, so we're going to
8:37
utilize your terrestrial spectrum, but we can also
8:39
bolster it with what we bring in the L&S band.
8:43
But then also in negotiations, you know it, it gives you quite
8:48
a bit more leverage when you bring spectrum to the table
8:50
because you're bringing an asset that can be utilized by the
8:53
carriers. This transaction and I, I made
8:58
this point earlier, this brings M&O's much closer to AC Space
9:02
mobile. So I think it's important to
9:04
understand that AST is not in the game of becoming a mobile
9:09
network operator. They do not want to be with
9:11
M&O's. They have no ambitions to do so.
9:14
They are a super wholesaler. And so they will sell their
9:19
service by their, their consolation will be utilizing
9:22
the M&O's cellular spectrum. But then the second consolation
9:26
will be providing service via L&S ban, but that will be in
9:30
full partnership with M and OS, whereas I think Starlink is, I
9:36
don't think Alan has made any, he hasn't you know, hidden his
9:39
ambitions at all that eventually he wants to go directly to
9:43
consumers potentially with his own phone.
9:45
And so I think Starlink and we've talked about this for
9:48
quite some time now for years that just, you know, Starlink's
9:52
business model is incompatible with M and OS initially that's
9:56
their core business, which is fixed wireless service.
10:00
The, the service that provides broadband directly to a dish on
10:03
top of your home or or your your vehicle.
10:07
That is in direct competition with the fixed wireless service
10:10
that T-Mobile, Rise and AT&T are providing directly to your home,
10:14
which some of those guys call it 5G Internet.
10:17
So that, that, and of course that also by the way, competes
10:20
with fiber, not, not as much, but it still is a direct
10:23
competition to fiber. And so that's the area that all
10:27
the wireless guys are focused on in terms of their core business.
10:31
They, they see growth in Subs for fixed wireless and fiber.
10:36
That's why they're investing more heavily in those areas.
10:38
But now that interestingly, now that Starlink has acquired this
10:42
spectrum, not only are they competing directly for fixed
10:46
wireless, they're going to start encroaching on the mobile
10:52
wireless businesses of all these of these companies, which is
10:55
why, you know, you see T-Mobile down quite a or I guess it's
11:00
recovered a little more. But you know, T-Mobile right now
11:03
has lost 12.2 billion in market cap from the steel, whereas I
11:07
think 18 TS down 7 billion in market cap and and Verizon's
11:13
down like 4 billion. But this is A and and look, this
11:18
is early days, so it's going to take quite some time to see how
11:21
these things play out and what T-mobile's reactions are.
11:24
But this kind of underscores that I think over the long run,
11:29
Starlink wants to compete with them and OS by buying these
11:34
licenses from Echostar. They will have the rights in the
11:37
USI believe in Canada as well and a few other select markets.
11:42
They will have these rights as well in Europe through 2027.
11:47
But I do think regulators there, we'll probably end up dividing
11:51
up S band spectrum when they come up for renewal in 2027.
11:54
My guess is that they'll split it in between three players.
11:58
One would be Iris, which is their homegrown solution or that
12:02
they're attempting to to, you know, develop the solution.
12:06
Then you've got you know the question around whether they
12:09
renew the license for Echostar, which will be Starlink and I
12:12
think as we all know, maybe perhaps things will change for a
12:17
lawn in 20/26/2020 seven. Maybe it would come more
12:21
friendly with European governments, which will smooth
12:24
that process to get those S ban licenses renewed.
12:28
But then I think the third, the third player would be HD space
12:32
mobile. I think they'll get licenses as
12:34
well through the South court. JVI guess the wild card in
12:37
Europe would be whether or not Sterling is able to get those S
12:41
ban rights. But for Sterling, it's important
12:44
because given their technology architecture, they don't.
12:47
They can't operate within borders of small countries
12:51
because there's just a lot of interference in the way that the
12:54
architecture works is that they can't put down very precise
12:58
beams, although that's probably going to improve over time.
13:00
But what MSS Spectrum does for you is that you don't have to
13:06
project very precise beams. You can just cover entire areas
13:10
pretty, pretty easily without having to worry about
13:13
interference because that spectrum goes across various
13:17
countries and you don't, you don't have to respect borders or
13:21
any of that or it's not as much of a problem.
13:24
So, and that, that's partially why SpaceX absolutely had to do
13:28
this deal because given their current technology architecture
13:32
by owning spectrum and, and by the way, this is like a pretty
13:36
decent amount of spectrum. It's 50 megahertz in the US and
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I have to go back and see how much they actually have access
13:44
to in Europe. But it gives their, it gives
13:48
their service more, more spectrum and it will boost
13:52
capacity and, and and it'll allow them to provide more
13:56
broadband like services. So, so again, I think if if
14:01
SpaceX was going to be stuck just using partner terrestrial
14:05
spectrum, that was always going to be a very, very tough
14:07
business to get off the ground. Whereas now I think they will be
14:11
able to offer eventually in the long term a a service that's
14:14
that's pretty, pretty decent. Let's see here.
14:18
I just have a few notes here. But yeah, I think I think for M
14:24
and OS like this is a pretty big net negative because I think
14:28
what was theoretical about Starlink, eventually, you know
14:32
Starlink's already eating some of your lunch and fix wireless,
14:35
but now Starlink's can be focused on potentially getting
14:39
some type of mobile wireless service going.
14:43
I think that is a big net negative for M and OS, which is
14:46
why again going back to the previous point, AST becomes that
14:50
much more important for M and OS as a counterbalance to to
14:54
Starlink. The other thing I would mention
14:57
is that for for anyone who thinks that Starlink is going to
15:01
go, you know, become a full-fledged M&O itself, there
15:04
are a few steps that Starlink has to undertake in order to get
15:08
there. Most importantly is that
15:10
Starlink did not have access to low band spectrum, so the 600 to
15:14
900 megahertz instead of their spectrum.
15:17
And that spectrum is not readily available because it's pretty
15:20
much owned by carrier various carriers around the world.
15:24
But the way that Starlink could get around that is, you know,
15:27
you could see Starlink partner, for example, you know, T-Mobile
15:30
is a new sub spot. Starling says, hey, I want to
15:33
start my own service. I want to sell phones directly
15:35
to consumers and we work out a virtual network operator
15:39
partnership, which is what, for example, Boost Mobile does today
15:44
or Mints or any of these other, you know, these other mobile
15:48
virtual network operators. So Starling could partner with
15:52
T-Mobile, come up with their own branded service where the
15:57
network, the low band and coverage is offloaded onto it's
16:01
a T-Mobile, but then Starlink when it can, it'll try to
16:05
provide service through a satellite.
16:08
That's a possibility. But trying to create a new MNO
16:13
is really tough. I, I don't think Starlink can
16:16
under can do it on their own. They'll have to do it in
16:20
partnership as a virtual network operator or I get this is and
16:25
this is like really, really long term.
16:26
If Starlink really wanted to get in the business, I guess they
16:30
could acquire try to acquire T-Mobile at somewhere in the
16:32
future. But that's a lot of money.
16:34
And I'm not sure SpaceX months to become an MNO, but who knows,
16:39
right. But if they do that, then they
16:43
would have to if they want to be globally, they would have to buy
16:47
a mobile network operators globally.
16:50
And I think if, as we've all seen over time, I mean, this has
16:53
been, you know, a big T for TMT investors over the long run,
16:58
there's never been a global mobile network operator.
17:01
It's just difficult in, in terms of managing different
17:05
geographies, regulators, different consumers.
17:07
But who knows? But maybe that's what, you know,
17:10
Elon wants to do the long run. And there's, there's a few ways
17:12
to try to get there. But any of those steps, I think
17:16
again, it's really important to understand any of those steps
17:19
just basically puts the MN OS more in bed with AST 6 mobile,
17:25
right? Because they're going to feel
17:26
threatened. And I think it's important to
17:28
reiterate the point that, you know, today AST has over 50
17:32
global MNO partnerships. Starlink has nine that they've
17:36
just closed. I think in their press release
17:37
today, they did say that they're not named.
17:40
They're working with a few more. I wonder why those others don't,
17:44
you know, are, are comfortable with letting the world know who
17:47
they are. But I think from what I
17:51
understand, there's this, this transaction is probably, I mean
17:57
it was a potential outcome, but not a high probably outcome for
18:00
most in the industry. I think people either thought
18:03
that T-Mobile would end up with the spectrum or maybe lower
18:07
probability Verizon would. But now that it's in Sterling's
18:10
hands, I think there was a summer for article that came out
18:14
because it was last week where Deutsche Telecom supposedly had
18:18
told team or was uncomfortable with the price being paid for
18:21
the spectrums. They, they, they had T-Mobile
18:24
buy out of bidding. But I, I, as I tweeted before, I
18:28
think it's pretty interesting that basically SpaceX outbid
18:32
T-Mobile for the spectrum. So SpaceX your partner for
18:36
direct to satellite or satellite direct device T-Mobile, they
18:41
just outpage you for the spectrum.
18:43
So what does that say for your partnership and what does that
18:46
mean? Like, because I think ultimately
18:49
Starlink, the long term view is that they eventually want to eat
18:53
T-mobile's lunch. They want to eat everybody's
18:54
lunch. I mean, that's just that's just
18:57
the SpaceX approach. And you know, more power to him.
19:00
Like all is fair in love and more.
19:02
This is a competitive market. This is what brand new car
19:04
wants. Like he wants more competition.
19:06
He didn't want to see Echo Star build out a shitty consolation
19:11
and not have that spectrum utilized properly.
19:15
He wanted to see it. And as Cassie has pointed out,
19:18
you know, many times spectrum finds its way to its most
19:21
efficient uses. And it just took all the
19:25
spectrum at Echostar. It took slash dish.
19:27
It took over a decade for Charlie to buy it in in
19:31
auctions, you know, and out of bankruptcy for DBSD and
19:35
Terrestar. It took well over a decade for
19:40
that spectrum to eventually find its hands into an efficient
19:42
operator, which is going to be SpaceX.
19:47
But I think like that, you know, this this transaction just
19:51
underscores that what I think, you know, if you've heard Scott
19:55
speak about this or anybody who's familiar with this sector,
19:59
it no one ever said this in this was going to be order takes all,
20:02
but it was going to be a market that supported multiple players
20:05
just given the size, I think. B of A mentioned that the market
20:10
was going to be according to them, they if he gets to be
20:14
around 30 billion annually, and that's just for the consumer
20:16
market. That's never that was never
20:19
going to go to one player, right.
20:20
But now I think with today's deal, it's going to end up going
20:25
to two players unless something crazy happens, right.
20:30
But I think you'll have AST space mobile working partnership
20:33
with the N OS with its own spectrum, Lucado and other S
20:37
band, the rights that's going to pursue around the world, which
20:41
which also by the way, SpaceX will be pursuing too.
20:45
And so I think you'll have those two companies going out to
20:48
regulators around the world asking for an allocation of S
20:52
band spectrum because it is a reminder like S band is not for
20:57
most parts of the world, it has not been allocated and it's not
20:59
being used. And so it's pretty much a
21:01
Greenfield opportunity. So the key thing for regulators
21:03
is that you have credible players who come to you and say,
21:08
hey, we want to utilize S band spectrum.
21:10
We've got a consolation that's coming back, utilize it.
21:14
And it's going to be, it's going to provide, you know, broadband
21:18
activity for nationals in your country, and it's going to
21:22
provide, you know, economic activity and all these wonderful
21:26
benefits. And so, you know, do you give it
21:29
to your HT Space Mobile and SpaceX or do you give it to
21:32
somebody else? Which I think the answer, to me
21:35
at least, seems pretty obvious. Let's see.
21:38
So as I mentioned before, this was a transaction that SpaceX
21:42
absolutely had to do this spectrum, if it were to have
21:46
fallen in Verizon sands, I think would have been pretty bad for
21:50
SpaceX and T-Mobile candidly. But but I think ideally in
21:55
T-mobile's world, they would have, they would have liked to
21:58
have gotten the spectrum and then leased it out or shared it
22:02
with Starling. But now Starling bought it
22:05
directly. So you know the, the, I
22:09
mentioned the Faustian bargain that T-Mobile made the deal with
22:11
the devil. Now it's manifesting itself,
22:14
right? So I, I, it's, it'll be
22:16
interesting to see how T-Mobile spend this in the coming days
22:19
and weeks and months. But, but yeah, I, I would assume
22:24
they'll say this is great and it'll enhance their service.
22:28
The partnership's strong, but I think over the long run, they're
22:30
going to have some pretty difficult questions to ask
22:33
themselves about what value this partnership brings and what type
22:37
of threat does it does it, you know, it's, it's like a parasite
22:43
kind of feeding on your body that eventually will take over
22:45
your body. You know, when do you actually
22:48
cut, cut bait or how do you limit the damage of the
22:51
potential competitive implications of feeding a direct
22:55
competitor? Right.
22:56
So, but yeah, I this is a transaction that SpaceX had to
23:00
do. They have inferior technology,
23:03
at least for now, which they will continue to iterate and get
23:06
better. But this spectrum gives them a
23:09
lot more breathing room in terms of providing a better service.
23:13
And so key question is, you know, are they going to be able
23:15
to get more traction with MN OS and ultimately a long run, are
23:21
they eventually going to try to go direct to consumer right?
23:25
As I mentioned before, regulators, this put SpaceX in a
23:29
pretty good position to get some S band around the world in
23:33
addition to AC space mobile. So I think it's basically going
23:36
to be those two players. And for S bands in markets where
23:40
those rights have not been assigned, I'd assume that they
23:44
are going to be, I don't know if it's equally, but if you're a
23:48
regular in a country, you probably want at least two,
23:52
perhaps even more, you know, three options for service.
23:56
And so I think you'll see AC space mobile get licenses and
24:01
SpaceX. What, what I think this does as
24:03
well around Echostar, who you know, and I had mentioned this
24:09
before it was part of their gambit to pretend to build a
24:12
consolation with MDA space in order to up their negotiating
24:16
leverage with all the players who are looking at their
24:19
spectrum for Echostar That, you know, they were going to have a
24:23
tough time building ADD constellation.
24:26
And so that was going to be $5 billion evaporated, which then
24:30
ultimately they would have had to have sold the the spectrum
24:33
to, you know, SpaceX or whoever it was.
24:36
But but that just basically takes out that player.
24:39
And so I think you know, I, I, I see another company today Global
24:45
Star, which is up 70%. I will stay there.
24:48
That Global Star does own some spectrum, but it's pretty
24:51
limited. I think it's like they have
24:54
maybe 11 megahertz of L band and of downlink and 5 megahertz of
24:58
uplink. I need to go back and look more
25:00
closely at Global Star. But I think this deal
25:04
interestingly puts a lot of pressure on Apple because their
25:09
global store partnership is somewhat questionable.
25:11
They they've committed to building out A next generation
25:14
consolation, which from what I've read on various research
25:20
for any space that next generation consolation isn't
25:23
going to have, you know, much broader capabilities and it's
25:28
definitely not going to be able to do broadband.
25:29
So they're kind of in a weird spot.
25:32
Apple that is, and and global stars.
25:34
So what do they do with that partnership?
25:36
Global Star with that Apple is pretty much or prior to Apple's
25:43
involvement, you know, Gold Star was likely facing bankruptcy
25:45
again. So as we've seen in the
25:48
information article that I tweeted out, I guess it was like
25:51
a few months ago, Apple has no lands or ambitions, at least
25:56
currently to become an MNO or compete directly through MN OS.
25:59
They don't want to directly own spectrum.
26:01
That's why they made this convoluted structure to invest
26:04
in global star for 85% of their capacity.
26:07
But I think this rose into question what Apple does around
26:12
direct to device for Apple, I think it was always going to be
26:16
an Internet of Things play where they could do tracking some some
26:22
low level data to to customers. But then now with this deal and
26:27
potential threat from SpaceX, which, you know, Ilan is toyed
26:30
with the idea. I was coming up with his own
26:33
mobile phone. I think that's, you know, it,
26:36
it's it's a potential threat, but we'll see, right?
26:40
Because, you know, I think companies like SpaceX talk and a
26:44
lot talk about a lot of different things, but it's
26:47
unclear exactly what they plan on doing.
26:49
I think for Apple, it's a pretty today is a net negative because
26:53
there is a potential for, you know, Starlink on long run to
26:58
come up with their own phone if they want to go direct directly
27:00
to consumers. I think for Google, this is
27:03
probably a positive deal because if indeed Starlink does decide
27:10
to make their own device, I'd assume, sorry, that's my laser
27:14
printer going off in the background.
27:15
I'd assume that they probably end up using Android as an
27:19
operating system. But so in that regards, I think
27:22
Google probably doesn't care. If anything, it would allow them
27:26
to take more share if indeed Starlink decides to make their
27:29
own device. But, but this is like talking
27:32
about several years out and several strategic steps to get
27:35
there, which I think it's probably totally to make that to
27:38
the call. But yeah, you're, that's, I
27:42
think with global start up. My, my take on the reason why
27:47
that's up is that, you know, it does have some global spectrum.
27:50
And so you're seeing some spectrum value being assigned
27:53
there. And as I reiterated before,
27:55
Legato, yeah, if you, if you tell me today based off of comps
28:00
that Legato is worth 20 billion in AST space Mobile's Curt
28:04
enterprise value is, let's see, 14 billion then.
28:10
Then I think AST, you know, people who are panicking and
28:15
having a neighbor reaction or selling today, I think they're
28:18
going to be somewhat saddened in whether it's today or in a few
28:22
days time when the stock is up nicely.
28:26
Let's see this is this is a really important point.
28:29
And sorry, this is like I'm rambling here, but there's just
28:32
a lot of different thoughts that I tried to pull together while
28:36
trying to take my kids to school this morning digesting this
28:39
news. The key, another key aspect of
28:42
this deal is that it brings a ton more focus to this market.
28:46
Someone mentioned to me today that this PM that they knew at
28:50
one of the big pod shops called them and said, hey, I'm buying
28:54
this stock because I think the market reaction is wrong.
28:57
Like there's going to be a ton more focus in this area.
29:00
And I think that's 100% true. I mean, I think just taking a
29:05
step back along just put down a massive $17 billion bet that
29:08
this this market is real and it's going to be paid.
29:12
And so every institutional investor is going to be focused
29:15
on directed device because all of a sudden it's real SpaceX,
29:20
you know, the the, the most well known name in space and, and
29:23
obviously alone brings a lot of cachet.
29:27
They're focused on this market globally.
29:29
And so institutional investors, hedge funds will be asking
29:32
themselves, OK, well, if he's focused on this, what, what does
29:35
it mean? Like for the people who are new,
29:38
what is it? What is this technology?
29:40
What how big is the Tam? Oh, it's actually more than just
29:44
consumer. It acts as defense and
29:46
government, you know, applications.
29:48
I mean, there's going to be a whole host of new investment
29:51
looking at this area. And I think as a former
29:55
institutional investor myself, when you play trends, if you
29:58
play like a market that's really huge, right, or wrongly, you
30:03
know, there, if there's like a handful of players, they'll be a
30:07
perceived market leader, which I think today that's ASTC as well,
30:11
in my opinion. But in other people's opinion,
30:12
that will be Starlink. But then you'll have the other
30:16
players, whether it's the direct players like you know, as I
30:20
mentioned before, AST and, and Starlink, or if it's like
30:23
derivative plays, right? So there will be people looking
30:27
at other ways to play it like, you know, our who's making solar
30:31
panels, who's making semi collectors, who's doing, you
30:33
know, making equipment. And so there will be more
30:36
institutional focus in this area and there's only a few ways to
30:40
play it right. And so fortunately one of the
30:42
market leaders has publicly traded, which is AST an
30:46
interesting, I guess side, side effect is that I believe
30:52
Echostar is getting over $7 billion of SpaceX stock, which I
30:57
don't know what the, I don't know what the restrictions are
31:01
around that or how they're planning to monetize that.
31:03
And I believe it looks like it's fixed value.
31:06
So, you know, for Echostar shareholders and I've, I've got
31:10
to look at the merger agreement, if they do have a, a definitive
31:14
agreement filed eventually. But if it's fixed value, I would
31:18
be a little careful because that means like if it's $7 billion
31:22
and then SpaceX goes out tomorrow raise another round
31:25
that's 50% higher, you're getting less shares or higher
31:29
value in shares, but at the same fixed value.
31:33
And so I think someone to point out the the SpaceX stock is
31:36
valued at $212 per share. But if SpaceX goes out and raise
31:41
a higher, raises a higher rounds then and it's at a higher price,
31:45
then you actually don't get more value.
31:47
They will just end up issuing less shares to your SO.
31:52
But anyway, I think it is important that it's going to
31:55
bring more focus to the sector. And for people who thought this
31:59
was a kind of a sleepy area, we're just not interested if
32:02
you're ATMT specialist or event driven guy or of course, you
32:08
know, some credit guys already know because of their
32:09
involvement logged and got it. This becomes a much more
32:13
interesting area of investment. And so I think it will bring
32:17
more investment dollars to AST and and others in the sector,
32:21
which, you know, today again, you're having a negative
32:24
reaction. But but we'll see what's the
32:26
market digest this and and people react mostly out where
32:30
the stock ends up, which I think you know, me personally, I
32:34
bought some stock this morning, actually started with space a
32:37
little late because I'm going to give myself more time to buy
32:40
stock. But but yeah, I think I think in
32:43
the 30s this was a great opportunity and I wouldn't be
32:47
surprised. Like we end the day green or
32:50
maybe the next day or two. Let's see.
32:55
Let me look at my notes here. Yeah.
32:58
I mean, I, I wrote here this, this pretty much makes I think
33:03
the market is duopoly. I think Coop captured it quite
33:06
well where he said, you know, he I think he tweeted, 2, three men
33:10
walk in, two men walk out. I think that's what we're seeing
33:13
today. It's it's basically now a 2 two
33:16
horse race between AC space mobile and SpaceX.
33:20
Obviously SpaceX is a pretty formidable compare competitor,
33:26
but AC, you know, invented the market and has the Emeto
33:29
partnerships, has a technology lead.
33:31
And so this will be pretty interesting to watch.
33:33
And I think importantly, as you've seen in wireless markets,
33:40
those markets are one, are ones that eventually end up in a, you
33:45
know, an oligopoly of three players.
33:49
You know, the market typically supports that.
33:51
And, and given the amount of, of investment required to deliver
33:55
wireless service, that's, that's typically the market structure
33:59
that you see where wireless operators can be highly
34:01
profitable, but they make the, the, the proper investments in
34:05
order to maintain a great service.
34:06
But I think here you're seeing what I think will unfold will be
34:12
a highly profitable duopoly, right.
34:15
And as I mentioned before, the mark the, the credit of dynamics
34:18
are such that I think you're going to have probably a
34:24
majority of operators continue to do work in business with AST
34:28
space mobile unless of course from the execution standpoint,
34:31
they they just can't deliver. But you'll see that versus other
34:35
M and OS who choose to go down the SpaceX path, which I think
34:40
you don't have as some strategic and existential type of
34:44
implications if you decide to go down the path.
34:49
So you know, this, I think the transaction today it, it
34:53
definitely, you know, it does dial up the risk overall for AC
34:58
because I think the competitive front dynamics increases to a
35:01
degree. So at the same time though, I
35:03
think it also dials up the value of the company.
35:05
So it's kind of weird like you kind of have these two things at
35:08
the same where from a standpoint, SpaceX is a permit
35:16
editor by for them to have their hands on spectrum, it definitely
35:21
increases their capability and in some respects like by having
35:27
a better service than what T-Mobile users are experiencing
35:30
today. You know, once they once this
35:34
transaction goes through and the spectrum can utilize, you know,
35:38
they're going to go through a pretty long regulatory process,
35:40
which I guess I should touch on that.
35:42
The FCC will have to review this deal and perhaps maybe it gets
35:46
approved sometime next year and run the same time possibly as
35:50
Legato. And then SpaceX has to get
35:55
Starship working. And I think in their press
35:56
release today, they mentioned that V3 satellites will be able
36:01
to utilize the spectrum. And so it will take some time
36:05
for that, for the spectrum to be utilized just like, you know,
36:07
Legato, it's probably going to be put to use in big band
36:12
Bluebird sometime in 20. You know, you'll see some
36:15
satellites start launching in at the end of 2026 and the service
36:19
start coming online sometime in 2027.
36:22
My guess is that SpaceX probably has a similar type of timeline.
36:26
If this transaction gets approved by the FCC, which I
36:30
don't, I don't know why it wouldn't, unless I don't know,
36:33
maybe, maybe if Elon did something with Trump, which I
36:37
don't see. I think they probably, it seems
36:39
like those guys have made-up to a degree.
36:42
And so not sure why the FCC wouldn't approve this deal.
36:47
Because I think the FCC wants to see this spectrum utilized and
36:51
put to use, which clearly if SpaceX is able to do that, then
36:55
that's a net positive for everybody.
36:59
Another thing I would mention is that there were event driven
37:02
guys and Kuki mentioned this on the call last night.
37:04
I guess it was bad timing in terms of calling out the people
37:10
who had this trade on because they ended up doing pretty well.
37:12
But the guys were long Echo Star and short AST Space Mobile.
37:17
Those guys are probably unwinding that trade today.
37:19
So if you're an event driven guy, we're looking to play the
37:22
catalyst which is now materialized and you were long
37:25
Echo Star and you were short AST Space Mobile.
37:28
I think there were probably by I think crew can mention maybe it
37:33
was like 7 or 8 million shares short AST since the beginning of
37:36
August. So those shares are probably
37:39
being covered today or decent amount of it being covered
37:42
today. And then the guy whoever had
37:44
that trade is selling their Echostar, which you're saying,
37:47
you know, I think Echostar was trading in volume in the 80s and
37:50
now it's at 78. At this point Echostar is going
37:54
to be a risk card trade. And So what does that mean
37:57
people, if you're long echo star, you're hoping for the
38:01
transaction to close and that they crystallize value and that
38:03
there's not a lot of tax leakage.
38:05
There is some optionality on costar in regards to the pay TV
38:09
business. So I think there's been some
38:11
speculation that perhaps Sling, they'll try to go back to the,
38:16
the you know, the merger, they'll try to negotiate a
38:20
merger again with DIRECTV. This is a, you know, Dish TV and
38:24
DIRECTV. It's been a long saga of them
38:27
trying to get the accommodation of those two satellite pay TV
38:31
providers, you know, through regulatory approvals, which
38:34
couldn't happen in the past, but I think maybe it, it could
38:37
happen in the near, it could happen with this administration,
38:39
especially with where streaming services have gone and have
38:42
become more competitive with satellite TV.
38:46
But for people who are playing Echostar, it's now hoping that
38:49
the transaction closes and then you've got some optionality on
38:52
the PTV business. But you know, it's, it's
38:55
basically like a a spread trade at this point.
38:58
And So what you're playing for, I think some of the some of the
39:03
parts guys post tax were saying like in mid 80s, maybe maybe
39:08
high 80s. And so there's not much to play
39:10
for. So I think people had that trade
39:12
are probably selling the Echostar and covering their AST
39:15
short. So you're seeing potentially
39:18
like some support on the AST side there from the dip this
39:22
morning. But anyway that's kind of my
39:27
initial takes I think as it's going to take the market
39:30
sometime to digest this and we'll see how the sell side
39:33
reacts. But I think this kind of now
39:37
you've got a two player race both that are armed with the
39:40
spectrum. You know one that is working in
39:45
partnership with M and OS and and is a who has a super
39:49
wholesaler approach of the business.
39:51
The other one is, is in competition with M and OS on the
39:55
fixed wireless side, claims to be part in partnership with
39:59
Emmano's for directed device. But I think the jury is going to
40:03
be out on that one and we'll see you know how that unfolds in the
40:06
coming, I mean months and years. But anyway, let me just take a
40:14
look. I think some comments I want to
40:17
see if there's any questions here.
40:21
OK, First one over Justin is in your opinion, how does it affect
40:25
S ban priority rights purchase AST did a few weeks ago this So
40:29
Echostar has Echostar had first position for S ban priority
40:33
rights around the world. And so there is a for the
40:37
markets where S ban is already allocated.
40:39
It's not going to matter. So the US it's not going to
40:42
matter. And that's why I'm like SpaceX
40:46
has or will have when the deal closes, you know, 50 megahertz
40:50
of spectrum here and and AC wet 45 megahertz.
40:54
But then globally, much of the SPN rights are not allocated.
40:58
And so it really is going to be up to ASD and Starlink when they
41:03
go to regular signature of the markets, they're going to
41:06
present a package, they're going to say, you know, if I'm SpaceX,
41:11
I'm going to go to the regular and say, hey, look, I've got,
41:13
I'm really great at launch and making satellites.
41:16
I've got a consolation, a fixed wireless Sally's already up.
41:20
I work with, I work with some of your current M&O partners on
41:23
fixed wireless. So I'm, I, I assume, I'm
41:27
guessing that SpaceX is going to have to go to the regulators
41:29
with M&A&M&O partner to make the case that they should get as ban
41:34
rights. But maybe they don't.
41:37
I, we'll see. But they're going to go and
41:41
present the best possible case as why they should get as ban
41:44
rights. And then my guess is that
41:45
regulators will allocate something to them, whether it's,
41:48
you know, 5 by 5 megahertz or 10 by 10 megahertz and AC will do
41:52
the same. AST will go to regulators and
41:55
say, you know, we've got by that time we'll have this low band
42:00
consolation up. We're playing to route this mid
42:02
band consolation. And we're doing that in close
42:06
partnership with these local M and OS, which for example, I'll
42:10
just take Saudi Arabia for, you know, we're working with all the
42:12
M and OS in Saudi Arabia. They're all our partners.
42:16
We want to go roll this up. We're not going to be doing this
42:18
directly in competition with the M and OS.
42:20
We're actually going to provide this as a add on service through
42:24
the M and OS. And so that's where the
42:27
regulators will have to decide how they dipping this stuff up.
42:31
I think the wild card for Echostar which is now going to
42:35
be Starlink is the S band rights in Europe because those come up
42:39
for renewal in 2027. My guess is that heading into
42:45
that the lawn could take two different approaches.
42:47
One would be to make amends and be more friendly with Europe and
42:52
say, hey, I'm sorry, sorry for playing politics, but I want to
42:57
get these S band rights renewed. You know, help me out.
43:00
I'm going to try to give Europe a, a robust, you know, broadband
43:07
service over S band through this new constellation that that
43:10
Starlink will be launching through Starship.
43:14
Or he could take the other path, which would be contentious.
43:16
He could continue to rattle the cages there threatened, threaten
43:20
the EU and all the member countries and regulators and try
43:24
to force his way through, which I think I'm guessing Elan's
43:27
going to be smarter than that and he's going to try to make
43:29
amends. But we'll see.
43:30
I mean, I don't know. I don't know if that bridge has
43:34
been burned just giving everything around the Ukraine
43:36
and Russia, but we'll see. I mean, it'll be interesting.
43:39
I, I think if I'm, if I'm any global regulator, I would for
43:44
the markets where, which are most of them where Espen rents
43:47
have not been allocated, I would probably allocate some taste to
43:51
East Face Mobile. I'd allocate some to Starlink.
43:54
And then yeah. And then if there's another
43:57
player perhaps who's credible, which I don't know of one right
44:01
now, maybe maybe that's Gold Star if Apple decides to plow
44:05
more money into it. But that's how I would probably
44:09
look to allocate a span because you, you, I mean, and we saw
44:13
that we see this with U.S. government, like you don't ever,
44:16
ever want to rely on one, one player.
44:18
And actually, this is one point that I, I forgot to make for
44:22
governments. You do not want one dominant
44:25
player. You want at least 2, two players
44:28
out there who you can rely on. And you know, you don't want,
44:34
for example, the player, you know, a a provider that is
44:38
providing military service, you know, communication services or
44:42
other types of services or on the government side, first
44:45
responder type of service. If you don't want an owner who
44:48
or operator that's material to bullshit who has political
44:52
interests and will shift, you know, their views of the world,
44:56
which I think I think for SpaceX, like I'm guessing as
45:00
they go pursue these rights, they'll probably I think the
45:02
line will probably dial down some of another inflammatory
45:06
stuff or I mean, that's my speculation.
45:10
But but that would probably be a smart approach.
45:12
But but yeah, for SVN, I think it's it's going to be a jump
45:15
ball between these two. And I don't think it's going to
45:17
be 1 player gets all of it. I think it's they're going to
45:21
get allocated pieces of it to make the service good in
45:24
whatever country they approach. Let's see.
45:29
He says face extra spent $17 billion on the non existing
45:33
market. Yeah, I agree with that.
45:35
I think I think this this underscores the value of what
45:40
AST space wall was doing and and obviously the value of the
45:43
Goddess spectrum. I think, you know, people are
45:46
going to whether it's investors like me and you, institutions or
45:51
governments, regulators, everybody setting up.
45:53
I mean the MN OS especially, I think it's probably a big
45:57
surprise for them that this deal happened.
45:59
And so they've got to figure out what are their next moves and
46:02
what does this mean near term and what does it mean long term,
46:06
right. So it'll be interesting to see
46:08
if SpaceX signs up more M and OS, which I, I expect them to
46:12
eventually, you know, to sign 9 M and OS over the last three
46:18
years. Yeah, there's got to be more,
46:20
right, Whether M and OS, if they're uncomfortable, maybe,
46:25
maybe they kind of use SpaceX Starlink as a, a near term deed
46:30
solution. But then over the long term, you
46:32
know, they'll figure it out strategically, who knows, right?
46:35
But but I'd expect AST to sign more M and OS in the coming
46:40
months quarters because I think, I think now it's almost like a
46:45
never get off the pot moment for M and OS because they've got to
46:48
figure out where they're going to place their bets, right?
46:52
And to not play now that you've got a player that could
46:57
potentially encroach on some of your business, you probably want
47:01
to sign up with ASD space mobile sooner rather than later in
47:05
order not to be left out or to avoid being forced to to work
47:09
with. Let's see here.
47:16
This is a pure D to D play, right?
47:18
I don't think the spectrum can be used for a fixed wireless
47:20
business. No, that's not true.
47:22
It's actually some of the spectrum can be is is primarily
47:27
or I guess it depends it. This spectrum can be definitely
47:32
used for fixed wireless depending on if the satellites
47:37
are good enough and they can provide high enough amount or
47:40
high level of bandwidth. This eventually can be used for
47:43
fixed wireless. You know, that was part of
47:47
Ergen's play was to create a mobile network operator, but at
47:51
some point, you know, he was potentially going to offer fixed
47:54
wireless service. It's not going to be as robust
47:58
as you know, what you're accustomed to if it's like
48:02
Starlink with a dish or Kiper with a dish, because obviously
48:06
to a mobile phone in this Montana, it's not going to have
48:09
the same level of throughput and performance.
48:12
But could it be a credible fixed wireless alternative?
48:16
Yeah, it can. It can provide like decent a a
48:19
decent alternative. Let's see how does this deal
48:24
affect Echostar as an ATNTMVNOI don't no, that's a really good
48:29
question. I don't think anyone has thought
48:32
through this. So for AT&T, they, I mean they
48:38
still probably want to serve as Boost Mobile's MVNOI mean Boost
48:43
Mobile in general is losing Subs like to be an MVNO to provide
48:47
the back end infrastructure for Boost Mobile Subs.
48:49
That's probably not a bad thing because over time those Subs
48:53
probably if you're AT&T, you're hoping that those Subs just
48:57
migrate over to your service. But you know it contractually
49:02
AT&T has to provide service to boost and so I don't think this
49:06
deal impacts that. But you know, if something has
49:09
to be re upped in several years, will it impact it?
49:12
Yeah, probably, but not in the near term.
49:14
Let's see, why is AST's purchase price of 67,000,000 so much
49:20
cheaper than Spacex's purchase? So I think this person's asking
49:24
about the Aspen rights AST ask for.
49:28
So let's separate a few things here.
49:30
First, EST bought S ban rights globally for $67,000,000.
49:36
That's basically like if you're playing poker, that's like your
49:39
auntie, right? Like you have to they have
49:41
priority. They're they're third in line.
49:44
The 1st 2 are Echostar and I believe in some markets Omni
49:48
space. But that gives you priority to
49:50
go to the regular and say, hey, I I was here in line first I
49:53
want to work out a deal. There's like a, let's say
49:55
there's a line of 20 people and Echostar's at the the front of
49:58
the line. When they talk to regulators,
50:01
they get to have the first conversation, right.
50:04
So, so by paying $67 million, we're at the beginning of that
50:07
line along with Echostar and Omni Space.
50:11
And so that's what they pay for the rights to that.
50:15
The, the $17 billion, most of that purchase price today or
50:20
pretty much all of it is really the, the actual spectrum
50:25
assignment in the US, which is AWS 4 and AWS 3 and H block
50:30
spectrum. And so SpaceX has bought those
50:34
rights to use that spectrum today.
50:36
And so that's, that's here in the US that's reallocated.
50:40
And so they can use that when the deal closes or or maybe
50:43
perhaps they could use it prior to the deal closing with, you
50:48
know, if I could start leases that spectrum to them.
50:52
But that's where they're paying for a permanent today.
50:54
They also have the rights to use or they they own the spectrum in
50:58
Europe up through 2027 for Echostar.
51:01
And so that's what 2 went after years.
51:04
Now those rights actually get basically reassigned or they're
51:10
going to get renewed. And so in Europe, they're going
51:14
to go through a process where various players, AC Space
51:17
Mobile, Echostar, what now SpaceX and then any other
51:22
players will go to the EU and make a case for getting a
51:24
spectrum allocation. So, so I would say most of
51:28
those, the rights that that SpaceX spot today is just for
51:32
USA WS48 of those three and H Block Spectrum.
51:37
So that's $17 billion. And so the comparable to that
51:41
would be AFD Space Mobile's purchase of the 80 year spectrum
51:46
rights for Albion Spectrum in the US and Canada, which is 45
51:52
megahertz of L band, which is 1.5 gigahertz to 1.7 gigahertz.
51:57
So it's lower mid band. What what SpaceX box today
52:01
AW3AW4 is 1.922 dot two gigahertz, you know, so it's,
52:08
it's slightly, it's higher mid band spectrum.
52:11
But yeah, that's, that's what most of the purchase prices
52:14
today are most, most, if not all, basically all of the
52:18
purchase price today. So hopefully that answers your
52:21
questions. Let's see what are the chances
52:24
that Elon Musk makes his own device?
52:26
I think, I think the chances now are semi decent.
52:30
I think Musk, he's going to the way that if I was Musk and I'd
52:35
market the service, I'd say, hey, I've got this is the new
52:38
Starlink phone. And you know, the way that it
52:41
would work is that he would work out some type of MVNO agreement
52:45
with T-Mobile, where T-Mobile is going to provide the low band
52:48
spectrum and most of the network for coverage.
52:51
And you know, Starlink will pay T-Mobile some decent fee for
52:55
that, but they're going to go to market potentially with their
52:58
own device and it will incorporate this spectrum.
53:02
And So what they'll be able to say is like, hey, in in areas
53:06
where there's bad coverage or even in in areas where there's
53:09
decent coverage, you'll have access to this additional
53:11
spectrum, which will boost the service and give you some level
53:14
of broadband connectivity, right?
53:17
And so I think the chances of him making his own device are
53:21
higher, But, you know, it's not fait accompli because I think as
53:26
we've all seen making a well, I guess, I guess Donald Trump made
53:31
his own mobile phone, right? You can you can outsource this
53:34
stuff and just rebrand it. And especially with the advent
53:37
of, you know, Android, you could probably go to a Chinese
53:41
supplier and have them put together a decent phone for you
53:45
and just put slap your name Starlink on it and then try to
53:48
sell it to customers. And then you know, you'd have
53:52
you already. So for Starlink, they already
53:54
have a distribution channel, which is they already sell
53:56
dishes directly to consumers. I mean, they're going to have to
53:58
be in the whole game of acquiring wireless subscribers,
54:01
which is not cheap, right? Like to acquire wireless
54:04
subscriber is probably a few 100 bucks in marketing.
54:08
And then you've got to, you know, there's, there's obviously
54:11
it's a different business, right?
54:12
Like you have to manage churn, you have to do promotions and
54:15
also other stuff. But then if you make your own
54:18
handset, you're competing directly with, with, you know,
54:23
Apple and, and Samsung and the other players.
54:25
And so I'm not sure that's a market they want to get into.
54:28
But if, for example, I don't know if you're a megalomaniac
54:33
and you think like X is going to provide everything to you
54:37
consumers like, you know, banking, voice services,
54:40
payments, any host of, you know, applications, AI, you know, hey,
54:46
maybe I'll sell a phone too. So that that could be something
54:50
in the cards further down. But the probability of that I, I
54:54
would put it, put it a very low probability of that happening
54:57
prior to today. But that probably that's
54:58
probably, you know, it's gone up significantly, right?
55:01
Because because now the, you know, Starlink doesn't have to
55:06
rely on carriers as much because it has access to its own
55:11
spectrum. So again, this goes back to the
55:14
key question like are they going to do this in partnership or are
55:17
they going to compete over the long run with carriers?
55:20
And then and then as I mentioned before, like where's this quit
55:23
Apple? Because Apple they're smart
55:25
guys, like interesting. I know that the head of M&A
55:29
there, maybe we should give him a call.
55:31
Like I think for those guys they've got, they've got to be
55:35
this as a shot across the bell that, you know, perhaps Starlink
55:38
eventually in SpaceX will go, you know, make their own mobile
55:43
phone. You know, they'll probably
55:45
outsource to the manufacturing and all that, but they, they
55:47
could. And then for the carriers,
55:50
whether it's ATT, Verizon and and it's partner T-Mobile, what
55:55
if they decide to start their own service, right?
55:57
And it's not going to be, it's not like they can replace the
56:00
terrestrial network because you, you can't, you need low band
56:02
spectrum. Do that.
56:03
You've got to build out a shit load of towers and it's really
56:05
expensive. But if they're, there's almost
56:09
like a prisoner's dilemma here. Where is Sterling does decide to
56:11
go down and offer its own service, which MNO enables, you
56:17
know, Sterling to do that, right?
56:19
And you'll, you'll have some near term benefits in doing that
56:23
economically by taking share, But then of the long run, if you
56:27
get hollowed out, like was it worth it?
56:29
Right. So, and then on the flip side,
56:32
the carriers that view this as a threat, they'll say, they'll
56:38
talk to AST 6 mobile and say, Hey, that spectrum deal you did
56:41
that was really smart. I want you to get your service
56:44
up. And as we all know, like you
56:45
know, there's been delays, but I want your service up yesterday
56:49
because I, I want to compete and I want to protect my subscribers
56:53
from churn. And I also want to show them
56:55
that we are providing differentiated value.
56:58
You know, we're, we're providing broadband, broadband service
57:02
directly to phones and we need to differentiate ourselves.
57:06
And so I think, I think, you know, this market, as I
57:10
mentioned before, it's going to end up being a duopoly between
57:13
AST and, and Starlink. And you know, how do you value
57:17
that, right? Like this is a market that on
57:20
the consumer side B of A said it's going to be $30 billion or
57:23
more annually. And that's not taking account
57:26
government and defense applications.
57:28
And for the governments, they're going to want 2 two players at
57:32
the minimum, ideally probably three players, but but it is
57:35
what it is like it's just going to be two players now.
57:38
So you know, how how are dollars allocated from the government?
57:44
You know, do you want to have a reliance on one provider he
57:47
probably meet you need to at least dual source everything,
57:50
right? So I think it's going to be a
57:52
huge opportunity for AST spaceball and candle leaf first
57:56
for SpaceX. Let's see, can T-Mobile join as
58:00
TS? They could.
58:03
They could. I think they're exclusively ends
58:05
in a few months. But the problem for T-Mobile
58:08
though is I don't I think AT&T and Verizon are happy to let
58:11
those guys rot, right? So I think if you're 18 T and
58:17
Verizon, the whole idea was to work together and build a great
58:20
service that then you can go take share from T-Mobile.
58:23
So by letting them into the fold, I'm not sure that's
58:27
probably, you know, that's probably counter to what they
58:30
want to do. But on the flip side, where I
58:32
could see it happening, I guess there's two paths.
58:34
One would be that the regulators say this service is too
58:38
important. You have to open it up to
58:39
everybody. But now that there's a credible,
58:42
you know, now that Starlink is going to be more credible.
58:45
I don't know why regulars Wood Forest AST to do that.
58:49
The other the other scenario where I could see T-Mobile going
58:53
the fold as if AT&T and Verizon decide, you know, after
58:57
analyzing this and kind of seeing how things play out, if
59:00
they decide like, hey, the Starlink is potentially long
59:05
term and existential threat, why don't we play nice and just let
59:09
T-Mobile into the fold and then we'll we'll you know, we will go
59:14
from there. That could be another way to do
59:17
it. But but yeah, I I don't see
59:20
T-Mobile coming over your turn, but but yeah, that's I guess
59:25
that's how you could potentially see a play out.
59:29
Let's see talked upon what this means.
59:34
SpaceX is a competitor for M&O is not a partner for them.
59:37
I think I already covered this pretty in depth.
59:40
So you know, if you if you missed it, just go back and
59:44
listen to that part where I covered it.
59:46
Let's see have a look at oh, Phoebe were saying good audio.
59:51
Great, that's good. Someone mentioned why did AC
59:59
drop three days before this announcement?
1:00:01
Well, that's how the markets work right?
1:00:04
Like people find out. Like hedge funds.
1:00:08
Other people working close to the deal, things eventually do
1:00:12
kind of leak and get out. And yeah, it's a material, non
1:00:15
public information, but sometimes people get their hands
1:00:17
on it in ways that were not intentional or whatever.
1:00:20
But or, you know, you might have someone may have had a
1:00:23
conversation with Echostar and they might have hinted like,
1:00:26
hey, you know, something big is coming.
1:00:28
But you know, there were some tea leaves out there, I think.
1:00:31
And this is actually an important point that I forgot to
1:00:33
cover. Semaphore, which is a news
1:00:37
publication that covers business.
1:00:40
I guess it was started by former Wall Street Journal reporters
1:00:43
had mentioned that, I guess it was last week, they had
1:00:47
mentioned that T-Mobile had looked at buying the spectrum.
1:00:52
But then Deutsche Bank, sorry, Deutsche Bank, Deutsche Telecom,
1:00:55
which owns just under half of T-Mobile, you know, tap the
1:00:58
brakes because they didn't want, they thought the value was too
1:01:00
high. And so they ended up not doing
1:01:03
the deal, which is a very interesting point that I tweeted
1:01:07
out earlier today, which is that, you know, T-Mobile is a
1:01:13
key partner of Starlink. T-Mobile tried to buy the
1:01:16
spectrum but essentially got outbid by its partner of SpaceX.
1:01:20
And so if you want to talk about like awkward situations, like
1:01:25
imagine Mike Sievert calling up Glenn Shotwell at SpaceX and
1:01:28
being like, Hey, I thought we were partners and we were going
1:01:32
to try to buy the spectrum, but then you outbid us for it.
1:01:36
What's your long term plans here?
1:01:37
And then SpaceX is probably like, hey, you know, we're,
1:01:39
we're just like the press release today.
1:01:41
We're, we're partnering with you.
1:01:43
It's OK. Like we're going to provide
1:01:44
better service. And you know, we're the
1:01:48
partnership's strong, but don't worry, your T-Mobile customers
1:01:52
will benefit and and and distrust us as I think like that
1:01:58
conversation. Yeah, it will be quite awkward
1:02:01
and interesting where T-Mobile and parent company Deutsche
1:02:06
Telecom wanted to buy the spectrum got out did by their
1:02:09
partner. And so how do you, I guess how
1:02:12
do you walk through the logistical beside the logical
1:02:16
rationale behind that and what it means for your partnership
1:02:19
over the long term? But who knows like maybe they'll
1:02:22
figure it out. You know, they'll, they'll
1:02:24
figure it out and T-Mobile will be OK with it and they'll resell
1:02:27
starting service and just, you know, they'll, they'll put trust
1:02:30
into SpaceX that they won't do anything beyond that to hurt
1:02:33
their business. But but yeah, I think just even
1:02:38
from those tea leaves, like there was some mention that
1:02:41
T-Mobile potentially was getting together with SpaceX for the
1:02:45
spectrum. So, you know, some of the some
1:02:48
of the tea leaves were there that this was potentially going
1:02:51
to happen. So I think for hedge funds,
1:02:53
usually, whether it's tracking private jets or having
1:02:58
conversations and kind of putting the mosaic together and
1:03:01
people, you know, getting little hints in here and there, they
1:03:06
could have pieced together that this was going to happen.
1:03:09
And so that the fact that ASD traded off over the course of
1:03:13
last week, I think was a precursor to this, this deal,
1:03:16
you know, coming to fruition. Let's see, I think that's it.
1:03:24
So I hope this is helpful. Again, I think I think it's
1:03:29
going to take the market some time to digest this news.
1:03:32
And you know, for people who aren't as familiar with the
1:03:35
story, who owns stock or perhaps don't understand implications
1:03:41
fully or, you know, want to, you know, sometimes you have people
1:03:45
who sell first and ask and then kind of figure out what the
1:03:48
situation is. And then they'll, they'll assess
1:03:50
whether or not they want to be involved.
1:03:52
I, I think you're seeing some of the, you know, people get shaken
1:03:55
out today, which is perfectly normal, right?
1:03:58
This stuff happens. Like, I, I can't tell you how
1:04:00
many times when I was working in, you know, as a hedge fund
1:04:05
portfolio manager, where the initial market reaction, people
1:04:08
panic, stocks go down, stocks go up.
1:04:11
And then as people have time to digest and figure what the
1:04:16
strategic implications are and what it all means, then you
1:04:19
start seeing a move, you know, moves in different directions.
1:04:23
Is people then assess what it means long term, you know, what
1:04:28
it, what the implications are and you know, where they want to
1:04:32
place, place their investment. Right.
1:04:34
And I think we're probably going to see that over the next few
1:04:36
days. And I, I guess I'd be, I'd be
1:04:39
remiss without saying that, you know, we are, we are due for
1:04:42
some pretty big catalyst coming out for AST, which, you know,
1:04:45
the company is working hard on delivering, which obviously the
1:04:48
key one is launch network deployment.
1:04:50
And then you've got some commercial different agreements
1:04:53
coming. You've got defense contracts
1:04:55
that are that are probably becoming pretty ripe for
1:04:59
expansion by the end of this month person at 2 potentially.
1:05:03
So, so yeah, there's a lot going on.
1:05:06
And I think I think, you know, it's important that for any new
1:05:12
market like this, that's huge in potential, in size and in
1:05:16
probability, like you're going to have things happen that are
1:05:22
category changing or cataclysmic, you know, as we
1:05:24
might call it. Like if you look at AI, you
1:05:28
know, unfortunately there's not really any public stocks to
1:05:31
trade in. But you know, when you see these
1:05:33
big moves by by companies that are private, like just imagine,
1:05:37
just imagine what the public reactions would have been if
1:05:39
they were public. But I think here you're you're
1:05:43
seeing you saw the initial negative reaction this morning
1:05:46
from AST and obviously not just this morning, but last week as
1:05:49
people speculated who were potentially in the know, maybe
1:05:52
they had non public information. But as the chips kind of as the
1:05:57
dust settles and people start figuring out what this means on
1:06:00
a chess board, I think I think it will become increasingly
1:06:03
clear that this market is huge. It's going to be now a duopoly.
1:06:09
And there are two ways to play it. 1 is a private company
1:06:12
called SpaceX. Another one is public company
1:06:15
called AST Space Mobile. If you line up all the pros and
1:06:20
cons of each each company, I think the there's a compelling
1:06:24
investment case for AST Space Mobile, whether that's from a
1:06:29
technological standpoint in terms of the patents that they
1:06:33
have, the satellites that they developed, the satellites in
1:06:35
terms of their road map. Also the business partnerships
1:06:40
they have in the business model that they've developed, you
1:06:44
know, and then of course, the spectrum that they've acquired,
1:06:46
which is Legato, which is what SpaceX, you know, I think it's
1:06:52
like having some perspective. You know, SpaceX back in 2016,
1:06:56
seventeen, this market didn't exist then AC Space Mobile, you
1:07:01
know, kicked it off. They started signing
1:07:03
partnerships with AT&T and Vodafone.
1:07:05
You had like rising and T-Mobile in 2019-2020 complained to the
1:07:12
FCC that they shouldn't be loud. That is going to be that there
1:07:17
would be potentially potential interference and you know, they
1:07:20
were just negative on the whole idea of providing direct to
1:07:24
device service over cellular spectrum.
1:07:26
And then you Fast forward to 2022, T-Mobile went from being a
1:07:30
naysayer to hey, we're partnering with Starlink and
1:07:33
we're going to go do this. And, and Starlink of course
1:07:36
decided that this was a real market too.
1:07:38
And they're they were like, oh, me too, that those guys are
1:07:40
doing that. I need to go pursue it as well,
1:07:43
which to the industry legacy guys or consult, you know,
1:07:48
supported experts like this was a market that was unattractive
1:07:52
and would never happen. Technology would work and so
1:07:56
Fast forward to the beginning or sorry mid last year you had
1:08:00
again Verizon that was like complaining about AST space
1:08:03
mobile and this market is never going to come to fruition.
1:08:06
All of a sudden they partnered place T space mobile.
1:08:08
They also invested money and as an addition to Google, Vodafone,
1:08:12
ATT and others. And then in January this year,
1:08:17
AST bought Legato Spectrum out of bankruptcy.
1:08:21
And then lo and behold, SpaceX is buying Spectrum from
1:08:24
Echostar, which for all intensive purposes, prior to the
1:08:27
AT&T Spectrum transaction was a distress company.
1:08:31
And so so yeah, it's, it's interesting.
1:08:34
He has been ahead of the curve. Obviously, whether you've got
1:08:40
the motes and all these things, you still need to execute and
1:08:42
suddenly need to get their satellites up.
1:08:44
But I think over the long run, a few weeks, a few months, it's
1:08:49
not really going to matter. I think you've got a duopoly.
1:08:53
What what is now going to be in a natural duopoly between two
1:08:57
players where clean up the consolation from economic
1:09:00
standpoint, there's going to be so much investment that's put
1:09:02
into it. It's just going to be really,
1:09:04
you know, not only I, I, let me step back, not only the
1:09:09
investment into the consolation, but also investments into
1:09:12
spectrum. That's going to be a tough nut
1:09:15
to crack, especially once all that spectrum is allocated.
1:09:20
Yeah, I, I think it's going to be a natural duopoly between AST
1:09:24
Space Mobile and Starlink. And so for anybody else who's
1:09:29
kind of contemplating this area there there, as I mentioned
1:09:32
before, like there will be some virtual services, whether it's
1:09:35
texting or, you know, from Geo satellites using, you know, MSS
1:09:40
spectrum that way. But I think you know, you're
1:09:44
going to have these two main players that will greatest T
1:09:47
space mobile. It's broadband connectivity for
1:09:49
Starlink. They'll eventually get there, as
1:09:51
I've always said over the last I don't know, I guess last 2-3
1:09:54
years and then it's going to be everyone else right.
1:09:57
So so yeah, it it'll be interesting to see what Geminos
1:10:01
do, what the reactions are. What does Apple do?
1:10:05
What is what do they do with global star?
1:10:08
How about some of these other players?
1:10:09
Like there's you were talking about trying to get their own
1:10:12
directed device constellations up like Biosad and a few other
1:10:17
players. Like what do they do now?
1:10:18
You know, like if IA shareholder in those companies, I mean,
1:10:23
you're pretty much just trying to play a spectrum bet at this
1:10:26
point because I I just don't know how others will be able to
1:10:30
get a credible and yeah, credible directed device
1:10:35
consolation up. But anyway, I'm now I'm
1:10:38
rambling, but I hope this is helpful.
1:10:40
And, you know, I'll have more thoughts in the coming days and
1:10:44
we'll see how things kind of play out.
1:10:45
But I think it's important take a deep breath, take a step back,
1:10:49
really think through what does this mean?
1:10:52
We went from a niche market, this little tiny company called
1:10:57
ACC Mobile, you know, coming up with this new technology that
1:11:01
people said cannot be done all of a sudden to a market where
1:11:07
one of the biggest players in space, SpaceX, is throwing
1:11:10
around $17 billion to acquire Spectrum to compete with AST,
1:11:14
which already has L band spectrum.
1:11:17
So 45 megahertz of L band spectrum versus 50 megahertz of
1:11:21
S band spectrum just in the US, right?
1:11:24
So, so I think, yeah, I think we've got a real market here
1:11:28
with a significant opportunity. And it's going to be very
1:11:32
interesting to see how it plays out competitively from
1:11:36
regulatory point of view and also for the M and OS.
1:11:39
So anyway, I'll close it there and yeah, maybe we'll have
1:11:44
another space in the coming days to talk about more details, if
1:11:48
any, that come out. And yeah, hope everyone is OK
1:11:53
and we'll talk again soon. Take care.
1:11:58
Thanks for listening to the AST Space Mover podcast.
1:12:02
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1:12:11
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sure to subscribe. Thanks again and I'll see you
1:12:17
next time. We're doing something very, very
1:12:23
big and I think with this technology we can really affect
1:12:26
billion lives. AST Space Mobile is the only
1:12:29
company that has proven technology to deliver several
1:12:33
mobile connectivity directly from space to do everyday
1:12:37
smartphone. People will just basically turn
1:12:39
their phone can be seamless regardless of where you are.
1:12:42
We don't want the user even to know that it's connected by
1:12:45
satellite. Our role is to bring this into
1:12:49
reality, always in partnership with the MMO.