Anpanman - AST SpaceMobile Adds T-Mobile - THE END GAME

[00:00:07] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:10] Speaker B: It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:00:27] Speaker A: Good morning, everybody. What an unbelievable fucking day, man.
[00:00:35] Speaker B: Unbelievable.
[00:00:36] Speaker A: Um, I'm literally beside myself. Uh, the last time I felt this way was when AST SpaceMobile added Verizon as a carrier to AT&T, and now what we What Space Mob had been predicting for the last 3 years has come to fruition. AST SpaceMobile has added T-Mobile as a carrier. And so we have effectively 100% of the US market locked up. Now, it's not definitive and it's going to take some time. And there's also some regulatory things that need to get worked through. And there's things that can be done that can be said explicitly. But there's a lot of stuff that cannot be said explicitly but are implied, and I'll explain about that. Um, but I think it's really important, and this is where the Space Mob due diligence— and I guess, you know, having been a former hedge fund guy, like, you got to read all the stuff between the tea leaves and then couple that together with, um, you know, I had a conversation with management this morning And I won't go into what exactly, you know, discerning between what they said or whatever, or what I'm about to talk about, because obviously there's like some sensitive stuff which will be, I guess, revealed over the next weeks, months. But yeah, this is huge. This is absolutely huge. I think it's important. Let's start off. So This morning when I woke up, I saw this press release from AST and I was like, holy shit. And of course, initially I was a little worried because I was like, is this something that was done on its own and AST is responding to it? Then I looked at the press release and I read it closely and it became crystal clear that this is a joint venture that's being put together and it's going to enable AST to bring T-Mobile into the fold. Now, they can't explicitly say that, and for, you know, from a regulatory and antitrust point of view, but that's what it is. I think it's important to highlight, you know, a few things to, you know, conclusions to draw. First, AT&T is the quarterback of this whole joint venture. As many will recall, AT&T was a quarterback of the AT&T and Verizon partnership to work with AST, and now we have AT&T quarterbacking the partnership between Verizon and T-Mobile. And the reason why that is, is that AT&T was a leading-edge partner with AST in developing this solution, which uses terrestrial spectrum and integrates the satellite service into the network core so it's seamless in handoff and delivery of service. And so it's very important to understand that AT&T was the one who issued this press release, right? So they are the quarterback of this whole thing, and they are working obviously very closely with AST. So that's point number 1. Point number 2, when this press release went out, there was only one provider that immediately pressed the button and had coordinated the PR at the same time with was in on it, all that stuff. And that was AST SpaceMobile. And that was one of the first things when I woke up, I looked and saw if like Starlink had released anything, if Globalstar released anything. They haven't released anything because they're not— they just learned about it today because they're from— they're on the outside looking in. And so, so that's really important. You had AST SpaceMobile pressed the button same time as these carriers. You had Abel retweeting and you had Scott retweeting it, right? And I will— I think Will Townsend had mentioned it earlier, he got briefed ahead of time. You know, AST was in the middle of all this, right? But it's important to note that they're not going to explicitly say, or they can't explicitly say certain things for regulatory reasons and And I'll talk about that in a little bit. But it's also important to note that this is not a definitive agreement yet between the carriers. However, they're working towards that. And the timing is very interesting because as we all know, T-Mobile's exclusivity with Starlink ends next month to potentially July. And so that timing, the ending of the exclusivity, It's not as if that happens by chance. This JV came out because of that exclusivity ending. And you saw over the last few earnings calls and discussions from the various CEOs talking about how they started to speak more openly about working with other satellite providers. I mean, AT&T did this. And of course, T-Mobile recently just said, hey, we're interested in AST SpaceMobile and Globalstar. This is for part of the regulatory record where they're going to talk about, like, we want more competition with satellite, right? And so that's kind of the balance to all this in terms of trying to get this through the regulatory review. But it's important to note that AT&T and Verizon both have exclusivity with AST for the next— once commercial service launches, they have exclusivity for multiple years, which I believe is at a minimum around 3 years. So they're locked in with AST SpaceMobile. T-Mobile, on the other hand, exclusivity ends in the next month or two. So again, this is part of the mosaic that you have to kind of piece together. It's like, from a competitive standpoint, what does this joint venture mean? This is not good for Starlink. Starlink didn't put out a PR. That's very telling. They're learning about this today. So I think that's really important for people to understand. And I think the market, it might take a little bit of time to digest this news, but once they start talking to carriers, they start talking to AST, it's gonna become abundantly clear what this means. But yeah, so AT&T and Verizon, going back, they have exclusivity with AST for the next call it 3 years. They also contributed 850 MHz spectrum, which I find interesting because also, as some Space Mob have been doing due diligence, there is virgin unused 800 MHz spectrum that is coming to market that Grain Management has. And that deal's closing. I think T-Mobile did that transaction. But who's going to use that spectrum? Is it gonna get thrown into this JV? Or is T-Mobile gonna throw in other spectrum? For example, are they gonna yank the 1.9 gigahertz spectrum that they're using with Starlink? Are they gonna yank that from them eventually and then give that to AST to use for its mid-band constellation? But the key thing is that T-Mobile is going to be a meaningful and important contributor of spectrum, and that will be used by AST, whether it's additional low-band spectrum, which my guess is absolutely there will be, but also mid-band spectrum, especially the G-block, which is currently used by Starlink. Because I think people have to remember, like, Starlink right now, they're amassing spectrum. They have AWS-3, which is in the 2 GHz range, and they have They just bought the H block, which is 1.9 GHz. It's actually right next to T-Mobile's G block. And so they're gonna, ultimately what we all know, Elon Musk has talked about this publicly and that's his ambition. They just branded themselves Starlink Mobile. They're eventually gonna go direct to consumer on this product, which is why T-Mobile, and we talked about this scenario where—
[00:08:56] Speaker B: Yeah.
[00:08:58] Speaker A: Hypothetically, will AT&T and Verizon allow T-Mobile in? My view on that was no, unless T-Mobile went to both of those guys and said, hey, look, if you don't let me in on this service and we create this joint venture, for example, I'll blow my brains out, meaning I'll enable Starlink to become a mobile network operator or virtual mobile network operator. And so maybe that's part of the discussion that happened here. But AT&T and Verizon are like, hey, we're gonna cut you in. And that's what happened today. And so I think Will Townsend, who's a distinguished research analyst who covers the industry, he said it very succinctly. He was briefed before this PR went out. He said that he also viewed this alliance as a defensive move to mitigate the impact of any non-terrestrial network service provider that might wish to more directly compete with mobile network operators. There's only one player that's doing that. It's not AST, 'cause AST, as Katia said, they are a cooperative player that we sell our service directly through MNOs in partnership with them. But there's one carrier— sorry, there's one satellite provider that is planning to go direct and that already sells direct to consumers, and that's Starlink. And so specifically, this JV was formed as a competitive counterbalance to Starlink. And I think ultimately the way that I see this playing out is that I think Starlink will get cut out from T-Mobile. And some might say, well, that's anti-competitive. What if customers want to use their service? They absolutely will be able to use the service because the way that Starlink is operated, is architected today is that it operates as a completely separate roaming network. And so what Starlink can do, they can say, okay, well, we don't need you, T-Mobile. We're going to go directly to consumers and sell them an eSIM with our service. And that service is either going to be— it could be just for roaming when you're out of terrestrial coverage, or they could try to develop something that is directly competitive with the MNOs. Now, it's not going to be as good because it doesn't have low-band cellular spectrum, but it's going to be a service. And so from a competitive standpoint, these guys can go to regulators and say, well, it is going to be a competitive market because obviously Starlink is creating what is now looking to be like a 4th wireless carrier. They're facilities-based because they own satellites. They also got a piece of Boost Mobile's network that was built out. And so there you have now 4 players competition. And the 3 of us, we just happen to be working with AST SpaceMobile. So that's not anti-competitive. People have more choice. And the reason why— and this is how they can get through regulators— the reason why the 3 carriers are working together is that they're going to contribute spectrum. And if the objective aim is to provide better service to consumers and for avoiding dead spots and providing broadband, then the FCC should be very supportive of this transaction, right? This joint venture. Because then Starlink has its own ability to go directly to consumer. Again, they can sell you an eSIM. They already do that today. I mean, for those that don't know, you can, as a Verizon or AT&T customer, you can go to Starlink and get an eSIM and you can roam on their network when you have dead spots. So there's no competitive— there won't be a competitive issue from an antitrust point of view. And if anything, this gives the consumer like a much better broadband experience. And then as Starlink develops, the FCC just gave approval of the Starlink EchoStar transaction where they got all this spectrum. It's gonna be hard for the FCC to argue that this is anti-competitive because Starlink has a shitload of spectrum. I mean, granted it's mid-band, but they're gonna be able to develop a competitive service. And so yeah, from a regulatory point of view, this shouldn't have any issues getting through. That said, the AT&T, Verizon, and T-Mobile, they have to be very careful in how they frame this JV because the JV is going to buy and negotiate satellite services from various competitors. And so that sounds good competitively. But at the end of the day, there's only one satellite direct-to-cell broadband solution that is working in cooperation with MNOs, not against them, and that's AST SpaceMobile, right? I mean, what other solutions are there? There's Skylo that does texting. I guess maybe that's kind of interesting that this JV could utilize, but for for Amazon Globalstar, like maybe 5, 6 years out from now when they develop their own satellite and they put those satellites up, it will be somewhat competitive. But maybe from a competitive standpoint, maybe they'll leverage that network to a degree. But the carriers don't need to do that, right? They don't need to bring Amazon in because you already get that through your iPhone already. And We know that the carriers are very wary of Apple kind of encroaching on their territory, as well as Amazon. Now, yesterday T-Mobile said, hey, yeah, Amazon's coming, we're interested in looking at that too. For regulators, that's what you need to say. You have to be able to say, yeah, we're, we're assessing all these options and we're going to keep it open and, and we want it to be competitive, but at the end of the day, like, this, this this move today in particular is to respond to the competitive threat of Starlink. And there's one company that is the North Star that's going to help these MNOs compete against Starlink, and that is AST SpaceMobile. And so instead of having 2/3 of the market, now we've added T-Mobile. Now again, obviously it's not done yet. They have to negotiate this thing. But it's clear who's in the driving seat. It's AT&T and AST SpaceMobile, and then you've got Verizon and T-Mobile who are along for the ride. Now, as I mentioned before, this is gonna take time for the market to realize. And last time when Verizon was announced, the market didn't care pre-market. The stock was up basically the same amount it is now, and then it took time— or no, it was up more, but it took time for people to digest what this meant. And speaking to some of you this morning, and I spoke to 2 hedge fund guys too, there were a lot of questions and they didn't quite understand. And I tried and I explained it explicitly to them. They're like, oh, okay, yeah, I get it now. And then, so I think that's going to happen over the next few days and weeks, but I fully expect AST to re-rate way higher. once people understand what this means. And I think it's also like these bears and skeptics who say the direct-to-device market isn't real, it's niche. You just had the 3 carriers who own the US market come together and form a joint venture to utilize AST SpaceMobile. They're doing this because it is a real market. And on the one hand, it's a massive opportunity. On the other hand, it's a huge threat to them. I mean, I think AST showing 100 megabits per second and eventually getting to, for the Block 1 satellites, but then getting to 200 megabits per second for Block 2 satellites, this is a real competitive threat to them. But if structured the right way, which is this JV and working with AC SpaceMobile, it's gonna be a huge boon for consumers and it's gonna be a great thing for the carriers. And then again, going back to the person that's missing in this room that didn't have PR, that CEO's out in China right now, that's the big threat to these guys, right? Like over the long run. It's not a big threat near term. We speculated this for a while and now it's coming to fruition, but Mike Sievert, when he got into the partnership with Starlink, that was a huge tactical blunder, right? 'Cause he enabled that company to enter the mobile market to get mindshare. And then obviously they went to go buy EchoStar and now they're gonna go into the AWS-3 auction and they're gonna buy more spectrum. And that guy's gone. He's not at T-Mobile anymore. And then Deutsche Telekom put in one of their close guys who's the current CEO of T-Mobile now. But then Deutsche Telekom CEO specifically said, we're very wary of Starlink and we know that we're dancing with the tiger. Well, today— or the lion. But today they just made it known, we are going to walk away from that partnership eventually. Once we're able to negotiate this JV, we're gonna walk away. And I think it's interesting because it's not definitive, so they still have to work stuff out and they're gonna have to talk to regulators about it, but the writing is on the wall. I think these 3 CEOs understand the competitive threat of Starlink and they understand, for T-Mobile, they understand the solution that AST is bringing to bear and that competitively by enticing AT&T and Verizon, letting them in. They're probably— my guess is they're going to contribute some amount of cash to this JV. They're going to contribute spectrum, the spectrum that— the spectrum, 850 megahertz spectrum that AT&T and Verizon contributed or they leased to AST. My guess is eventually that spectrum is going to find its way into this JV and then T-Mobile's gonna probably contribute. I think T-Mobile has 800 MHz spectrum. They'll contribute spectrum. The company Grain Management, my guess, that spectrum gets contributed too. But yeah, this is huge, right? I mean, and the risk here is that maybe this Droid Venture, the FCC might block it or the DOJ might block it, but I think it's gonna be hard. I think it's gonna be hard to do that from a consumer welfare point of view, this is gonna just enhance mobile broadband service in the US, like 100% absolute coverage across the country, and it's gonna be broadband. So from an FCC perspective, like, that's good for consumers. And then from an antitrust point of view, as I mentioned before, if the DOJ were to look at this, Starlink is becoming a 4th facilities-based carrier, right? Like, they I was gonna talk about this before, but the fact that they got a build-out requirement on the AWS-3 spectrum that all they have to do is just provide satellite service, they don't have to build out towers, that's huge. And I think that order from the FCC, by the way, probably helped prompt this JV today where the FCC said, hey, for wireless spectrum, you can now use satellite coverage to for your buildout requirements, which lowers the bar tremendously. If you imagine Charlie Ergen, when he was trying to build out his network under Dish Network/Echostar, when he had that spectrum, he had to go build towers and he had deadlines where he had to build out, cover like 50% of the population, 65%, 75%, 80%, 90%. And the whole reason why he had to sell the company is he couldn't meet those deadlines. And this was under a previous FCC administration. I bet Charlie Ergen, yeah, he got a lot of money in selling EchoStar, but he's probably gnashing his teeth. He's like, man, I should have just did direct-to-device, which he tried to at the end, but it was too late. But I should have worked with the FCC to get to have direct-to-device meet my buildout requirements, right? And so that changes the game. And so for Verizon, AT&T, and T-Mobile, like from a CapEx savings standpoint, they can use AST SpaceMobile to meet coverage requirements. Now, it's not just about dead zones, it's about also probably— it's also probably about, you know, pulling back on rural towers. Because if you're able to deliver 200 megabits per second in those areas, then what's the point of having a tower which costs— each tower costs— there was a Space Mob member who kind of put some of the annual numbers together, but it's I don't know, $150,000, $200,000 a year to run those things. Like, that's tremendous savings. But yeah, today is, you know, I just like last time when Verizon was announced, I called Cook this morning and we both were like jumping up and down. I may not sound as exciting because— excited because I'm a bit hungover. I'm in Vegas right now. But But yeah, it's— this is huge news. Um, I don't know what else to say. Like, I think, I think the market is—
[00:22:30] Speaker B: it's—
[00:22:31] Speaker A: now I'm talking in circles, but the market is going— it's going to take time to digest this. But, um, and there's going to be a bunch of, um, bears and skeptics who are going to say, oh, you know, AST, this is bad for them in the long run because the economics are going to get crushed. Um, No, it's not. AST has 50% revenue share in those 3-year exclusivities with AT&T and Verizon, at least for the 3 years. That's gonna, that's gonna stay the same. Now maybe once T-Mobile gets added, and then, you know, there's going to be— they're going to at least be at 50/50 for the next 3 years. But then once that burns off, um, 3 years from now, then yeah, maybe that turns into 60/40 or something. Maybe the economics change. But it's a lot better than what Starlink was giving T-Mobile, which was Starlink got 80% and T-Mobile got 20%. And of course, like, people will say, well, you know, the service is not that great. I mean, no one's really using the service. Uptake is awful, um, based off of what T-Mobile experienced with T-Satellite. Yeah, that service sucked. It was a piece of shit. It was intermittent texting. It's not diff— that's not the same as broadband. This is like a whole different ball game, right? A whole different ball of wax. And that's where— that's why T-Mobile was desperate to join and here we go, they're in, right? And so yeah, I can't, this is insane. Like going back 5 years, it was only AT&T and then 2024, the impossible happened, Verizon joined and now it's T-Mobile. So it's 100% of the market. They can't now. AST can't say that explicitly, nor can these carriers. But for the smart kids in the room, our PR went out the same time as their PR. Management has been coordinating with these companies in making this happen. Management, I mean AST management. And AT&T is quarterbacking this entire thing, which is what they were doing with AST and Verizon was a junior partner. Now T-Mobile's joining as a junior partner. The PR didn't come directly from Verizon. It didn't come directly from T-Mobile. It came from AT&T. And then the CEOs of Verizon and T-Mobile were quoted in the release, right? And that's— by the way, that's what happened with Verizon too. When they announced that they were joining with AST, Verizon didn't put out the massive PR. It was really from AST, and then AT&T welcomed Verizon into the fold. This is the same thing. But yeah, this is— it's gonna take time. You're gonna have skeptics say, like, you know, that the economics over the long run are gonna get crushed. Who cares? Who cares if it goes from 50/50 to 60/40, but you have 100% of the most profitable market in the world? And by the way, every market around the world's gonna see what's going on in the US and say, you know what, Shit, I need to follow their lead. I'm gonna add AST. This is, this is like, um, this is the endgame, right? This is like the Infinity Stones. You got all of them, it's over. Now obviously the company has to execute and they gotta get batch 1 out, batch 2, batch 3. But right now I don't give a shit about that. I don't care because like this is more important that we've locked up all 3. And so now we've got time. We have even more time to get— now obviously we want to get the constellation up as quick as we can, but But from a competitive standpoint, um, we've locked it all up. And so yeah, it's pretty— I'm beside myself. It's pretty insane. Um, but yeah, you're gonna have like, uh, Tim Farrar and all these other people question this or that or try to spin it a different way. There's, there's no other way to spin it. Um, but yeah, if anyone has any questions or comments, please leave them down and I'll try to go through them. I mean, by the way, this is what happened in Europe. Like, the framework already exists. Like, AST formed Satellite Connect Europe. And so this joint venture, it's following the same playbook, like, which is what AST deployed with Vodafone, and then they brought on Telefónica and Orange and others. It's unfolding here in the US. Like, some people might be like, well, why would they do a joint venture? I don't understand this. Well, it's because AST did it in Europe and it's what makes sense for the carriers. If you're going to try to trust each other, you're gonna contribute spectrum, you're gonna have some governance mechanism in place. And then, 'cause obviously they're competitors, right? Like you can't, they're not gonna be full, they're not gonna trust each other 100%. And so by having this JV framework, like that helps kind of grease the wheels and get things going. Let's see, someone's asking, how do you think the unit economics working in a world where there's potentially a shared competitive D2D system across carriers? That's a good question. I'm not— I mean, we'll find out, but I think ultimately, at least for the next 3 years, it's gonna be 50/50, and then it's eventually, you know, maybe that gets compressed a bit, but at the end of the day, like, it doesn't matter, right? Like if you have 100% of the market and if they, if you're the sole provider and you're integrated with the networks of all these companies and yeah, from a pricing perspective, like your negotiation, your negotiating leverage is gonna be very high, right? Because the ability to rip and replace you doesn't exist. So Yeah, let me just look through some of the questions here. I think that's it. I'm gonna pause there and maybe I'll do a follow-up, follow-up space later. But yeah, this is massive news. I think everybody should be super bullish. There's a short interest, by the way, is like 67.7 million shares, which is the all-time high. There's going to be people who read this and it initially, but once they peel back the layers of the onion and management starts talking to sell-side research analysts, they're going to get it, right? And this, you know, make no bones about it, this is AST SpaceMobile bringing on T-Mobile. And yeah, this is it. know what else to say. But anyway, thanks for joining. We'll talk again shortly. Yeah, I'm going to try to digest this a bit further and maybe I'll do a space later. But yeah, what an amazing day and congrats everyone. And this week, my guess is we'll see that batch 1 shipment news go out and it's going to be an amazing end of May and June, July, August. I mean, basically throughout the entire year. So yeah, congrats everyone.
[00:29:38] Speaker B: Take care.
[00:29:47] Speaker A: Thanks for listening to the AST Space Mover 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 about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time.
[00:30:06] Speaker B: We're doing something very, very big, and I think with this technology we can really affect a billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular broadband connectivity directly from space to the everyday smartphone. People will just basically turn their phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the MMOs. Listen. Mmm, waffles.