Anpanman - August Launch Confirmed - The Billion Dollar Race to First Service

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast. We will just basically turn the 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. Everyone, thanks for joining. Uh, give me a thumbs up if you can hear me. We just had some news hit the tape. Uh, it came up on Bloomberg first, and now— which I don't know if the company hasn't tweeted it yet, but they just announced that Bluebirds 11, 12, and 13 will be launched in the first half of August, which is great news.
[00:00:47] Speaker B: Just read Through this.
[00:00:52] Speaker A: As, um, some of you know, the satellites are close to being completed and tested, but I believe because of our scheduling, we, we do have the Falcon 9 scheduled for— maybe it's either the first or second week of August, obviously. But, but yeah, they just announced that, so that just hit the tape.
[00:01:11] Speaker B: Great news.
[00:01:13] Speaker A: Uh, so we should probably see the shipment of The next batch of Bluebirds, probably my guess is towards the second week of July, but then there, there probably will be a PR that they're ready to ship, or maybe this is kind of implying that. But great news. Thanks everyone for joining. I'm going to, aside from that news that I just broke, I did want to talk about a few different things. I won't go through the Collar transaction that Abel put in place last night that was covered by Cook in detail. And for those that don't know, Abel owns— let me just take a quick look here— last count, Abel owns 78 million shares in AST SpaceMobile. And so last night, as part of a financial planning exercise, he did enter into a collar transaction. Uh, Cook covered it, so you can listen to that space, but for a small portion of his holdings. It's 2 million shares out of 78 million shares. So pretty de minimis for someone who hasn't monetized really any of his shares since the founding of the company. And so, you know, something that I think is smart for him. And from a financial perspective, for any founder, you don't want them being stressed out in terms of their personal finances. You want them fully focused on the mission of executing on behalf of the company. Obviously, you know, You know, if, if insiders were dumping stock left and right, that might be a concern— or not might be, that would be a concern. But the company, whether it's Abel or Scott Wasadusky, they've taken— well, actually, Abel is quite exceptional. He hasn't sold, technically sold any stock for the last 6 years since the company's been public. I, I'm not even sure he's sold any since the founding of the company. But, uh, here he's taking— he's using this collar transaction to enter into a loan. And depending on the performance at the end of the period, which I believe is sometime in early next year, he will either have to settle the loan in shares or cash, and that's up to his choosing. What we've seen in the past is he did enter into one of these transactions before, I think it was 2024, and then he actually rolled up the strikes because he didn't want to sell any of his shares. So But yeah, if anyone's interested, Kuk covered this in detail. I think it's just a good financial exercise. And as I mentioned, for any executives, you really want them focused on executing the business and not worried about financial problems personally. And not saying that he has financial problems, but— I always talk about Scott Muzubuski as an example where Scott, he has a pretty— he's a pretty young guy and he's got I forget how many kids he has, but they're all rather young. And so for someone who is constantly working and traveling and putting in, you know, the really long hours for the company, you do want them to be financially secure to a degree and for them to be able to hire help. You know, his wife obviously is doing the yeoman's work of taking care of the kids while he's away. And so I'm getting into too much personal details here, but yeah, you want you want your executives to be focused on the mission and not worried about, you know, financial outlays, uh, where they can afford private school or help or, uh, summer camp or things like that. But anyway, going back to AST SpaceMobile, um, I, I, I did listen to Cook Space last night. Um, it was funny that he, he expected me to fire up a space. Um, and I was actually at the World Cup. Uh, I took my son to go see a game, which was great. We saw Norway play Senegal. And fortunately, we were blessed by the weather gods that it did not rain or thunderstorm as forecasted. And so that was a wonderful game to go watch. I was cheering for Senegal. They did put in a great performance, but in the end, Haaland was clinical in his finishes. And so they lost 3-2, but it was a very exciting game. But yeah, so the Cook talking about my death. I'll just say that the claims of my death were wildly exaggerated. I'm still alive. So going to the market overnight, some people were asking why Nasdaq was nuked, and I'm sure people have seen all these different posts, but the Korean stock market was down, I think, 10%. And, you know, people out in Asia, especially with this whole push towards AI in a number of companies, whether it's Samsung, Hynix, Some of these memory providers who have benefited greatly and trade at what is viewed as very reasonable valuations because they trade at single-digit PE multiples because they're essentially over-earning right now, which is good, right? Because these companies need to earn more money and then take some of those proceeds and go invest in new memory fabs. And, you know, when you do have that type of dynamic, there are these boom and bust periods where You know, when times are good, these fab, these, these companies go build more fabs and then they overbuild and then demand kind of drops out and then you go through these cycles. It's, it's a, we're currently in a boom cycle. No one knows. And you know, every cycle everyone says that this time is different, right? Like that AI is different and the demand is gonna be insatiable. And so memory is not gonna be cyclical anymore. Memory is cyclical. It will always be cyclical 'cause that's just the nature of the beast, right? And so maybe this boom cycle's gonna last longer than people expect, But, you know, there, you can't have something just go straight up and not have any pullbacks or, you know, whenever there's some wobble around AI demand and, you know, if Google or one of these companies cancels on a project and then people kind of get jittery and they try to extrapolate, okay, have we seen the top for AI demand around data centers, which is pulling through memory? And so you're going to have these really wild swings. And so last night, the KOSPI was down, I think, 10%. All these memory names were down significantly. And someone might ask here in the US, well, why does that impact me? Why should I care? Well, these markets are all interconnected. And so just for example, we have a new memory ETF called DRAM, and that invests in Micron here in the US, SanDisk, and then it invests in some of the Japanese and Korean players. And so when when the markets in Korea sell off, it's going to impact some of the securities here because they all, you know, investors do look at relative valuations between the two. And so it's going to impact both as well as the fact that risk is being— there's some amount of leverage that's being deployed for risk. And so whether that's the individual investor in Korea who has taken out loans and is buying some of these memory companies, and in turn that person's portfolio probably has like some US-based names, right? And so when they take a hit and they get margin called or they have to gross down, they're going to sell names that are local, but then they might also sell, as we know, there are a lot of Korean investors, for example, that own Quantum names here in the US. And so IMQ, I think, is widely held by Korean retail investors. And so when you do have some of these big moves, there are cascading effects, right? And so As we saw in the last Bluebird launch, there are some Korean retail investors in AST SpaceMobile. And so, yeah, it's going to have an impact. So we saw overnight the stock get to 69 or so, a great auspicious number. But now, now we're seeing a rebound. And I talked about this dynamic, I guess, a while back where I thought we had bottomed because we've just been on this unidirectional move down. Let's see, we peaked just prior to the Blue Origin New Glenn incident, which seems like yesterday, which it actually was. It was May 29th. We've been on a straight line down. And so that seems— that seemed quite a bit extreme to me. I think space stocks in general have been complete— I don't know about completely de-risked, but definitely de-rated. any SpaceX premium or enthusiasm has been completely taken outta these stocks. And so we're back to levels where prior to the SpaceX run, we're back to early May levels, which is kind of funny 'cause that was what, I don't know, 50, 40, 40, 50 days ago. But when you're a space investor, you tend to age a bit more than other public investors because you go through these big periods of volatility. Um, but yeah, I, I think, uh, as I mentioned yesterday, I think we've reached a, you know, is it the bottom? Who knows. Is it a near-term bottom? I think we have, um, because I think sentiment is completely bombed out. Also, uh, technically speaking, I just posted a little while ago, um, let's see here, real-time short interest is at an all-time high. So yesterday, uh, real-time short interest hit 76.9 million shares. And this is important in that, um, Kuk has covered this too, but I, I do think SpaceX investors, especially the ones who own shares privately through SPVs or their employees, they're probably talking to Goldman or Republic Bank, First Republic, or the old First Republic Bank, Morgan Stanley, any number of, you know, wealth advisors. And some of the people have probably recommended that they short a basket of space stocks or they short some high-beta space stocks, and AST certainly fits in that category. When I talk about 70, in my tweet earlier, I talked about a new all-time high and that the numbers are actually much bigger than indicated. And so what I mean by that is the, let's see, the short interest as of, call it June 10th, was 64 million, and now we've gotten to 77 million effectively, right? And so you have to understand though that the stock on June 10th at 64 million was at 104. And so as the stock has moved lower, um, the convertible arbitrageurs who, uh, trade around deltas, you know, the underlying warrant in the convertible bond, when the stock price goes up, they, they get longer the stock, and so they have to short more shares. And then when stock goes down, they actually have to cover shares because, um, they're not as long. And so the, the bond value takes over more of the value versus the warrant. And so with the stock price going from $104 to $77— actually, I should probably go through the math, but, um, they've probably, they've probably net covered several million shares. And so the fact that we've gone from 64 million on June 10th to now 77 million, in, in light of convert ARBs covering a significant amount of shares, means that there are a lot more outright shorts, right? Outright shorts meaning whether it's a fundamental short or It's part of a hedging program as a basket. I'm sure Goldman probably offers some of their clients, you know, some space basket on swap and are short ASD as part of that. And so the reason why this is important is that this is a dynamic that is probably going to continue for some time, but it's going to add fuel for the next move higher. And what I mean by that is in anticipation of SpaceX, there's a big lockup coming up. I think it's Depending on performance metrics, the minimum lockup, or the minimum lockup is 20% of SpaceX shares are going to become fully tradable on August 20th. However, if SpaceX trades above a certain amount, that could be an additional 10%. So it's like 30% can come unlocked. And so when that, when those shares become available for trade, some of these people who have this basket on, they will then go in the market, sell their SpaceX, and then they will cover They're short. And so from a technical perspective, that could create a pretty interesting squeeze dynamic where clearly the shorts have piled into AST. And what I'll do is I'll try to go back after the space is done. I don't have time to do it now, but I'll try to calculate how many deltas convert ARBs have covered on this way down so we can get a true number of how much additional short interest has has come into the stock, which I think is pretty significant. But yeah, I think as we've seen, the entire space sector has derated and a lot of the SpaceX, I guess the draining liquidity has happened. And so from here on, I do think we've bottomed and obviously for AST, there's quite a bit of good news ahead, and I'll talk about one nugget that came out today. But then also, I will say for folks who maybe are newer investors to the sector or for AST, I think it's important to— this is, I always remind folks, number one, don't invest on margin. If you're going to try to do some leveraged type of trades, like at worst, use options or use leveraged ETFs for short periods of time. Don't Don't use leveraged ETFs for long periods of time. And this is, by the way, a case in point. When you have unidirectional moves up, leveraged ETFs will outperform. When you have unidirectional moves down, they'll get absolutely clobbered, which is what ASTX has suffered over the last few weeks. And so just to give people an idea of the performance tracking, the difference between the two, Let's see, so AST, the last time the stock hit $65, that was in May, I think. Let's see, ASTX bought, hit like $21 or so, but well, I guess it's rebounding today. But this morning when ASTX had, or AST had hit $69, ASTX was at, I guess it was like $17 or so. So clearly because of the magnified move down, the unidirectional move down and then effective compounding, The you know ASTS at 65, you know ASTX was at 21, but then this morning when ASTS was at 69, ASTX was at 17. So that just shows you because of compounding, because of the fact that these products are inefficient, the underperformance is quite quite a bit more. And so if you had held ASTX through the entire period of when AST was at 65 and then when it hit 69 this morning. you would have significantly underperformed. And so that's the danger of the products, which is why holding onto them in the long run is not a good idea. It's typically something that you do for the short term if you're looking for, you know, a swing trade or some period of leverage and you think you have edge and you think, you know, it's going to work out well. But it's important to note that the second point I was going to make is when you're following space companies, it's important to have a watch list and so populate it with BlackSky, Firefly, Intuitive Machines, MDA Space, Planet Labs, Redwire, Rocket Lab. I mean, it's important to put all these companies into a watchlist because oftentimes when people see their stock is, their favorite stock is down, they're like, well, woe is me. Why is the company always down? Or why can't they announce something or whatever it is, right? But it's important to have the context that the entire sector is down. Like the underperformance is no, it's not an outlier. Space stocks are getting hit. And so it gives, I think it gives people some level of context and ability to frame that, oh, it's not just my stock that I own, it's actually the entire sector's down. And so I think it's important if you do own space stocks or whether it's some of these other names, you do need to follow the peers. Just to see if it's, you know, idiosyncratic, like it's something that's related to your company, or if it's something, you know, macro-related, right? And so, yeah, I think it's important to make sure you do that so that you can, you know, stay sane. Anyway, so moving on, this morning we got some interesting news. Rakuten announced that they will be forming a joint venture with AST SpaceMobile. The joint venture is going to be capitalized 50/50. My guess is that AST, as part of that joint venture, is going to contribute satellites, technology, know-how, all that stuff, and then Rakuten will probably have to put in some dollars. And so the reason why this is important is that we have this JLEO project that the decision's coming up at the end of June. And so this joint venture structure is very similar to what AST did in Europe. where they created Satellite Connect Europe with Vodafone, and then they brought in additional partners. That's Vodafone. Um, who else is there? Actually, I wrote a tweet about this, but Vodafone, Orange, um, here's some of the other players.
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[00:19:42] Speaker A: And Telenor. Yeah. And so, and I, in my opinion, I think Deutsche Telekom will join that joint venture as well. But the reason why you do this is that by creating a joint venture, you're able to create an entity with governance rights and that's capitalized, that is able to then kind of work as a third party to enable satellite services for the folks who have entered the joint venture, which oftentimes Those companies are, you know, competitive with our, you know, competitors. And so by forming this joint venture, it allows them to work more easily with one another. But this news that came out today is important in that, you know, it establishes a joint venture in Japan. And the timeline, I think, is going to be within 2026. And my guess is probably in the next few months. And I think this joint venture was clearly designed to facilitate the J-LEO project. And so we are going to hear In the next, I guess it's the next week, who wins that? Now, maybe a decision gets delayed, but, but I do think, you know, AST SpaceMobile and Rakuten are very well positioned to win that. And this joint venture being formed right a week before this announcement would indicate that they're probably well positioned to win this. The reason why I think it's important that this joint venture was formed is that As part of the JALIO project, one of the aims of it by the Japanese government is to allow during periods of, you know, if there's a natural disaster or emergency and the networks go down, this— the new entity that will be utilized that will provide broadband satellite service needs to be able to work or access by, you know, competitor networks. And so whether that's KDDI, NTT Docomo, or SoftBank, they will need the ability to access AST SpaceMobile's network, even though Rakuten is the exclusive user of it. Through this joint venture, you can establish protocols and pooling of spectrum. And quite candidly, similar to Satellite Connect in Europe or what's happening here with the joint venture around the US, that joint venture is probably an entrée to then invite other partners in, whether that's NTT Docomo or SoftBank. I think KDDI. So there's, by the way, there's 4 major carriers or actually 3 major carriers and one kind of mid-level carrier in Japan. The big major carriers are KDDI, NTT Docomo, and SoftBank. And then the challenger is Rakuten. And so for those that don't know, Rakuten has exclusive Rights to AST Space Mobile service in Japan, and as a result of that, KDDI was the first to partner with Starlink. I think they're the senior partner, and then NTT, Docomo, and SoftBank joined KDDI in providing Starlink service. And so, so for all intents and purposes, as of now, Starlink does have the top three carriers in Japan. However, those agreements are not exclusive, and then on top of that. What we learned in the SpaceX IPO, those agreements can be terminated at any time. And so it was interesting that Katzy tweeted out earlier today, which I retweeted, that SoftBank is testing, or AST SpaceMobile and Rakuten are testing the satellite service over SoftBank spectrum, which is important in that you need permission to test on another carrier spectrum. And so that probably indicates that SoftBank Is likely going to join this joint venture. I mean, you can't say can't say that definitively, but as we all know, Space Mob DD is undefeated, and so that probably indicates that SoftBank is likely going to work with AST. But I think it's important, you know, as we head into the decision process for this JLEO project, I just wanted to go through some of the key tenets of or the requirements of. of what the Japanese government is looking for. And so I just asked ChatGPT to summarize the key aspects of it, and then I'll talk a little bit about how AST addresses these things and how it's well positioned. So first, JLEO, the core requirements are that it's going to be structured as a single winner. And so it needs to be a Japanese-controlled satellite directed device infrastructure, or that's what they're calling it, a Japanese-controlled satellite device Directed Device Infrastructure Program, and they are going to offer, I think, ¥148 billion in assistance for covering no more than 50% of eligible costs to the winning consortium. The other half has to be financed by the consortium, which, as I mentioned before, the tender or the genesis of this project came when the Japanese government put together their Fiscal budget for 2026, and so in November of 2025, that's when everyone first learned about this project. And then bidding was opened up in March of 2026, and then of course they're making the decision on who to select by the end of this month. The reason why the timing is important is that back in January, that was when Rakuten notified ASD Space Mobile that I was stepping down for the board. The reason why I did that is because Rackerton wanted to sell some of their shares. And so as we all learned later, they sold half of their stake, 15 million shares, and then they retained half. And the reason why at that point in time we thought that the main aim of selling these shares was to deleverage the company's balance sheet because they have a significant amount of debt. And as part of that program, selling half of their share in the Astin SpaceMobile, they also started to monetize and restructure their fintech business, which actually has been doing quite well. But I think now we know, or we can speculate, that the reason why they wanted to raise capital was to put their best foot forward in this proposal, which again, the tender opened up in March, but they wanted to put their best foot forward and say, hey, we are financially well capitalized. We can you know, we can execute on this program if you give it to us. And so that was an interesting tell that at that— back then we didn't kind of put the numbers together. But with Space Mob due diligence, you know, I think we learned— what was it, maybe 2 to 3 weeks ago about the JLEO program. And, you know, something that— something— it was something that we should focus on. But let's go through some of these key criteria. And so number one is Japanese ownership and operational control. It talks about how the recipient must be a corporation established under Japanese law with principal business and presence in Japan. It must own supported LEO communications infrastructure, operate and manage that infrastructure itself, and this is important, locate all ground facilities required for Japanese service in Japan, has to be in Japan, so satellite gateways, operational control centers, Payload operations control centers, network operations control centers. And so this is an important aspect because I think, as we all know, AST SpaceMobile's current architecture, you know, because of the bent pipe nature, it requires that, you know, obviously if you're talking to a satellite— or sorry, a mobile phone in Japan, that the satellite takes that signal, packages it together with other signals, and then beams it back down to Japan. And so traffic originates and lands in Japan. And so that's, that's one important criteria. Also, all the infrastructure is going to be owned by this joint venture. And so gateways, control center, all that stuff is going to be owned by this Japanese JV, which at least today we haven't seen Starlink offer this type of control to other governments or MNOs. Starlink, as we know, and I'll just take T-Mobile, for example, the network here in the US is completely owned and operated by Starlink. And so the way that Starlink works with T-Mobile is that they provide T-Mobile customers with an eSIM, and that eSIM is the backup network to your terrestrial T-Mobile network. Or they also allow users of AT&T and Verizon to subscribe to the service, although I can't imagine there are many of them. But that network operates completely independent of the MNO, and the MNO has no control The traffic goes over Starlink's network and then they hand it back over to the MNO. And so looking at this JLEO project, the requirements around it, unless Starlink creates a new Japanese entity and KDDI puts in economics into that entity and then effectively controls that entity, the infrastructure, the control centers, all that stuff, I I just don't see how Starlink could be eligible under this first criteria. Let's see here. So nation number 2, nation direct-to-smartphone service by March 2029. This is something that both AST SpaceMobile and Starlink can meet. And so there, I think there was some speculation that perhaps MDA Space and Telesat could do something here. I just don't see those 2 companies coming together and putting up a full constellation. and have service in force by March 2029, which is part of my skepticism as to— there was someone who was speculating about that, but part of my skepticism was like, I just don't know how they could meet any of these deadlines. 'Cause as we all know, for space, and especially for a new area like directed device, it takes a lot of time to develop the technology and to deploy it. And so that this, This criteria in and of itself pretty much, I think, limits the competition to just AST and Starlink. So let's go through some of the subcriteria here. So direct communication between LEO satellites and smartphones, check. Service to general users throughout Japan, check. Use of frequencies allocated to cellular mobile phone service, check. Infrastructure capable of supporting video calling for approximately 70% of each day nationwide, or roughly 16.8 hours per day. And so that requirement pretty much, I think, for the near term and probably for the medium term, disqualifies Starlink because Starlink cannot do video calls. And so Starlink, at least in its current form of 650 direct-to-device V1 satellites, that's narrowband data. They can do some level of data transfer if there's only one user in the cell, but if you're looking at multiple users in the cell, you're not gonna get video calling to work. It is interesting that they're saying 70% of each day nationwide, or roughly 16.8 hours a day, and so I think that criteria does allow some flexibility for deployment of the constellation, and so obviously AST believes it can cover Japan with continuous service for, you know, for 45 to 60 satellites, but this criteria I think perhaps gives them a bit more time to get the full constellation up. But going back to some of these subcriteria, an important point here is service to general users throughout Japan. And so when you talk about a general user in Japan, that means an existing mobile subscriber. And what does an existing mobile subscriber have? They have an existing phone, right? And so again, I think this probably makes it a bit harder for Starlink to win because Starlink requires a new chipset. for you to work with their existing V1 satellites and then extrapolate out into, you know, 2028, 2029 when they start launching the V2 satellites. That's gonna require an entirely new chipset because they're gonna be utilizing spectrum that is not embedded in phones. And so this requirement, if you're gonna do a, you know, emergency network for disaster recovery, you need a satellite system that's backwards compatible with existing handsets. I mean, think about like older Japanese folks or, I mean, just the general populace, right? I mean, how long does it take to turn over mobile phones in Japan to a new standard? It would probably take, I don't know, 5, 6, 7, 8 years to do that. And maybe you have to require people to upgrade their phones. Whereas AST, the beauty of the the service and the product is that it works with existing phones. There's no need to modify them. It already works. And the other thing is that I will say is that the first Block 1 satellites, or sorry, Block 2 satellites are going to provide this service over low-band spectrum, which is important for coverage and propagation. And so if you think about a natural disaster or some type of issue where the network goes down and you have people that are I don't know, I mean, heaven forbid trapped in an earthquake under a building or there's other circumstances where people are trapped, you're gonna want to utilize the best spectrum to get to them, right? Like utilizing mid-band spectrum, it's for Starlink. If a building has collapsed and you're under, I don't know, 2 or 3 walls worth of rubble, you're not gonna be able to get to that user. You're gonna need low-band spectrum to penetrate all that debris and rubble. for that user to connect to the satellite and to ask for help, right? And so that's another point that I've talked about where I think Starlink for disaster recovery, first responders, I mean, you name it, like it's not a great architecture that number one is solely focused on mid-band spectrum, then number two, it can't utilize low band, right? Unless they come out with a new satellite with a much bigger phased array, And by the way, like, it doesn't make sense to do that for Starlink because you need— you actually need MNO partnerships to access that low-band spectrum, and you need satellites that can put down very specific beams within defined cells that don't interfere with terrestrial networks. There's a whole host of reasons why Starlink won't go for that approach. But again, this, this kind of goes to the advantage of AST SpaceMobile. Okay, so 3rd criteria, disaster roaming across Japanese mobile operators. The system must support Japan's planned emergency interoperator roaming system. When a terrestrial operator, mobile operator, suffers an outage, the JLEO operator and its partner MNO must be capable of providing satellite-based full roaming covering voice, mobile data, SMS. And so this joint venture The fact that it's being established, this is going to be the entity that KDDI, NTT Docomo, SoftBank, and Rakuten will interface with in order to make sure that their network is compatible. And so during these periods of emergencies, they will be able to roam on the— we'll call it Satellite Connect Japan network. Now, if Starlink— I think if Starlink was If they thought they were going to win this, you would probably see them form a joint venture with KDDI, and that would be the entity for these other operators to interface with, but again, we're not really seeing that happening, so I think this is a pretty important tell. Let's see, so number 4, spectrum licensing and regulatory approvals. The bidder must identify and demonstrate a credible path for uplink and downlink spectrum, and by the way, so This requirement, it doesn't necessarily mean that you have to own spectrum today, but you need to have an avenue to procure spectrum, whether that's outright purchasing it, leasing it from an MNO partner, or the MNO partner puts it into the JV. I mean, there's a whole host of ways that this can happen, but as we all know, spectrum is finite and it's very valuable and expensive. And so this probably disqualifies, again, you know, the person who had speculated about MDA Space. This probably disqualifies them because they're not working with any MNO partners. And so If you don't have spectrum, you can't really put forward a proposal. Let's see, domestic Japanese frequency, right? So we talked about that. Rakuten has low-band spectrum, 700 MHz. They also have some mid-band spectrum as well. I mean, all MNOs have spectrum that is accessible, but as mentioned before, AST's solution is focused on low-band spectrum, which I think is the asset that you want to utilize during disasters. So let's see. All right. There's some more technical stuff here, but I won't go through it. Satellite station, Earth station, and mobile Earth station licenses, interference mitigation, Japanese landing rights, service authorization. You know, there's more stuff here, but—
[00:37:02] Speaker B: Yeah.
[00:37:04] Speaker A: Starlink, And AST meet this criteria. They both have spectrum access to it via their partners. And then, of course, for Starlink, which is unique, they will have EchoStar spectrum in Japan, which would need to be authorized, of course. But as I mentioned before, that spectrum does have some issues if being used in an emergency. So let's see. This part is pretty interesting. So detailed and executable satellite deployment plan, obviously Starlink and AST. Have plans that are detailed and executable. So number of satellites, orbital altitude inclination. We did learn recently that AST seems to have changed their inclination to meet the JLEO requirements, and so that's pretty interesting. Spacecraft size, mass and design life, payload antenna. I mean, basically all the stuff that you would expect, you know, putting it in front of regulators. One interesting thing, which I think is a unique Aspect of an AST proposal. So part of this is having as part of the deployment plan launch vehicles, number of launches, and launch provider arrangements. And so this is where AST and Rakuten can really stand out, because obviously for Starlink, they're not going to launch Starlink satellites on Mitsubishi Heavy or competitors' launch vehicles, because why would you do that? Because you already had plenty of launch capacity. But what AST and Rakuten can do is they can go to Mitsubishi Heavy, they can contract out for several launches. Mitsubishi Heavy in the 6 SRB solid rocket booster configuration can launch 3 satellites, 3 Block II satellites at a time. And so what you can do as part of your package that you put in for in Japan, you say, hey, I'm going to utilize Mitsubishi Heavy for, I don't know, maybe a 5th of the deployment or—
[00:38:53] Speaker B: Yeah.
[00:38:53] Speaker A: or a 4th, depending on, you know, what's available. But the fact that you're actually putting, you know, dollars back into the Japanese economy and supporting the Japanese space program, that's really important. I just don't see SpaceX doing that. I don't— I can't imagine that SpaceX, you know, the Starlink folks go to Japan and say, hey, we're going to contract out some Mitsubishi Heavy launch, because they're in that business already and it just wouldn't make sense. So they can make that part really attractive for Japan by supporting the space program. The other aspect too is that, and they can highlight this, ASD does buy its solar film from Sharp in Japan. And so for those that don't know, there was a plan early on in the company's history where they were going to utilize Sharp to make the microns. And so Sharp was going— it was either Sharp or I forget, maybe it was another Japanese manufacturer, but They were actually going to outsource manufacturing of microns in Japan, and as part of that, they were going to get ex-Im funding from the Japanese, you know, the equivalent of the US Development Bank. And they were, I think they were going to get something on the order of $500 million in financing by manufacturing microns there. However, because of the importance of the microns, and I'm sure through the ongoing development, they figured it was much better to bring manufacturing in-house, and thank God they did. But they continue to source solar panels or solar film from Sharp of Japan, which is pretty, you know, when you look at the total bill of materials, that is a pretty big component of the cost. And so the fact that they are able to say to Japan, hey, we're getting some of our components sourced from Japan and we are going to use Japanese launch, I just think that makes the the proposal much more attractive than perhaps, you know, Starlink. Let's see. So the last criteria, you know, the winner must demonstrate adequate— so it's financial stability and post-subsidy operation. So the winner must demonstrate adequate technical capability, staffing resources, fully funded plan, unsubsidized share of the project, and viable commercial model. Obviously, I think If I didn't believe that AST could meet any of these requirements, I wouldn't be invested. And so they will meet all of these requirements for the Jaleo project. So it is going to be a business that is fully funded. There's technical capability. Obviously, we've demonstrated video calling in Japan a number of times. And so, yeah, I think we meet all those criteria. One other interesting thing in terms of the mandate of what JLEO does not lay out, and I think some people had some questions about. So there is no mandated satellite architecture. You can go in with Ben 5 or generative onboard processing, transparent payloads, you know, any number of these technical, you know, architectures. But if you're able to meet the criteria of what they've outlined, They're not saying you have to stick with one architecture over another, right? And so while some architectures have advantages and disadvantages, they're not favoring one or the other. The other thing is like there's no, at least initial domestic manufacturing requirement. And so obviously Starlink and AST manufacture their satellites outside of Japan, but I believe the winner is supposed to study future plans for perhaps locating some level of manufacturing in Japan, which makes sense. But then this is a really interesting part. There is no requirement that every satellite be dedicated exclusively to Japan. And so the documents focus on Japanese ownership and control of supportive infrastructure and fulfillment of the requirements. And then, but it does say that broader regional or international constellation appears possible, provided that the subsidized assets, operational authority, and domestic service meet the program conditions. And so this is why Satellite Connect Japan is so important, because you can utilize— and by the way, like, it doesn't make sense for each and every country to have its own constellation. That doesn't make economic sense. It also, if you were in the situation where everybody had to develop their own constellation, obviously there's That's a lot of money. There's also, you know, a lot of potential junk that goes out into space. But here, there's no requirement that the satellite be fully dedicated to Japan. And so, and this is why I think the elegance of what AST has done with Satellite Connect Europe and satellite, what is now, let's call it Satellite Connect Japan, you can leverage the same constellation. However, the operations, the control, All the infrastructure has to be in that country or in that region. But for all intents and purposes, when the satellite constellation goes over your country, you effectively own, operate, and control it, and you have the kill switch, which is the thing that we refer to. For example, when Elon Musk was like, hey, I don't like what's going on in Ukraine and Russia, I'm going to turn off the Starlink service, and he turned it off unilaterally. That's the thing that Europeans and Japanese are trying to avoid. And what quite candidly, like every, you know, India has a similar type of approach that they're, or, you know, constellation that they're trying to put together. Everyone wants sovereignty and they want control. And that's where I think the AST SpaceMobile, aside from the technological advantages of delivering true broadband to an unmodified phone, That's where I think the advantage the company has, which is integrating closely with the domestic incumbent MNO operators where the MNOs have control of the network or that JV has control. There's no kill switch. It's not like the US government can say, well, we're going to turn it off over Japan because for all intents and purposes, the JV controls it. And then, yeah, you have full sovereign control of the infrastructure. It's owned by you and you manage what data goes over it. It's not something like a Starlink where it's a completely separate network. You don't really know who's monitoring the network, who controls the satellites. You're just basically getting information, you know, Starlink interfaces with the user and then you're getting information from Starlink and you don't really know if that information has been effectively evaluated or stored somewhere else or whatever it is, right? Because for AST, the satellites act as kind of like a— I mean, there's a lot more technology behind it, but they act as a repeater where you communicate with a mobile phone and that data goes up the satellite and then it goes directly back down to the mobile network operator, whether that's Rocketan or the satellite JV. It doesn't go on to Starlink's network and then go through Starlink's infrastructure, which is owned by them, and then it's handed off to the network operator's network sometime later, right? Or it doesn't go over multiple countries, for example. It all stays over Japan. And so I think that's a very important distinction. Ultimately, like, who knows when this decision gets made? I truly think that AST is very well positioned But of course, there's always politics that can come into play. And so, you know, Elon has very— he has very influential friends in the US government. And so who knows if they put their thumbs on the scale. But I think for Japan, it's— and for the US government, it's pretty hard to argue if AST were to win this, like how this would not be good for the US. You know, a and for Japan as a US ally, because you still have a US company that's helping out, that's providing the service to Japan. And it's not as if it's a Chinese constellation or some foreign entity that you don't want to muscle in on your ally. And so I think it's a win-win. I mean, if Starlink, obviously as an AST Space Holdings shareholder, if Starlink wins this, then I'd be be sad. I don't really think, by the way, that anyone's really pricing this into the stock. If they are, it hasn't been reflected. It certainly hasn't been reflected over the last few weeks. And so if we win this, great. And if not, then it is what it is. But I do think the company is well positioned. And as I mentioned before, on all these criteria, I think we are the much more interesting solution and the solution that actually meets objectively their needs. And so I'd be surprised if we don't, if we don't win it. But anyway, um, let me just check the comments here. I've been rambling on for quite some time. See if people have comments. If you do have a question or comment, feel free to leave it below. Oh yeah, Katzi put his post here that that AST and Rakuten have been using SoftBank's spectrum for testing in Japan. So that's a big positive. And by the way, like, for those that don't remember, because, you know, Kasey puts out a ton of due diligence, AST in one of their STAs had requested testing. And this is a great reminder when looking at this. I need to go back and reread this, but for those that forgot, AST requested with the FCC to test on T-Mobile spectrum. And this happened in, maybe it was like February this year. And we were all kind of scratching our heads. We're like, what? Why are they doing that? Like, does that mean? And, you know, we were all wondering, does that mean that T-Mobile might work with AST? And then, nah, nah, that's not gonna happen. Well, because of the JV announcement with AT&T and Verizon, now it makes a ton of sense. Yeah, T-Mobile. T-Mobile was planning for quite some time to defect and, and testing their spectrum as part of the STA makes a ton of sense. I need to go back and find that, by the way. Okay, let's see. I have 2 questions. Do you estimate to make another round of shares of dilution due to a new 500-employee plan? I don't believe that there are plans for new dilution. And, you know, we have over $3 billion of cash, but obviously if service gets delayed, and you continue to have burn, then you might need to raise some money. But I think it's important to note that during the— was it the annual meeting? Was it the annual meeting or maybe it was a subsequent meeting? Scott did mention that there are no plans for additional convertible debt. He didn't completely say that they were not going to raise any equity, but for all we know, for as long— I mean, for what we know now, there is no ATM in place. They terminated the last one. And he did emphasize that they are focusing their efforts on commercial prepayments from M&Os. And so that could be kind of the primary funding mechanism in the near term, as well as, you know, we've got over $3 billion of cash on the balance sheet, so there's no real need near term to raise money. But obviously, if there is a need for it, especially if it's an attractive value-creative opportunity where it requires capital. Like, for example, if we didn't win this JLEO project and the company came out tomorrow and said, hey, we need to raise an additional $300 million around it, I would be all for that. Okay. Did something change in the topic of a buyout from SpaceX in terms of policy and rules, blocks, blockers? Okay. I don't know what this means. For anyone who's— I'll just kind of nip this in the bud. For anyone who's speculating that SpaceX could buy a space space AST SpaceMobile. I think there's a very low, tiny likelihood of that. The US government wants a diversity of suppliers. The FCC wants that. You know, there's this thing called the Sherman Act and the Clayton Act, antitrust rules here in the US. And so if SpaceX were to try to buy AST SpaceMobile, I'm pretty certain it would get shot down by the Department of Justice, and the FCC would also block that as well. And so any inkling or idea of that As speculation, I think, is unfounded. Unless of course you had one of two things, either Starlink became distressed and AST combining the two makes for a better US solution, or vice versa. If AST became distressed, then they might allow it, but I don't really see either of those scenarios happening. Let's see. So Someone's saying, not sure if you already answered, but sat launch confirmed for August. Does this not seem a bit late? 45 by year end seems off. There have been a few people who've said, hey, how are they gonna meet the 45 satellites by year end? They're not gonna meet the 45 satellites by year end. I think we've talked about this multiple times, but my guess is that we'll probably get to 20 to 25 satellites by year end, and then 45 will probably get hit sometime towards the end of Q1, early Q2. But the company has not updated that, and the reason why is that they are procuring additional launch. So probably spooling up more SpaceX launches as well as putting in additional MLAs with other providers. And then, of course, we have to see how quickly Blue Origin comes back to the launch pad. Let's see. No launch provider listed on the PR, which is unusual. ULA, perhaps? Uh, no, this is definitely SpaceX Falcon 9 for August. Let's see. Uh, they just posted launch expected in mid-August. Do you think this supports or goes slightly against cadence? Um, no, this goes towards cadence. This is, um, this is— I think you're, you're probably going to see more rapid launches after this August. And so perhaps you might see one or more starting in September, October, November, and December. Let's see here.
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[00:53:54] Speaker A: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome, that's new. It can help you with practically anything on the web. Like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, set up required compatibility and availability varies. 18+. In the last earnings call, they had 2 launches scheduled for July with the next launch scheduled for August. That means there is another delay. Can you talk about reasons for the delay? Now that they have figured out the stack configuration problem. I don't recall that they announced— I don't think they ever said that there were 2 launches in July, although I could be wrong. But let's see, does this mean that there's another delay? I don't think there's another delay. The satellites are close to done from what I understand, and so the launch was booked for early August. And so that's when we're launching. The key question will be, when is the next launch after that? And we'll find out soon. So we do have, let's see, so I guess the third quarter, sorry, second quarter results will be, let me just go back and look when we'll get a formal update from the company. I was looking at my calendar here. So last time they, okay, well, Q2 last time was announced in early August, which is actually going to happen at the same time as this launch, which is pretty cool timing. So we'll probably get an update on the company's launch plans then. And my guess is we will probably get, and this is just me speculating, we'll probably get another launch, like batch of Bluebirds that are ready to go before that August launch. That's my guess. I think that's those are some of the only questions. I don't know if there's any more here. Okay, Geek Street. Why has Elon never commented on Space Mobile? Seems odd he never mentioned anything. Bush too, as he is usually outspoken. Yeah, that's always been something interesting. He And just, this is my personal view, but when Abel created this service, invented it in 2017, and then, you know, obviously launched BlueWalker 1 and BlueWalker 3, this was something that Starlink was like, oh, you know what? This is really interesting. We need to catch up and do this ourselves. And so Starlink, They acquired Swarm, which was a small IoT provider that was providing narrowband data to connected devices, although I think Swarm used 3GPP, the standard, in order to communicate to those devices. And so they hired that team to come in and quickly slap together the first direct-to-cell constellation, which that team did. And then, as we all know, that entire team got blown out. And so I think Elon hasn't talked about AST because he just doesn't want to give— back then, you know, I remember during the August 2022 announcement of this service with T-Mobile, he basically used like exact wording that AST used in its marketing in describing the service. And so back then, of course, I was I was upset because it's like, man, this guy literally lifted the idea and is using the exact wording that we do. And so I think part of not commenting about AST SpaceMobile is that he wanted, and T-Mobile as well, they wanted to show or indicate that they had somehow developed the service on their own, came up with it, and were the first to market. And so by talking about a competitor in that context indicates that perhaps you were, you know, you don't want to give your competitor any air and for people to then do some research and be like, oh, there's this other service that actually was created first and is working with all these MNOs and is actually doing broadband. And so that's probably why he's shied away from talking about AST SpaceMobile. What's funny though is that Mario Narwhal, the guy who is, you know, had been an Elan supporter and then unceremoniously got stripped of, I guess, be, you know, by Elon. Elon stopped following this guy. And so for whatever reason, maybe there was a fallout between the two, but then Mario has become more neutral in some of his posts, believe it or not. And so when AST did launch their last batch of Bluebirds, Mario actually posted about it, which was a first. And he talked about how AST is putting up the first broadband constellation and it's going to compete with Starlink. And so So that was pretty interesting to, to watch unfold. Let's see, someone's saying here, would the Starlink Mobile V2 satellites even fit on other providers' rockets? No, they will not. The Starlink Mobile V2 satellites, those are specifically architected for Starship. And so there are no other rockets that can take those satellites up. And so it is highly dependent on Starship becoming successful. Let's see. So I'll end it there. I've been going now for almost an hour. But yeah, I hope this was helpful. I do think as people— and I want to give a shout out to all the folks who've been researching the JALEO project. I do think AST and Rakuten are well positioned to win that business, which is important because I think as we've seen, Satellite Connect Europe, that was kind of the template. The company was very astute in rolling out this JV structure in order to get Vodafone, Orange, Telefónica, Telenor, CK Hutchison to all work together collaboratively in Europe in order to provide broadband connectivity to users there. And then we saw it unfold here in the US where AT&T and Verizon are creating this JV and inviting T-Mobile into that because ultimately, I think, as we've discussed before, I think T-Mobile is going to relegate Starlink as a junior service and will adopt AST SpaceMobile as a primary broadband service. And then in Japan, I think we're seeing this unfold again with J.Leo. And so I'll end it there. Folks have questions, feel free to tweet at me and I'll try to respond to them. But But yeah, the market sucks. You know, we're going through this period of de-risking and it is what it is. But as I always say, stay focused. These are times when people generate a tremendous amount of wealth by sticking to what— knowing what they own and moving forward and being able to ride out the volatility. So with that, I'll end it. Thanks everyone for joining and we'll talk again soon. Take care. 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.
[01:01:42] Speaker B: Bye.
[01:01:49] Speaker A: Listen. Mmm, waffles.
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