Fireside chat with Scott Wisniewski

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:09] Speaker B: It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:00:30] Speaker C: Very happy and grateful to have Scott from AST join us. So Scott, thank you again for coming out. I was gonna invite Scott to maybe kind of, you know, start higher level for anybody in the room or listening to webcasts who are not as familiar with AST SpaceMobile. You know, I'll set the stage a little bit. You know, part of the you know rapidly growing you know high interest you know Leo space constellation universe today with you know some probably some companies you're familiar with, some you're less familiar with. But you know, I think AST has a you know very unique and differentiated strategy and technology in in how they're attacking that space in a TAM that we at B of A at least estimated you know somewhere in the roughly thirty billion. range for the TAM. Scott can discuss maybe if they have different estimates and how they get to them. So Scott, thank you again. And, you know, we'd love to hear maybe a brief overview.
[00:01:33] Speaker D: Great. Well, thank you very much for having us. Very appreciative. AST SpaceMobile, we're building a space-based cellular broadband network that connects to today's cell phones, the 6 billion phones in circulation today. This is something we've been at for a long time. We created this industry had some of the foundational patents. And the hope is really to make your phone and everyone's phone work better and work when it doesn't otherwise work. And we think that's a big opportunity. It's a big problem to solve. It's valuable to the mobile network operators. It's valuable to the consumer. It's valuable to the US government. And we've been building it for a long time. We've been public now for 4 years. And we're at the stage of the growth where we're giving revenue guidance for the first time for the second half of the year and expect to grow very quickly with commercial service in 2026. fleshing out that service in the years to come. So we're an exciting moment for this company. We're at the intersection of a lot of exciting trends, like you mentioned, space connectivity, US space investment, US investment in space. And we've always been very excited about the story. We're founder-led. Our founder and controlling shareholder, Abel Avalon, is a classic builder entrepreneur, has been very successful in the past and has built this company. and is what you want when you're building a new company like this. You want that founder who's sleeping on the factory floor building the network. And so we're at an important inflection point and we are hoping to bring space into the cellular landscape in a real meaningful way. Historically, space has been a small market. There's a couple of small TAMs out there today, but we're really building this new direct-to-device vertical in a way that is very beneficial to the cellular industry. And that's why we've attracted investment over time from AT&T, Verizon, Google, Vodafone, Rakuten Mobile, Bell Canada, and American Tower, and why we're partnered with over 50 mobile network operators globally who have a TAM or have a service base of almost 3 billion subs. So this is a big problem. We've got really cool technology that solves it. That's very differentiated and it's relevant to very, very important markets.
[00:03:40] Speaker C: That's a great overview. And yeah, for Investors or anyone as old as me, you know, our memory is that over time, the last 25 years have been a number of attempts to build LEO constellations to provide broadband either in like, you know, less developed countries or other business models. And I think, you know, every single one failed or at least went through bankruptcy once, you know, so, you know, for those investors might have that memory. How is AST different? You know, maybe just address the funding question, you know, Are you fully funded for your projected constellation? And then also touch on just the technology differentiation, which you mentioned briefly before, but I think it's important to note how that's different than previous technologies or even competitors today.
[00:04:34] Speaker D: Yeah, I know it's a fascinating question and it's informed by the historical record, right? So when you look at space history, and I really came into it about 10 years ago with the reenergization of the LEO efforts. You know, there's been several shots on goal, serious shots on goal on building a global constellation. And conceptually, from a financial perspective, it sounds like a good idea. If you could provide access to connectivity globally, there's a lot of markets there. There's a lot of people to touch. And so what makes us different is that we've come in at a point in the cycle where Costs have come down meaningfully. Electronics have been made very efficient and cheaper and smaller. And now we've come with a new idea years ago, which was you don't need a dish. You don't need to pay $1,000 for a dish to get service. You can just use the phone in your pocket. And by solving a series of technology challenges and bringing the wireless partner, the wireless companies along as our partner and go-to-market strategy, leveraging their spectrum and customers while we bring the network. We created an ecosystem here that we think is very powerful and can give birth to this new industry. And so we think it's different this time. We think our record and our execution in the last 6 years has shown that out. We're well capitalized, as you indicated. We've got $1.55 billion on the balance sheet pro forma June 30th, which fully funds us for our initial network of approximately 50 satellites into low Earth orbit. 2, we've executed on the technology and done a series of demonstrations. We're flying 5 of the largest satellites ever put into low Earth orbit commercially, and we're about to launch one that's even 3 times the size. And that's important because it helps you connect with a small, low-powered cell phone from hundreds of miles away. And we're doing this with a business model and a business plan that's segmented and sequential. and has allowed us to get to this point pretty efficiently for our shareholders and for our goals and our partners. And ultimately, we're trying to deliver service as soon as possible because we hear that demand signal. Our customers, the operators, want this service. They want the service for the consumer. Consumers feel very excited about this. They want connectivity and they want it all the time, and they don't understand when they don't have it.
[00:06:53] Speaker C: You mentioned the relationships with the with the major operators, both in the US and globally. Can you just remind us, how many satellites do you need to have launched and operational to provide service on more than an intermittent basis?
[00:07:09] Speaker D: Yeah, so again, this is, you know, some of the mistakes of the past were, you know, having engineers build big, beautiful business plans and not able to execute on them. And so what we did with both the engineering and technical expertise, but the businessman's mindset is segmenting. So we built and launched and operate 5 satellites that's generated tens of millions of dollars in revenue from the US government. Above, up from there, 25 satellites we estimate will get us cash flow breakeven, which is nice. And 45 to 60 is our current target. That is how many we need to hit 24/7 coverage in the markets that matter, like the US, Europe, Japan, and for the United States government. And so that's really how we've organized the business plan, the funding strategy, the timeline, our vertical integration, vertically integrated manufacturing strategy. And it's really important for all those things to come together at the same time. And that's how we've always built the program and that's how it's evolved over the years. And we think that's the path to success, bringing those all together at once.
[00:08:12] Speaker C: And can you just remind us, on the government side, I wanna break down the revenue in different piece parts. On the government side, Can you just remind us, you know, what services you're providing US government today? I think most of the payments have been milestone payments in the US government, but then there are future revenue opportunities that aren't currently baked into the numbers, and maybe walk us through thinking around that, including Golden Dome and other initiatives from the US government. So let's start on the government side and, you know, how you've been paid so far, what you're providing, And then future opportunity for revenue growth?
[00:08:47] Speaker D: Yeah, so I always say if we built a space company and didn't have revenue from the US government, we would be the first. So the US government has evolved to be an important part of our revenue expectations for the first couple years of the constellation. Going back to your question about the technology, we are operating the largest satellites ever commercially in low Earth orbit, and we're doing that at a price level that's multiple orders of magnitude lower than is traditionally done for large satellites usually you see in GEO. So being able to put up large arrays into low Earth orbit and build a constellation with it is a new capability for civilization. And that has both communications and non-communications applications. So why is that important to the government? So the government, the US government buys connectivity services today. They like buying connectivity services from space, having multiple vendors to do that, being able to use both a dual-use strategy, which means the same infrastructure that commercial uses, as well as avoiding vendor lock, which means having multiple vendors for a service. You know, there's a, there's really good buying trends on the comm side. And so, as you probably know, one of the dynamics we're working with now is perhaps the most positive US government investment in space backdrop since the '60s, the space race. And Golden Dome just recently got an interim funding package of $25 billion passed and signed by the president. So it's a great backdrop. We have a lot of the traditional comms use cases, and we also have a couple of non-comms use cases. And on our earnings call, we talked a little bit about all of these. We think there's about 10, up to 10 really distinct individual use cases relevant for the US government, and that each of those have the opportunity to become programs of record at the end of the day, which is usually code for, you know, $100 million plus opportunities per year. And then specifically the one we're developing now, and that we've been doing testing with the US government in orbit, both a phase 1 and a phase 2 contract for the Space Development Agency is doing non-communications testing in orbit with applications that are pretty broad and fit within some of the priorities, the recent national security priorities.
[00:11:00] Speaker C: Does the US government have any preferred partner economics or pricing or anything based on their early involvement and investment in AST, or is each contract going to be negotiated individually at market rates?
[00:11:16] Speaker D: Well, I'd say the process for government contracting is bespoke. I think the priorities that they have had in the last couple of years, started in the prior Trump administration with the development of the SDA and then other funding vehicles since, both under Biden and now Trump since January. Their approach is they want fixed-cost pricing. They don't want this cost-plus stuff. They want to know what they're getting. They want their vendors to move fast and they want to know what they're buying. So I think all of those models, which we've developed, you know, we're not, we're not a company for the US government. We are a commercial company. that commercial players need to understand, investors need to understand, and we need to be able to articulate clearly. This is not a cost-plus model. So I think we're ideally suited for that environment with the government where they want firm fixed pricing and clear value for payment. That doesn't mean small contracts. It doesn't mean smaller contracts than historical. What it means is you know what you're getting and you know that it's able to be deployed because you can see it today. And that's the basis, I think, for those contracts, how they look, how big they get, You know, we'll talk more about that over time as those contracts are awarded. Okay.
[00:12:30] Speaker C: Let's shift to the carrier side, which I think is how most investors think about the core revenue growth opportunity for your company. Can you explain the economics of those relationships? Is it a revenue share? You know, is it pay-per- pay-per-receipt or a usage-based model? How does the revenue model work with the carriers?
[00:12:56] Speaker D: Yeah, so this was another important concept to kind of get engagement from the cellular community early on. So one of the things, and our founder and CEO had a great relationship with AT&T through a prior company and has built on that throughout the globe with all the relationships I talked about earlier. And so the way we built it from the beginning was, you know, we're going to provide an add-on service. A la carte offering, similar to an international roaming pass. When you land in France, you get a text, you click yes, you get access for the day. Same sort of model. And the reason for that is we want to provide alignment with the operator. We don't want to be a cost center. We don't want to be something they think about when they're doing their CapEx budget. We want to be a source of revenue growth. And we probably won't be a big percentage of the revenue over time, but we could be a big percentage of the revenue growth. And what's often mature industries. And so that's always been our focus. How do we bring the wireless operators along with us to drive revenue growth, both for us, which that's our core focus is revenue, obviously, and for them because revenue growth is valuable and capturing that growth, not through traditional just pricing markups, but giving value to their consumer. And so that add-on model, that 50 revenue share, that's kind of been enshrined in all of our contracts. I think as we watch the industry evolve a little bit, there's value in perhaps including it in some of their super premium plans, because if you can drive mixed shift, that has a large piece of value for the operator, which would be paid on the backend. And then separately, we want to help them generally with their brand. We think that by delivering connectivity all the time, it fulfills the promise of connectivity to the consumer. For better or for worse, I don't believe that wireless companies get the right amount of credit for putting one of the most valuable tools in our pocket. We have the world's information in our pocket and it works 95, 96, 99% of the time, but that when it doesn't work, you're incredibly disappointed and emotionally so. And so what we found through initial applications of this type of service and through reviews of and market research is that— Consumers want this. And it's emotional and it's both tangible and intangible. It's emotional and rational. And by giving them that comfort or that insurance policy or that promise of connectivity all the time, it's valuable. And I think it's appropriate that, uh, that's structured with an add-on and a revenue share. And that's how we've always been organized.
[00:15:23] Speaker C: How does it work if it's a, if it's included in the premium plan, right? So you mentioned that earlier, right? Because at one point, We all paid for LD and that got kind of rolled up. And, you know, at one point we all paid for international roaming and now a lot of the premium plans include that too. So I guess at some point, you know, Verizon, AT&T Mobile, they include, you know, satellite connectivity in the premium plans. So is there in your agreement, do they just pay you per sub in those premium plans that include the functionality? Or would they have to allocate some value to that? I'm just trying to figure out the mechanics of how that would work versus a pure revenue share, which is much simpler, right? They charge $10, they keep $7, you keep $3, whatever the numbers are, right? How does it work if it's included in a premium plan?
[00:16:11] Speaker D: Yeah, the core principle for us is revenue share, and that aligns interests.
[00:16:14] Speaker C: Okay.
[00:16:15] Speaker D: How that plays out market by market, operator by operator, I think we'll give more clarity over time. But the The important principle is that we maintain alignment on revenue, I think. And that's really important to us. Over time, will there be other payments? Will there be minimum revenue commitments? Those are all things that make sense and are very standard in the industry. But for a novel offering like this, it's been very typical historically to have à la carte for the consumer.
[00:16:44] Speaker C: Okay. Thank you for letting me walk through the questions on the revenue building. It's important for investors to To understand that, I wanted to go back to the technology and some of the differentiation. Can you just walk through the spectrum you're utilizing today to deliver service? And then you obviously have the Legato agreement that would bring in more spectrum, which I think is also different than maybe what some competitors, or not competitors, what others are doing in the market. Can you lay that out for us?
[00:17:12] Speaker D: Yeah. So our Our core strategy has always been to partner with the operator. They bring spectrum and customer, we bring network, and we use their spectrum on a non-interference basis in places they're not using it. Now, that allowed us to bring AT&T and Verizon together in the United States with the 850 megahertz strategy and others around the world. And so we've always been focused on that approach, and it was a smart one because it allowed us when we were young, we didn't have spectrum to kind of build a model On the basis of our technology. And when we think about this industry, spectrum's very important, but we've always felt that the technology enables the capability. And that's why we've developed the largest satellites ever put into low Earth orbit, because that large satellite facilitates broadband. It facilitates non-interference in the other wireless airwaves, because wireless airwaves are the most heavily trafficked we have, and we can't kill the golden goose and impact terrestrial operations. And it also allows us to be very efficient with our power because we're able to collect power from the sun with the entire size of the array. And so you put all that together and it's a pretty good solution for what we need and it's pretty differentiated and it allows us to service a lot of frequencies. So often satellites would service one frequency or 2 frequencies. We service the 15 or so frequencies in low band that matter for 3GPP. And those are the frequencies that are in phones today. So country by country, as the satellite's going overhead, we can create locations that have up to 4 different frequencies, potentially from different operators that will switch as we go from US to Mexico, Mexico to Brazil. You can change that over. And by having all that flexibility on board with the satellite, we're a very valuable tool to fill in the gaps and cracks in today's wireless cellular networks and take advantage of the 6 billion phones that are already in service. You mentioned As of January, we started talking about and announced our kind of enhancements to that strategy with MSS Spectrum. So we signed an agreement to get long-term usage rights from the L-band, 20 MHz in the United States and Canada. And since then, we've announced an ITU filing acquisition to get some S-band rights around the world in various countries where it's not already allocated. And so those strategies are all, think of them as enhancements to the core strategy. They add more lanes to the wireless superhighway that we can push more traffic and more subscribers through, and it allows us to build the business over time with a strategic asset now within our 4 walls.
[00:19:46] Speaker C: So if I heard you correctly, what you were saying was that, you know, your constellation in LEO orbit, right? You know, as it's passing over different areas, it can dynamically switch between spectrum bands to support the carrier spectrum needs, and that's specific area? Is that—
[00:20:07] Speaker D: That's right.
[00:20:07] Speaker C: Is that what you're saying?
[00:20:08] Speaker D: Okay.
[00:20:09] Speaker C: And then will your newer Bluebird-2 satellites, are they built to currently support the L and the S-band? No.
[00:20:19] Speaker D: So our current network build is focused on low-band, 700, 800, and the range of 700 and 960. And so those are all the low-band frequencies, or at least the vast majority of them. Over time, we can incorporate mid-band satellites into the network, and that's the intent as these spectrum acquisitions get approved through the regulator, as the frequencies get deeper into the phone installed base. So the sequencing works out pretty well for a medium-term strategy, but think of that as approval in 2026, big strategy in 2027. But right now we're focused on low band.
[00:21:00] Speaker C: And I skipped over it a bit, but the Legato transaction, currently trying to get approval there. For people not as familiar, can you just tell us where that is, what's required for final approval for you to finally get access to or to get that spectrum, which you've already done some funding for, so that's already backstopped?
[00:21:21] Speaker D: So there's a lot there, but basically, you know, cellular frequencies, there's about 1,000 megahertz of cellular frequencies, maybe more between low band and mid band. And that's why we started there. But then there's also these MSS or space frequencies called L and S, uh, which each is about 20 to 40 megahertz globally. Uh, and some of them are used and some of them are not used. And so starting with L, which is what we did with the Legato transaction, L is, is pretty heavily trafficked around the world. It's, it's definitely used today. Except in the US and Canada, where it was cleared for terrestrial use or intended for terrestrial use years ago. And so that has, uh, what we did here was we got the long-term rights to use that cleared spectrum. So it's 20 plus 20 megahertz, which is a fantastic allocation. It's 1.5 and 1.6 gigahertz, lower mid-band, which is really great propagation characteristics. And it's not in use. So as soon as we're able to light it up, we're able to do that and bring that back. to space for its original intent has been a very strong message and the original intent of the transaction. So we are expected to file with the SEC to bring those rights to bear in the coming months, and we expect that to be a 2026 timeframe for us. But this transaction basically will give us long-term 80-plus-year access rights to 20-plus-20 MHz in the US and Canada, and we've signed definitive agreements with the Legatta shareholders. Those were approved in May by their bankruptcy court judge. And so at this point, it's only subject to SEC approval, and we'll make those filings in due course.
[00:22:58] Speaker C: Okay, fair enough. So I wanna move on to the launch cadence, right? You know, you already mentioned satellites required to provide contiguous service. So what does the launch cadence and visibility look like? For the next 12 months.
[00:23:16] Speaker D: Yeah. So on our earnings call, we announced kind of detailed launch timing the first time. So we laid out the satellites we're producing for the next 13 launches, which essentially corresponds to that 45 to 60 target that we've laid out. The importance of 45 to 60 satellites is it gives us 24/7 coverage in the markets that matter, which is the key enabler for a consumer service. Now we can service the US government with less. We can do IoT and enterprise and beta and better than nothing, but But I think the, in order to hit the mass market, you want someone to be able to be in a place without their phone working, have it work better, sign up for the service, like it, keep it. And that's really the success factor for the mass market. And, and so that target we laid out in our earnings call, the high-level summary is that we plan to do a launch every month or 2 during 2025 and 2026, starting very soon. Our first big satellite, FM1, was our most recent disclosure, is ready to ship in August. And we've had no major issues in final testing or preparations for shipment. And we're working with our launch provider to get that up. But otherwise, we've got the factory humming. Like I said, our founder is sleeping on the factory floor, as you'd want to hear and expect, and getting to a 6-satellite-per-month manufacturing cadence in order to fulfill that '13 launch plan is our key objective right now. And so we've— what you hear from us is vertical integration, so manufacturing of which we control. We've built over 8 satellites worth of kind of active payload, which is the hard stuff to put together. So we expect the satellite manufacturing ramp to be quite nice. And those launches, we're working with multiple launch providers to kind of manage that portfolio. For us, that ticket to space is more than half our CapEx and one that we actively manage and one that we have flexibility on. We built the satellites so we can work with multiple launch providers. But hitting those network deployment timelines are very, very important because we want to get to that target of 24/7 coverage as soon as possible.
[00:25:17] Speaker C: Sure. And there are a few pieces in there, right? Number one is the manufacturing cadence. And you said you need the 6-satellite-per-month cadence to hit the launch timeline. I'm sorry if I missed it when you said it, but where are we now for the manufacturing cadence? How many satellites per month throughout today? And I know you have the one ready to ship whenever they're ready to take it over in India, but Where are we with the manufacturing cadence today?
[00:25:39] Speaker D: So because we're vertically integrated, there's a lot of different elements of that, right? So we've, we years ago, we took all the testing onsite. So as you're putting together systems and subsystems, we're testing it, moving it back and forth from annex to annex of the factory. And that's been a key time saver for us. We do, you know, just to give you a sense on solar panels, the initial element we get into our factory from outside is basically a Chewing gum stick-sized, uh, kick. And that we lay out on solar panels, you know, 2,400 square feet in size. So, and on the antenna side, we get individual antennas, we install them as part of the microns, and then we also build the, the bus, the control side ourselves. So each one of those systems and subsystems, I think, are at different levels of maturity. As of right now, we feel best about the microns, which is the active payload. And, uh, that's why we gave the guidance that By the end of Q3 coming up soon, we expect to be at about 6 per month cadence. And then by the end of the year, we expect to be at the full satellite cadence. So now I'd estimate, you know, we're somewhere in the probably 2 to 3 range on average, but we need to keep ramping that. And the first one's the hardest. So we feel good about hitting those targets and they're key to enabling the 2026 goals.
[00:26:54] Speaker C: Okay. And then The launch is, I guess, the second gating factor, and launches are always uncertain, right? I mean, I've covered satellites for years now, tracked launches. They get delayed. You have catastrophic failures. It's hard to launch things into space. Why do you think, as I'm tracking it, you know, I'm seeing this, why do you think that some of the recent launches, and not just you, but even like planned launches globally, whether they're India, Blue Origin, or SpaceX, have been pushed out? And, you know, what makes you think that the broader launch cadence globally is going to pick back up end of '25, beginning of '26?
[00:27:33] Speaker D: Well, I'd say the launch industry and the supply of launch experienced some challenges starting a couple of years ago with basically the, we don't really have access to China launch as US companies. Russia launch is not accessible by US companies. So really the big, big provider of launch today is SpaceX. Blue Origin is coming up behind them, which is why we've made a point of having a good relationship with them, signed a big contract with them. They have a New Glenn launch vehicle that's twice the size of the Falcon 9 and can launch twice as many satellites for us in one go. That program backed by Jeff Bezos has an incredible amount of investment and people behind it and is doing very nicely. They're going to have their next big launch coming up hopefully in the coming weeks. And between the two of them plus India, we signed an agreement with the India Space Agency. in order to launch on their human space-rated vehicle. So all in all, you know, SpaceX has a nice cadence, lots of launches. Blue Origin has a fantastic vehicle. We expect great things out of that in 2026, and it's twice the size, so we can get a lot of satellites on in one go. And then there's multiple other providers around the world. And so when we looked at launch 3 years ago, 2 years ago, we made our partner choices based on how we thought the landscape would play out. And there's a couple new launch providers coming up behind them as well. So we see tight '25, tight '26, and then launch opening up a lot thereafter. But we really like the plan we put in place with Blue Origin, SpaceX, and ISRO.
[00:29:03] Speaker C: Okay. That's very helpful. And I touched on it earlier, but then I skipped over it. You know, when I opened, I said that there's a ton of interest in this space right now, and there's also a lot of, you know, existing and growing competition. So just to help To help investors, you know, think about your offering, your technological capabilities versus say what, you know, Starlink offers today, T-Mobile, I think it's Techstone, what they're offering through them, or, you know, what Amazon and their Kuiper, I'm probably pronouncing it wrong, what they're gonna be able to offer from a technology perspective. You know, what kind of capability are you offering and, you know, how is it different? Whether you wanna talk about kind of like You know, megabits per second, whatever the right metric is, you know, how is that different than the others that are out in the space?
[00:29:52] Speaker D: Yeah, the thing we're offering that's different is broadband to 6 billion phones around the world. So one of the key challenges with the historical space communications business has been the need to fund or get someone to buy a $1,000 dish. And if you're a customer that has to buy a $500 or $1,000 dish, Or you're a supplier of services who have to discount that dish. It implies a business model that requires ARPOs of $100 or so per month. And that ARPU level doesn't really work outside the US. That's been the classic issue with that business plan. And so being able to go direct to the phone is the reason I'm here. It's the reason I think all of us pay attention to this story because you don't need to put a new phone in people's pockets. So that upfront charge is zero. And then you can further split up the service as much as you want. You can offer gigabyte plans in the United States for broadband. You can offer 100-megabyte talk and text plans in Sub-Saharan Africa for a dollar or less. And we make good money on all those plans and we service those markets with good value. And that is really our strategy and what's differentiated with our tech and our go-to-market strategy and our technology and architecture strategy. How that plays out over time, we think that you need a big satellite. We think that's the right answer. It gets broadband, it manages interference issues in very narrow wireless channels, and we think that's one of the reasons why we've attracted the following from the operators that we have. Overall, how does that play out over time? We think this is a great new market. This is not the competitive historical fixed broadband communications space market. This is a brand new vertical that's entering the wireless TAM, which is enormous, and we're adding real value both to the operator into the end user. And so at the end of the day, we like and think we've been successful and we'll be successful because we've been at the birth of this new industry. And it's tapping into something that most of us know is a problem. You know, when our phone doesn't work, I often am on calls with customers and when the phone drops off in the middle of the call, I always come back on and say, sorry, that wasn't intentional. That was not planned. I just dropped even though I was in Greenwich or whatever. And that's really the strategy. So we're We feel like we're differentiated. All technological advantages dissipate over time. So it's, you know, we expect we have a 5 to 10 year advantage. And that's one of the reasons why we have the spectrum strategy we have, because we're pairing our technology lead with long-lived assets that'll preserve that strategic advantage over time.
[00:32:21] Speaker C: And you do have, I think, over 2,000 patents, if I have the number right. Do any of your patents protect that technology advance? I'm not trying to get or think about is, you know, through their, you know, their denser satellite constellations, could, you know, could a Starlink— what's to prevent a Starlink from also offering a direct-to-device solution over time if they strategically shifted or made some tweaks to their satellite builds? I'm just trying to figure out, you know, what's the barrier to them also entering that market?
[00:32:53] Speaker D: Right. So we have over 3,700 patent and patent pending claims underpinning our satellite technology and the network architecture. That's important. We've built first and smartly and built the go-to-market strategies and the relationships with the ecosystem, which is valuable. We've overcome many of the threshold issues with getting to space that you described earlier that remain. And you put all those together, feel great about barriers to entry. If you pair that with what do we think the world looks like in 10 years, We think, so what you said about a TAM of $30 billion, you know, it's not gonna be a winner-take-all market. You know, this is gonna have multiple players.
[00:33:32] Speaker C: Do you agree with that rough TAM size? I mean, it's—
[00:33:35] Speaker D: Yeah, it's broadly consistent with where market research is and how people think about it. And when you think about it in terms of reasonable ARPOs and reasonable penetration, you can easily support tens of billions of revenue for this market. And it adds a lot of value to the consumer, and we think the consumer is there. And so when you put it all together, there's going to be multiple players. This is a classic carrier-neutral type of outsourced service that you see across other industries. Each market has 3 or 4 wireless players. They have different spectrum positions, different strategies, different approaches. They run a lot of dual sourcing. I mean, this is not a winner-take-all market. We expect to be a leader in this market, and in the early years, we expect to be the primary player. And it's hard to see more players, but we're not going to be the only one.
[00:34:22] Speaker C: And I probably focused maybe even too much just on the revenue opportunity from developed wireless markets like the US, but we're all a bit provincial, right? There's also that enormous opportunity from unserved, right? People that just don't even have access to a terrestrial wireless network today that presumably you could also help to serve with even basic wireless connectivity in addition to You know, directed advice. So how are you thinking about that? You know, how are you going after that market? And for any of us trying to model this, how do those ARPU assumptions maybe differ from what you might be modeling in for a US market, for example?
[00:35:04] Speaker D: Yeah, and this is a key area of our relationship with Vodafone, who has an incredible footprint in both Europe and Africa. And so the key difference here is that because we don't have to put a new phone in people's hands and because we can sell plans by the gigabyte or the 100 megabyte, we can hit different markets and with different ability to pay and provide value-added services to all of them. So I think what I mentioned some pricing earlier, but you can give talk and text plans for relatively little impact on our—
[00:35:41] Speaker C: Yeah.
[00:35:41] Speaker D: on our network. And that's something that could be very valuable in Africa or in parts of Asia. And some of us forget here in the United States, but Africa is very, very large. It's 40-plus countries, a diverse array of ability to pay across different markets, diverse backgrounds, languages, different impacts. There's multiple large players of which Vodafone is one, and there's large portions of the continent that are covered not great, or they're still covered by 2G. And this is a cellular broadband service, so there's an upgrade from 2G. And so when you put all that together, we still think the biggest opportunity is in the developed world where there's so many of us who go in and out of connectivity and value that stopgap or that supplement or that insurance blanket. But yeah, there's billions who are unconnected still. And when we look at those markets, We see big opportunities and Africa is chief among them. And that's a key part of our strategy with Vodafone. But another point I'd make with Vodafone though is we recently formed a joint venture with them in Europe to go after the European opportunity. And me, historically, I've always thought Europe has very good connectivity. You'd think this would be perhaps a poor application for that, but we've had great success. Our team there has signed up 21 of the 28 EU member states to do initial indications of interest. And that's above and beyond the Vodafone markets that we already have under contract. And what they've found is that the consumer really values that X factor, whatever it is, just kind of fulfilling the promise of connectivity. And so we really see as we get in deeper that the value prop for both developing world and the developed world is pretty strong. It's different, but it can be serviced uniquely by our flexible tech.
[00:37:29] Speaker C: Okay. I'll open it to the audience here in a minute. If you have any questions out there, just please raise your hand. There is a microphone that can be passed around. Let me just go ahead and jump in with one more of my own, if I could please. So we talked about the US government opportunities. Something we have not talked about are local government opportunities. We're all very well aware of connectivity issues during natural disasters and otherwise, and So is that another market that you could pivot to with local government, first responders and that opportunity?
[00:38:06] Speaker D: Yeah, core to our strategy with AT&T has been their FirstNet program. So they won a concession from the US government to build out the FirstNet network for first responders. They have a couple million subscribers under that. But that plan's been a great growth area for them. And the industrial logic is clear, right? The value prop is clear. First responders need their technology to work. They need their communications to work. And if they can't, lives are on the line. And so whether you look at kind of classic first responder networks for governments around the world, or you look at what do you do when power goes down for 12 hours? Spain had an outage last summer that was pretty scary. We've all seen flooding and natural disasters and fires in the United States where networks go down. Being able to flip a switch and turn on capabilities over a broad area, it might be hard to serve millions of folks with broadband, but we can tailor the network so that texts and voice calls can get out, and that would be very powerful. So that is a big use case for us. It's an important one, I think, for the mission. It's important for the operators. How that fits in is kind of a second-tier use case and a second-tier revenue opportunity. will be very interesting for us, but we like that and that's natural. I think when you stack the end markets for us, consumer is very big at the end of the day, US government will be good-sized, and then you can start looking at enterprise, IoT, disaster recovery, first responder. Those are really nice little markets for us that could make a big difference for our business model, which is the flow-through margins are very high.
[00:39:44] Speaker B: Okay.
[00:39:45] Speaker C: And for maybe one more, for those of us watching, what's the next big milestone and catalyst we should be looking out for?
[00:39:52] Speaker D: Well, we're very excited to kick off our network deployment campaign. So that's one I'd point to. You know, folks tend to look at the FCC and regulatory approval timelines. We feel really good about those, but that is one that has been kicked into high gear with the new administration, and we're very excited to keep seeing those drop. And ultimately commercial agreements with our partners. We expect to roll out our initial, our network initially to our closest partners and those agreements can start coming through any day now. So I think all in all, look to our network deployment timelines and our go-to-market strategies and commercial agreements with our customers.
[00:40:32] Speaker C: And what will we hear on the new commercial agreements? What do you mean? Will we see, you know, press releases? Will we get more details on On the agreements, what will we see when those come out?
[00:40:42] Speaker D: That's exactly right. I think these commercial agreements are important. This is— don't think of this as a 5-page bolt-on. This is a native cellular service that they can have their subs completely roam onto. And there's huge implications of that for the network, for legal frameworks. And we're creating these— we're pointing these aircraft carriers in the right direction to drive revenue through. And so these commercial agreements are very important. They're important milestones for the relationship and they're important guideposts for investors, I think, on how revenue will start to take shape.
[00:41:11] Speaker C: Great. Hey, Scott, thank you so much for coming out. It's a pleasure to have you here.
[00:41:15] Speaker D: Thank you very much.
[00:41:16] Speaker B: Okay.
[00:41:16] Speaker D: Thank you all.
[00:41:22] Speaker A: Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time.
[00:41:41] Speaker B: We're doing something very, very big, and I think with this technology we can really affect a billion lives. AST SpaceMobile is the only company that has proven technology to deliver To deliver cellular mobile connectivity directly from space to the everyday smartphone. People will just basically turn on their phone and be seamless. Regardless of where you are, we don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the NMO.
[00:42:21] Speaker A: Listen.
[00:42:21] Speaker D: Mmm, waffles.