Spectrum Wars: How AST SpaceMobile Became the Poison Pill Legacy Players Can't Escape

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[00:01:03] Speaker C: This is the AST SpaceMobile Podcast. 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.
[00:01:22] Speaker D: Everyone, sorry about that. I had to restart the space. I was told that I was cutting in and out. Um, and this is the, this is the issue with using legacy cable internet. I have Spectrum, which is, which can be quite spotty, uh, believe it or not, here in New York. And so I just switched to my Verizon phone and turned off Wi-Fi. So hopefully I'm, I'm okay. If people can give me thumbs up, or if someone who's chatting with me can let me know that they can hear me before I start, I'll— I will just see that everything's okay. But anyway, unfortunately, I was going on for quite some time, and so I'm gonna have to do it again, but I'll try to be quick. But yeah, I wanted to fire up a space and talk about a few topics. It's a pretty hot start to the summer here in New York. It's July 1st. We're just around the corner from July 4th, which is going to be a great celebration here in the States. But, um, but yeah, I wanted to talk about, uh, a few things. So first, um, my tweet earlier today, I did refer to how, uh, any number of players, whether short sellers, skeptics, um, industry, uh, incumbents, any number of folks have called Space Mob, uh, delusional and, um, and space investors in general delusional, which I actually think is a compliment because I think for anybody to have invested in this sector over the last 5 years before it became a thing, to have the mental fortitude and patience and just foresight to stay invested in this sector and to hold through all these years is something to be proud of. Because I don't think anyone else aside from this community could have, you know, suffered or weathered through a grind down to $2. And then of course had these positive catalysts and, and, you know, the stock re-rate all the way to $130. And, you know, most, most people that I know of have held onto a material core position. But being delusional is important. I think any number of founders in the space sector People probably called them that when they started their companies. For AST SpaceMobile, back in 2017, Abel started the idea of AST SpaceMobile about, you know, creating this very large satellite with a phased array that you could fold up into a standard fairing, but being able to deliver that 2.5, 3-ton satellite up to space and utilize it to connect to everyday unmodified mobile phones was a crazy idea. However, back then, you know, that crazy idea in the face of legacy players saying you couldn't do it. I mean, there were active participants, whether it was Tim Ferriss, Alan Gottlieb, Ken Miller of Link, any number of people who were actively trying to sabotage the company, whether through opinion pieces, which maybe one day I'll post some of these. But I remember going through early days of FUD. And, you know, when you, when you're a new investor to the sector and you see these people who have, you know, experience and they seem knowledgeable about the subject, it's scary as hell, right? And so the company had to fight through all that. And we're lucky that there were a few strategic investors, Cisneros, Rakuten, American Tower, who were, you know, Bell Canada, who were willing to take a bet on this company. And thankfully they, they took that bet and of course the company came public and then it had the support of people like you and me to make it to the other end. And so when people say that we're delusional, yeah, you have to have a certain kind of crazy in order to start a company like this, to see it through the ups and downs, to not sell a single share over the last 6 years, which is still insane. But then also it takes a crazy type of investor, whether that's Mickey Mikitani of Rakuten or, you know, any number of us to, to put capital and belief into this founder with, with this crazy vision who's up against the world to actually pull this off, right? And so I talked about in that post where the company, when it got down to below $2, I think the equity value was around, you know, $600, $700 million with $100 million of cash in the bank. Those were pretty dark times, right? And But yet most people, a vast majority, stuck with the name and have been rewarded for it. And so when people call you delusional, I don't— I wouldn't take that as a— at least in this case, for people who've invested in the space sector. And it's not just for AST, it's Rocket Lab, Planet Labs, any number of companies. You should accept that label with pride. I think it's a good thing because otherwise I just don't— you know, you're obviously— when people look back and they say, well, you know, I should have I should have held onto my Nvidia, or I should have held onto Amazon back in the day, or memory stocks, right? Like Micron, SanDisk. Everybody wants to hear about the story of someone who owned Micron at 10 and held all the way through. But those are rare. Those are very rare because it takes someone crazy to buy into that company, hold and believe in the thesis and be crazy enough to believe that, oh yeah, AI data center demand is going to be through the roof and margins for commodity, highly cyclical memory companies are going to go to, you know, gross margins are going to go to basically software margins of 85, 90%. If you were to tell someone that 5 years ago, then they would've said you're absolutely delusional, right? But now it's like everyone in retrospect is like, oh man, it was so obvious. Why didn't I do this? And it's like, yeah, because you, it wasn't obvious back then because you were not delusional enough to believe it. And so, so that's, that's, you know, I, that was my point of the post this morning. I think we can all, whether you were talking to your friends and family or coworkers or anybody talking about this idea 5 years ago, I think we can all relate that, yes, we are delusional. And that's the reason why we've been rewarded in an outsized way for believing and having the conviction to hold. And this kind of plays into my next point, which is The legacy player revival, right? And so Tut had tweeted out this meme. You can check it out on his on his profile. It's the old Grim Reaper who's like knocking on doors, and the first door is Gsat, and there's blood coming out of it. The second door is Iridium. There's blood coming out of it, and then there's Vsat, Visat, and there's blood coming out of it. And here he posted this meme, and it says there were and there were signs, right? And and below it is a a quote tweet of where the stock prices were back in June of 2020. June 26th, 2024. And so AST was at, this was like the breakout year for AST. It was at $11.22. ViaSat was down 55% that year to $12.38. Iridium was down to $26.34, so it was down 35%. And Globalstar was down to a dollar, right? It was down 45% year to date. And so this is a pretty interesting tweet because I think In normal circumstances, when you have a company that's disruptive like AST and also Starlink, the incumbents will suffer, right? There's this view that they will get competitively compromised and they'll lose subscribers, share, whatever it is over time. However, what's different about this sector is that Viasat, Iridium, and Globalstar sit on very valuable spectrum. And so I've talked about this idea of like EchoStar, where EchoStar was worth more dead than alive, and that came to fruition, right? EchoStar, At one point, you could have bought those shares when they were teetering on bankruptcy and Charlie Ergen had gone toe-to-toe with the FCC. I think they dipped to around $17. And of course, now we know EchoStar, they sold their AWS-3 spectrum and the stock is now trading at a massive discount, but it's trading at $102. So a very different outcome versus what people had thought when Ergen was going toe-to-toe with the FCC. The reason why I make this point is that these companies, because they have these holdings of valuable spectrum, ultimately they ended up getting a tremendous amount of value. It's funny because a lot of these executives, whether it's Mark Denkberg at ViaSat, Matt Desch at Iridium, Paul Jacobs at Globalstar, and Jay Munro before him, A lot of these folks were poo-pooing the whole idea of what AST SpaceMobile was doing because it was a competitive threat to a lot of their core business. And they poo-pooed the idea of direct-to-device, that anyone could do broadband over a mobile phone. And Matt Dash in particular, if you look at his comments, I think it was like back in 2021, 2022, I've posted some of these before, but he poo-pooed the idea of this being a market that was relevant, that would be big enough. and that they felt comfortable where they were. If folks will recall, Iridium would tell investors like, oh, we've got their carrot to entice investors. They're like, we're going to raise a dividend, we're going to CapEx holiday, we feel confident about our position, direct device, it's not really a thing. But then of course that changed over time. That changed when Iridium decided to try to work with Qualcomm on Project Stardust to bring connectivity to mobile phones. And then they learned very quickly that handset manufacturers and mobile operators, they didn't want— well, for handset guys, they didn't want to pay more for a proprietary chipset. And then for mobile network operators, they're like, over my dead body, you're not going to put Iridium mobile phone service that's in competition with what I do on a phone. And so that quickly got killed. But the reason why I bring this up is that, you know, for example, Globalstar has been paying Tim Ferriss over the years to spread FUD about AST SpaceMobile. Again, there's a whole host of players. Alan Gottlieb had put this, like, detailed article back in 2021, which when I first read it, it scared the bejesus out of me because I didn't know enough at that time. But it had talked about how— it had talked about how the AST's technology wouldn't work. They wouldn't be able to close link budget. The satellites that they were proposing were gonna melt in space and they were too big. I remember they were—
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[00:12:32] Speaker D: Petitioning at various international regulatory bodies to get, to get, you know, to basically chop the legs from under AST where they were saying, hey, Papua New Guinea is not— you can't flag there and they don't have enough liability coverage. And so no one should approve this constellation. There is like so much of this stuff going on. It was truly the company against the world and The reason why it's funny now is that because AST created this new market of direct-to-device broadband, this idea, it helped re-rate the value of MSS spectrum over time. And so these guys who were working against the company ultimately benefited financially from AST's pioneering work. And of course, eventually Starlink joined that as well. And perhaps it wouldn't have been as big, but because Starlink joined, it became something that people paid attention to. Now it's become a competitive threat for the wireless carriers, but then that's also benefiting AST as a strategic partner. But yeah, over time, the value of these companies' holdings went up where Globalstar, the network and the service that they provide today is not really worth much, but the spectrum is worth a lot. And Globalstar fortunately has full duplex. They have dedicated uplink and dedicated downlink. I think it's like 15 MHz of downlink and uplink is like, I need to go back and look, but I think it's like 6 or 7, maybe it's 7 MHz. But yeah, the value of Globalstar increased because of ASC as well as Iridium and ViaSat, and I'll go into why that is. So first of all, what really kicked off the run on spectrum was the first transaction, which was in January of 2025, AST announced this groundbreaking deal with Legato. Legato owns 40 to 45 MHz of L-band spectrum in North America, in the US and Canada, and they entered into this agreement where AST would pay Legato, I think it was like $500 million, approximately around that, which is what they owed Viasat because Legato was in bankruptcy, and if they didn't make these payments, Viasat would ultimately be able to get the spectrum back as a general secured creditor. And so what AST did is they came in and said, hey, Legato, I want to use the spectrum for our next-generation satellites, and I will pay you what you owe Viasat and all the other creditors, and then I will also pay you ongoing monthly payments to use your spectrum for 80 years, and then I will also give you a cut of the potential revenues of the constellation when it's over North America for the specific service. And Legato was like, oh, thank you. Thank God, you're bailing me out. I was out of options. For those that don't know, Ligado had tried to build a terrestrial broadband business for many years and had failed because while they did get FCC approval to use the L-band spectrum for terrestrial use, you had pushback from the Department of War and also GPS and Wi-Fi, any number of alliances who claimed that there would be interference because for terrestrial use, you're looking at higher power, And these folks claimed that, you know, because GPS is so important, you can't, you know, you can't use it, you can't use this spectrum for terrestrial use. However, the elegance of AST is that with these large phased arrays, which are able to put down very specific and controlled beams, you're able to actually deliver service without causing any type of interference in adjacent channels. And as a result of that, by the way, the original intent of the L-band spectrum was for satellite to terrestrial use, not terrestrial-to-terrestrial use. And so AST, through what we call spectrum alchemy, was able to unlock the value of Ligado. And so from that point on, in January of 2025, back then, ViaSat was trading at distressed levels because it was unclear if they were going to be able to meet their financial obligations. ViaSat traded, and this was, by the way, this is like one of the biggest fumbles of all time. I should have just bought some ViaSat too. It traded at $7. I think at the lows it was like $7.50. And then on that news of the transaction that AST announced, the stock traded up to almost as high as $10, and it came back down and kind of kicked along. And it wasn't until, I think, August of 2025 when these payments to Legato from AST, then ultimately to Legato, which then went to Viasat actually got, you know, when the cash hit the bank, that's when Viasat really went on this like rerating, right? Because then it's like, okay, their financial future is less precarious. And now people are looking at the value of their L-band spectrum globally because it's like, hey, well, if AST can monetize that spectrum here in the US, then maybe they could do it globally or maybe Starlink could do it. And so the stock went on this massive run. It, by that time, it rerated to call it mid-teens. And then once the payment hit the bank, you know, it traded up to like $28. This is when research analysts started upgrading it. And then the rest is history, right? Viasat's now trading at $90 on the— not, not because it's a great viable business. You know, Viasat, their broadband to, broadband to commercial airliner business is getting absolutely hammered by Starlink. And then the other parts of the business as well are getting beat by Starlink. And then now people are kind of valuing Viasat on its spectrum holdings, assuming that eventually they will enter into some type of agreement, whether it's with the ill-fated Equitas Space 42 slash what would've been Rocket Lab anchoring, helping anchoring that JV, that service, if they can find another partner. And, you know, there's been some speculation that perhaps MDA Space might step into the shoes there. But then they've still gotta figure out, you know, who's gonna pay for that and who's gonna launch it. Or AST SpaceMobile could, like, lease that spectrum or maybe monetize it. Or you could have the situation where SpaceX might do it, which I would argue that SpaceX already has its mid-band S-band spectrum. And so I think regulators would shoot that deal down. And there's been people who've asked, well, why doesn't SpaceX just buy Viasat, or why don't they buy— why didn't they buy Iridium, or why didn't they do Globalstar? Well, SpaceX is in the middle of buying AWS-3 spectrum from EchoStar. It's about 50 megahertz of spectrum. And so the last thing you want to do during a regulatory review, which doesn't— they still need to get through international reviews, but that deal's not going to close until the end of summer of 2027. The last thing you want to do is layer on additional deals for spectrum nearby, that will complicate your review, right? Because regulators will be like, wait, so you're already buying this other AWS-3 spectrum and then you're buying more? And so how is that good for competition? And so maybe they'll pursue, they'll try to make a case for regulators and they'll try to pursue the spectrum later. But yeah, you wouldn't want to do an anti-competitive deal in the middle of a regulatory review. So that's that's going to leave SpaceX out. I think the natural fit for Viasat, by the way, is AST, right? Like they can actually light up the spectrum. And the point here is that a lot of these legacy players, you know, their corporate and technological and financial structure disallows them to go and innovate and change and do something more useful with the spectrum. Like for Iridium, there is this this like catch-22, right? So Iridium over the years, they've carved out a very nice niche. Like they, they have 2.2 million like consumers or business users as subscribers who pay really high price for critical connectivity. But the real meat and potatoes for the business is the military business, right? Where the US military pays them, you know, very fat and sticky contracts for connectivity for, you know, various services around, you know, drone connectivity and other things. Right. But that business is not going to go away and it's very sticky. And as I've talked about before, the Department of War wants to have access to redundant constellations like they want Starshield, they want Starlink, they want Iridium, they want AST, they want whatever Globalstar eventually becomes. These are all important, right? Because when you go into a war with someone, you want to have options. You want to have ability to switch networks. if one is taken down, and I'm not just talking about, like, you know, electronic warfare. I'm talking about somebody sending anti-satellite missiles up to space and trying to take out constellations. You need to have multiple constellations. You need to have stuff in GEO. You need to have stuff in MEO. You need to have stuff in LEO. Like, this stuff has to be pretty much redundant, right? And not easily taken down, which is why Iridium, the current legacy network, will always have a place. Now, The issue for REAM for, for many years is that they did financial engineering, they loaded up on debt, and then they promised investors a fat dividend, right? And so once you're into that mode, it's really hard to then pivot and say, hey, you know what, sorry, we're not going to pay this dividend. We need to put, plow every dollar back into the network and, and innovate. And so that was the, the pickle that Matt Desch was in, because for many years he said direct advice is not really a thing and it's a niche. And so we're just going to go to a CapEx holiday and just pay back dividends. And, and, you know, we will innovate to a degree. Like they've come up with a P&T solution and then they eventually came back to the idea of directed advice to some extent. But it's tough to do that. Whereas for Rocket Lab, what's good is that people expect Rocket Lab to spend gobs of money for R&D. They're doing it for Neutron. I think Peter Beckton mentioned that they're spending 95% of their R&D budget on Neutron. And so once they buy Iridium, the good thing that they can do is the first thing that they'll do is to obviously cut the dividend. Like once Rocket Lab acquires Iridium, the dividend-holding shareholders of Iridium, they'll sell out and they'll move on to something else that provides yield. But anybody who owns Rocket Lab knows like Rocket Lab for the foreseeable future is not paying a dividend, right? They're going to plow earnings back into innovating, right? And so That's the beauty for Rocket Lab is that they can, they have the license to say, well, we're the cash flows that are coming from Iridium. We need to use those to innovate and figure out something new for the Iridium network. And we need to do it in a way that is going to be backwards compatible with the old users of Iridium. Because I, they're, they're the one issue that you will have is how do you, how do you make something that's backwards compatible with all the people, the mission-critical applications that are on the network today. How do you do that in a very economic way, right? Because if you think about like all the military users who have these legacy interfaces, like they're not gonna, they're not gonna let you shut the network down wholesale. You need to provide something that transitions them, or maybe you offer really cheap, you know, devices to replace what they have. And so that's going to be something that they'll have to figure out. But there you have a path, right? And so for Amazon with Globalstar, it's unclear. They're obviously going to— they've committed to MDA, the next generation Globalstar or the existing replenishment program, and then the next generation satellites. They've committed to that. But then ultimately, what do they do after? Right. But that's been always the problem with these legacy folks is that they've committed to an architecture and they've been kind of in a pickle of what to do. And now because spectrum is valuable and obviously communication use case is a multi, you know, billion, trillion dollar TAM, they're able now to sell their companies at a very high price and sell to or work in partnership with other companies that can innovate and have the license to spend in order to upgrade those networks and come up with new applications. But yeah, I guess my point is that these legacy guys, they were in a tough spot, right? But yet the value of the spectrum that they hold helps bail them out. And a lot of these guys who were negative on the whole idea of direct-to-device will walk away with very, really fat paychecks and stocks that they can sell which are, you know, nicely valued. So, um, so it's kind of funny how that, that all works. Um, I guess moving on, uh, you know, I did also want to talk about the summer setup. And so I mentioned this in the Catalyst Tracker. I, I started to update it, but I, I know I've probably missed a few things. But yeah, the coming weeks are looking really good for the company. Um, I know And there's quite a few people who quite candidly are just impatient. With this J. Leo Award, there is a process. And so, and, you know, I guess maybe some folks don't know it. I didn't really know. I had to research it quite a bit. But the thing about the J. Leo Program is that we got the award, meaning Rakuten, not us. And so I think it's important to know that it's Rakuten and this JV, RAST, which is short for Rakuten and AST.
[00:26:09] Speaker C: Right.
[00:26:10] Speaker D: They got the award, right? And so they're the lead dog on this thing. So it's up to them to determine when and how they will communicate the award. And so for people lamenting that, oh my God, like someone was saying, AST's bad at PR, they should learn something from Rocket Lab. Well, it's not really AST's decision. It's not AST's award to go telegraph to the world. Like you have to do it in partnership with Rakuten. And for Rakuten, the process is as follows. Now that they got the award, they actually have to outline in very great detail what their plans are in terms of, you know, launch, the technology, the ground infrastructure, the budget, all that stuff, and the timeline. And they have to submit that to the CIAJ. I think that's CIAJ and the MIC. When they submit that, it's going to take some time to review that, and there might be some feedback on the plan of, hey, you need to adjust this. This doesn't make sense. What's this? And then once there's a little bit of back and forth, it will then get formally approved where the JALEO project can actually start executing. And so based off of, you know, ChatGPT AI analysis on historic precedent, I think we're probably looking at realistically sometime in mid to the end of July of a formal declaration that this project is approved and funded and ready to go. And so you just gotta be a little patient, but that sets up well for the summer because you do have some things that are going on between. Obviously, from what we're hearing, there's— it sounds like the next Bluebird mission could be at the, you know, around the first week of August. And so if you back solve, that means that the Bluebirds probably have to start shipping relatively soon here. So Perhaps as soon as this weekend, and so so you've got a number of catalysts that are coming. If you got that, you've got this formal formalized award, and we'll learn details. And I'm sure under knowing Mickey Mickey and Tony and Rakuten, there's going to be a ton of fanfare and PR and communications around it. You know, we'll we'll see something about that in the back half of the call, the second half of July, and then you've got. Of course, the launch, which is going to be perhaps the first week of July, which I'm looking at my calendar. I'm going to clear it out. I'm definitely going to go to this one. Unfortunately, I missed the last one. But yeah, summer's looking really good. And this is on top of a ton of catalysts that I'd outlined before. And so let me just look here. Yeah, so we've got, as I mentioned before, the Jay Leo Project details that will probably be the second half of this month. We've got BB-11 through 13 delivery and launch. We also are going to get some type of mission update on BB-8 through BB-10 deployment and confirmation of operations. There's also a number of things that are, you know, the press might get leaky and we might start hearing rumblings about a T-Mobile definitive commercial agreement, or at least Maybe not that far, maybe more of an MOU, but I would expect something like that happening. The other things that actually come along with the JLEO project is I would— and I mentioned this in my tweet— I would not be surprised if we actually do sign an MLA with Mitsubishi Heavy as part of the announcement of that formal project. The reason why that's important is that if I was the Japanese regulators, I would actually Go back to the parties and say, before I can approve this, I want to see a multi-launch agreement with Mitsubishi. At least that would be me if I was a Japanese regulator. So I think you could hear or see positive news around that, which would be great. And then, of course, you know, with that, and one of my key questions in the upcoming earnings call will be, you know, when and how much, you know, import-export bank financing are you seeking from Japan? the Japanese government or, you know, quasi-government entities, because that, that, and, you know, some people have asked, well, does the JV entity need to be funded with equity or cash? No, it actually doesn't, from my understanding. I think you can raise side-by-side debt, which would be backed by, you know, a Japanese quasi-government entity, the JBIC. And then also here, I think we were pursuing about $500 million of ex-im financing. from the US Import-Export Bank. I think with this transaction, you could actually get all $500 million of that funding because obviously Japan will need to purchase Bluebird satellites from us, which would qualify for export financing. So there's a lot of stuff that's going on, which is very exciting. I think, I mean, as we all saw today, let me just take a look. The markets will continue to be volatile. I think AST had our, our, our 11, 11, pre-11 AM dip to like 83 and change, and now we're actually— and change are actually up. And so yeah, I think in periods of time volatility, just make sure that you stay focused. Like if you need to look at this catalyst list or, or put Kook Spaces on repeat before you go to bed, we're, we're in the final innings of commercial service, right? And this is where things get really interesting, where Scott talked about in his most recent public talk, he discussed how there's no need for additional financing in terms of convertible debt, and that they would look to commercial payments, prepayments to fund the rest of the constellation. Now, obviously, at some point, they might put an ATM in place just to have in their back pocket, which I think is a smart thing, but We're seeing some of what he talked about come to fruition now, which is this Jay Liao project, something that no one really had on the radar up until, I guess it was like maybe a month ago. And here you've got $1 billion of financing over 3 years, and then side-by-side debt that will match that, probably another billion dollars that wasn't there before. And so there have been a number of tweets from various people, including myself, of how this can unfold. This is a perfect template where any country or region thinking about sovereignty will probably look to this type of structure, which is something that, by the way, Starlink can't offer technologically or structurally, or there's no interest in doing it. But for SatCo, Satellite Connect Europe, this is something that is going to be similar in playbook where In Europe, you're actually going to get a 2 GHz, either 5x5 or 10x10 MHz spectrum allocation. My guess is that there will be European funding that's opened up for that entity. And so we're starting to see the playbook for the constellation actually becoming funded by governments around the world. I think you're going to see something unfold similarly in Brazil. where Anatel approved AST SpaceMobile for commercial service, and they also gave them, hey, here, here's 10 MHz by 10 MHz of S-band spectrum for use. And then you're gonna see something similar in Mexico where AST is working with Altan Redes, which currently has mind-blowing 45 MHz by 45 MHz of 700 MHz spectrum. This was a concession that was given by the Mexican government many years ago to Altim to provide basically under— the goal is to get to 100% coverage over Mexico, especially for rural areas that, you know, that are, that are not connected and people are not living, you know, people are suffering. They live in poverty. But here you've got Altim, who is a super wholesaler. They're not really an MNO. They actually wholesale capacity to virtual network operators and mobile network operators in Mexico. But AST is testing with them. And we know AST has a good relationship with Carlos Slim, who famously is at odds with Elon Musk. I do think you'll see some type of JV come to fruition in Mexico. And so there's a whole list of potential parties for this. Saudi Telecom out in Saudi Arabia, they committed to I think, $1 billion of economic value for the commercial agreement that they signed for 10 years. You could see Saudi Telecom becoming a key JV partner, and they already cover a vast majority of Middle East markets, but you could see something formed there as well. So anyway, yeah, I guess I could keep going on for hours here, but I'm probably going to pause there. If folks have any questions or comments, I'll take a quick look, but But yeah, this is a pretty exciting time. I think given the strategic pieces that are moving around wireless and that now that Starlink has taken the mask off and they've told the MNOs flat out, we're coming for your business. Again, I think AST SpaceMobile's strategic value has gone up exponentially and that continues to unfold day by day, right? And so I think the Japan Times or the Nikkei just ran an article. I don't have access to it yet because I only have access to— and I happen to pay for this subscription— I paid for a Nikkei English version subscription, which unfortunately we don't get news as quickly as the Japanese version. But there is an article in the Nikkei saying how Elon Musk is entering into the terrestrial mobile business, which, you know, if you're an executive at KDDI, NTT Docomo, or SoftBank, you're reading that and asking yourself, whoa, maybe I shouldn't be in this partnership. Maybe this thing that Rakuten is doing and this company called AEC SpaceMobile, maybe I need to explore that further. And that's going to be a conversation and thought process that's going to get replicated in every single country, every single region around the world. And that's why I refer to this idea that AST's strategic value is going to continue to move up. I guess another thing I wanted to point out as well is someone had referred to Viasat having to monetize their spectrum, basically use it or lose it, which I think for the markets that Viasat participates in, I think they probably have a pretty safe position. However, That's not true across all the markets they operate. As we know, in Europe, European regulators are looking to reallocate the 2 GHz spectrum, S-band spectrum, and Viasat and EchoStar are probably the 2 players that have the most to lose. Candidly, EchoStar really isn't using that spectrum, although they're going to try to make the case that when Starlink takes over, that Starlink will use it. But we all know that Starlink isn't necessarily the most popular company in Europe. And then for Viasat, they utilize that spectrum for connectivity to commercial airliners, which for all intents and purposes, that business is getting completely eroded by Starlink. It seems like every other day you see that United, Lufthansa, somebody has moved from Viasat to Starlink and for good reason. I've used Viasat service on Delta and a few other planes, and it's pretty awful. So I don't blame airliners for switching. But if Viasat can't make a good business and economic case to retain that spectrum, it is going to get allocated to someone else. And I think that's probably AST. And so there is this race for Viasat to try to come up with something. And that's why they entered into this Equitas partnership with Space42 and what got left at the altar from Rocket Lab. Or I don't know, maybe Rocket Lab still commits to that, which they've got to invest dollars and satellite manufacturing capacity. But with this Iridium deal, which ultimately is competitive to what Equitas is doing, I don't really see that happening. Maybe we could do another space just solely on that. But Viasat is a, you know, they've got a shot clock that's running, right? And so a lot of these markets where they have, they do have spectrum, but they actually don't have regulatory licenses. They need to go figure out a use case to— it's like cybersquatting on some kind of, you know, website, right? Like you need to have a legitimate use case if If somebody who actually probably has more owner right, you know, rights over that website over you, if they come and ask regulators for it, or, you know, then they might just get it for free. But you should come with something good that's defensible in order to sit on that domain. And so that's kind of what BioSat is facing now, where they're going to lose this license in Europe. After, you know, it's May 2027, and then the EU regulators have already given basically EchoStar and Viasat a 2-year grace period before they really transition that spectrum to the new winners. But Viasat faces this problem elsewhere. And so do you— and this is part of the reason why Viasat, after the Legato deal was inked in January of 2025, which by the way, they were a party to, And then when they found out the value of a spectrum and the positive reaction AST went through, then they tried— they had solid remorse. Like, they went back to court and they said, hey, we don't— we basically don't agree to do this because AST is— they claim that AST is doing a service that we didn't agree that they could do. And then they try to go to court and they went to court, was it 2 times, 3 times? It got shot down each time. Because they tried to unscramble the egg because they ultimately realized like, oh my gosh, like the value of this spectrum, we shouldn't have given it away so cheaply. We shouldn't have agreed to this deal, which by the way, like you had no choice. Like you were a distressed company trading at $7, and this was the only company that can unlock the value of that spectrum. But now that you have the financial payments from AST and the market looks at this entire ecosystem differently, and you have benefited, now you're trying to go back on that deal and try to basically reinvent your company or extract more economics. So ViaSat's in a pretty interesting spot because they ultimately will need to enter into some type of deal if they can't execute on monetizing the spectrum themselves. And AST is well positioned for that. There could be some other players, but ultimately, as Katsi has said, And this is a key thing that people need to remember. And I'll end the space here, maybe after I answer some questions. AST SpaceMobile has the rights for the next 80 years to use L-band spectrum in North America. That's the United States and Canada. That effectively is a poison pill for anyone who wants to utilize L-band spectrum globally for Viasat. This is why Viasat tried to unscramble the egg. They tried to say, we don't agree, we want out of this deal. And the judges at US bankruptcy court and also in Delaware said, sorry, Charlie, you agreed to this deal, you took money, you have to abide by it. And so if there is somebody that is interested in utilizing L-band spectrum globally, they have to do it without the benefit of North America, which as we all know, is the most profitable market in the world. And so if you can imagine trying to put up a constellation that serves L-band just for Europe and the Middle East and certain regions, but not having the US as the financial anchor to fund the economics of the build-out of that constellation, it's really tough. And so this is why I and others say the ultimate home for this Viasat spectrum, and I don't I don't foresee AST buying BISAC. They don't need to do that. They can enter into some type of leasing arrangement. The ultimate home for that spectrum is with AST, right? Because AST owns the most valuable portion of it, North American market. And for it to work for any other player, it's really tough without that piece. And so that's why when people say eventually it's going to go with AST, that's what they mean, right? And this whole By the way, like people who believe in this Equitas joint venture, it's a gambit, right? And it was a playbook straight out of what Charlie Ergen did. And for those people that don't remember Charlie Ergen, because the FCC said, hey, use it or lose it. And then Charlie Ergen's like, hey, I'm going to start a direct-to-device service and I'm going to use that as leverage to the FCC and say, hey, I'm deploying it. And it's also going to put people on notice. It's going to put Starlink on notice and AST. It's like, hey, if you don't buy my spectrum or use my spectrum, I'm going to try to use it against you. And, you know, he entered into a contract with MDA Space to build satellites. And then of course, ultimately Starlink came in and paid the price that Ergen wanted. And so this is a similar type of gambit, like Viasat, they're going to continue. I think, what was it that we were supposed to hear about the JV getting inked? Maybe it was like two, three months ago, and I remember in the last Vice at earnings call, Dankberg was like, "You know we're still working it out. We're going to sign it soon. You'll hear very soon." When people pushed him on details, he didn't really have maybe because he couldn't talk about it, or maybe there truly weren't many details. But he kind of brushed that brushed those questions aside, and now we know partially why. It's because Rocket Lab was was dragging their feet, and and. They slow rolled it, right? And then ultimately, the reason why that is is because they pulled the trigger on Iridium and decided not to do this acquisition of J&B. And so now you've got Viasat and Space 42 at the altar with like no groom. And so they've got to figure out what they're going to do, right? And so this is where like the fun game theory comes up. As I mentioned before, Starlink cannot buy Viasat. Or utilize their spectrum. They have more than enough spectrum, and the FCC will say, hey, we already approved you. We don't want you coming back. And the DOJ is going to say that's anti-competitive. And so I think ultimately there will be a deal between AST and ViaSat. Again, I don't think it's a merger or any of that. I think it will be some type of spectrum leasing type deal. Anyway, okay, so it's 12:06. I'm going to end this soon, but I'm going to ask, or I'm going to look at any questions here. So Drew Tupar, is the T-Mobile agreement in a similar situation in terms of getting the details ironed out before announcing? So it depends on what you're asking here. The T-Mobile agreement, if you are referring to the joint venture with AT&T and Verizon, then yes, the details of that joint venture are still getting ironed out. And then as soon as it goes definitive, and by the way, I should put that in the in my catalyst watch. That is going to be a big catalyst for AST because they need to have something definitive, and once that that's inked, then that pretty much tells us that these guys are walking from Starlink. And then that of course that JV is going to have to go through regulatory review and ultimate approval. But that is going to be a big tell of basically telling the world that T-Mobile is going to be working with AST. They may not say that, by the way, explicitly, but that's what they mean implicitly by that joint venture. Let's see here. Has management talked about what the difference is between our Gen 2 and Gen 3 satellites? Is there a timeline for the Gen 3 rollout? Management has not talked about details around Gen 3, but what we do know, or what they— okay, what they have disclosed is that Gen 3 satellites will be focused on mid-band spectrum. So I think the range in various presentations have been between 1.5 GHz to as high as 2.4, maybe even pushing 2.6 GHz. That satellite will have the same exact form factor as the Block 2 satellites. However, they will be focused on mid-band, and so the number of cell beams that they will project down will be smaller, but there will be much more in terms of number of cell beams. And, um, and yeah, that's as much as we know. Let me see. We need a space on the horizontal horizon model. I am compelling— compiling real examples to describe what is physically happening with us with this that differs from warping spacetime. Okay, uh, Dr. Aaron Thompson is a really smart guy. Thomason. Um, we've actually chatted privately and he's got some pretty interesting perspectives, but Maybe I need to get him connected with Katzi because this stuff is over my head. But thank you, Dr. Thomason. Let's see, we'll get some of these questions.
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[00:48:24] Speaker D: Do you think the Japanese-owned satellites will be able to be used when above Europe, U.S., etc., for AST's normal services? Yes. So that's the beauty of this federated model. When they— these satellites, let's call them Japan Birds, they will be fully owned and operated by the Japanese JV. However, they will be leased to AST for use in other areas when they are not above Japan. And so when they're over Europe, when they're over US, AST will use them for commercial purposes and most likely commercial purposes only, not for anything beyond that. And so there you get to amortize the cost and utilize capacity of these satellites, which, by the way, somebody else paid for, right? And so the model for this was when Planet Labs did a deal with JSAT, and JSAT paid Planet Labs, I think it was like $230 million. JSAT got exclusive use of the Pelican satellites over Japan, but then when the satellites were over other regions, Planet Labs got the economic benefit and capacity of those satellites. Let's see here. As AST locks up more countries globally with JVs, SpaceX share price should take a hit as the original IPO assumption of D2D value being captured by AST. That is true to some extent, but you know, there's gonna be room for both companies, right? And so the SpaceX story of like, hey, we're not gonna partner with the other ones, we're actually gonna go after the whole enchilada. I think there'll be plenty of speculative shareholders who are like, oh man, that's great. I'll ascribe them a higher multiple. So I think you might be in the situation where as this market expands and the strategic pieces fall into place, SpaceX is going to go up and so is AST. And so yeah, I could totally see that happening. Another thing I will mention today, and maybe the market is now starting to have some level of delineation and bifurcation, Today, I'm not— this is probably not the whole reason why SpaceX is down, but Meta announced today that they are getting into the AI data center, basically the compute as a service business where Meta, any additional capacity that they have with their AI data centers, they will sell it to users. And so that's caused all these NeoCloud companies like IREN, NVIS, Mara, they're all trading on CoreWeave. Uh, and interestingly, SpaceX is trading down too. SpaceX is down 7%. I've talked about this before. Um, SpaceX is now an AI compute leasing company. A vast majority of its— if, if the Anthropic, Google, and relative AI, if those contracts continue, um, which, which the— there's no reason to expect why they wouldn't. Uh, a vast majority, call it 60, 70% of SpaceX revenues going forward are going to be from AI data center leasing payments. And so SpaceX, the reason why I bring this up is that, you know, it's down today and all the space names are up. The space names wanted to follow SpaceX down, but then they all rebounded. Maybe people are starting to figure this out where it's like, hey, this space basket that I'm short against my SpaceX, maybe I shouldn't be short AST SpaceMobile and Rocket Lab and some of these other companies. Maybe I should be short IREN and NBIS and Riot. Like, Maybe those are, or the basket should at least comprise of 60% of those companies versus 100% of space companies. And so there might be some of that happening now. I wouldn't be surprised. And if I was on the Goldman Sachs prime brokerage desk offering hedge baskets to hedge fund clients, I would be going back to them and saying, hey, you know that space basket we put together for SpaceX? We actually need to adjust that. You need to short some of these NeoCloud companies because SpaceX is now pretty much any new cloud company. And so maybe you're starting to see some of that. Oh, here's a nice one. Uh, DC Ions, long and strong since 6. Good on you, man. I love to see that. Uh, oh, what's this? AST reaction June 30th to the Grain 800 MHz transaction. Okay, this is very telling. I don't know if you guys saw this. I mean, I'll retweet this. Um, AST SpaceMobile is commending the FCC in their efforts to bring 800 MHz band into use for 5G mobile service. Senator Cruz has strong support. Oh, this is positive. So for those that don't know, AST SpaceMobile currently utilizes 850 MHz for the AT&T and Verizon federated spectrum band. And you, and I think grain management, this spectrum, which is now potentially up for use for direct advice, my guess is that it gets incorporated into this. And so AST is a likely counterparty to this. This would be huge. And then, and the reason why, now there is an argument to be made that maybe Starlink should come in and try to get access to this spectrum. However, The regulatory issue that Starlink faces is that this spectrum, for the FCC approval of grain management in utilizing the spectrum for terrestrial use, part of it is that it needs to be deployed quickly for direct-to-device. And that's something that Starlink cannot do because their satellites are not architected for low-band spectrum. Starlink can only work within the PCS, call it terrestrial and S-band. MSS spectrum. So anywhere— I'm just making numbers up here, but probably as low as 1.7 to 2.5, or— and Katzy will know more. But they don't have a satellite currently, nor do we know if they have a satellite planned for the future that could work with low-band spectrum. And part of the issue is in order to work with low-band spectrum in a very efficient and effective way, you need to have a very massive and large phased array. Which SpaceX's next generation Starlink satellite, the V3, is going to be 5 meters by 5 meters. In order to deliver good service, you're going to need something much bigger than that. So this is very positive. You know what? I'm going to dig into this and tweet about it. Let's see. Let me finish this off here. Short interest. What's short interest today? It ticked up a little bit. Let me just take a look. Short interest is now— 2.5%. Is now at 87.3 million shares. So we are, for those that celebrate, we're at a new all-time high. Let's see. I think that's it. So thanks everyone for joining. I need to dig into this Grain Management AST support letter. The fact that AST is supporting it is very bullish. So if you weren't bullish enough before, then, um, you have reason to be now. But anyway, yeah, we are setting up for a great summer. A lot of big catalysts that are coming up, uh, a lot of strategic pieces that are moving, and those pieces, those pieces moving are in favor of AST. So know what you own, hold on to dear life, don't worry about volatility, don't be on margin, and yeah, enjoy the ride. Thanks everyone, take care.
[00:55:55] Speaker C: Thanks for listening to the AST Space Rover 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. Listen. Mmm, waffles.
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