AST SpaceMobile Q2 - Anpanman Bullish

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[00:00:55] Speaker C: Hey everyone, thanks for joining. So I wanted to do a quick space, or maybe it's not gonna be quick, but, um, just wanted to cover the Q2 earnings call and provide a few thoughts. But yeah, I'll just jump right into it. Um, there were a number of big takeaways and quite candidly, I know, you know, stock price sentiment. Stock price always guides sentiment and people were, I guess, somewhat neutral on these earnings. But if you look at what was disclosed, it was very bullish. And so I think obviously some other names in the space sector have sold off post-market and as a result, AST is kind of trading in sympathy, but if you dig into everything that was disclosed today, which management was quite open about a number of different opportunities and they provided color on a number of areas, it's actually very bullish. So I wanted to talk about it and kind of dig into a few things that stood out for me, which by the way, this isn't exhaustive. It's just I looked at the transcript and reviewed some of the PR and went into the 10-Q a little bit, but I just wanted to provide some initial thoughts. But before I do that, I did want to talk about this new hire, which was not part of the quarter, but I think is a huge data point. So this guy, Ozzie Ramos, who was most recently vice chair of UBS's investment banking division, So he was there for about 3 years, August 2023 through August 2026. Prior to that, he was at Barclays for almost 16 years. He was vice chair of banking there for about 6 years. Prior to that, he was managing director and head of the communications cable and satellite sector. And then prior to that, he was head of media and then he was a managing director for a number of years. And then before that, he was at Lehman for 8 years and I know some people who had come across this kind of joked, oh, it's Lehman. Well, Lehman was a completely fine investment bank, and unfortunately the trading side got in over its head, and of course, financial crisis happened. But for those that don't know, maybe some of you guys are too young, Barclays acquired Lehman. And so this guy was at Lehman, and then he came over to Barclays as part of that transaction. So But the reason why I bring this guy up, Ozzy, is that he has a tremendous amount of experience. So being the head of the communications cable and satellite sector, he would've had relationships across the globe with leading telecom companies, satellite guys. So he'll know, for example, Viasat, Inmarsat. I think he actually worked on the Inmarsat deal, but he knows all the different players and where the bodies are. And then he became vice chair of banking, at Barclays, and then he moved over to UBS and did that for 3 years. So the key question you have to ask yourself is, what is this guy— now that he's very senior, he's older, maybe you could argue that he's retiring to a degree and maybe he just wants to do something for fun, but this person who has strategic advisory experience, I used to be a banker before, and so a vice chair of investment banking, that's like the number 2 or depending, it could be number one role for the entire investment banking division. Investment banks, you typically have investment banking. There's also sales and trading, which is capital markets function. You have research, you have asset management, but this guy was the head honcho in banking at Barclays and then now at, or previously at UBS, and he just left in August. So what does that mean? So obviously AST's in the middle of significant execution and strategic expansion. It's having to work out something with T-Mobile, Deutsche Telekom. There's also the joint venture that I think we learned today. I'll talk a bit more about it, but the joint venture, AST is not only dealing directly with AT&T and Verizon and inevitably T-Mobile, and it will also be working with this joint venture, which maybe is the 4th party that they're talking about. And so the joint venture, by the way, so what could that mean? Now I'm kind of getting into the meat of everything, but you could work with MNO directly, and then the joint venture is something separate, right? The joint venture is where they've put in additional spectrum resources. Maybe it's the entity that holds on the infrastructure, but there's other things that the joint venture could do, right? AST could contribute its legato spectrum. then maybe they create some type of IoT business. I mean, there's a whole host of ways that this joint venture could go just beyond just the typical connectivity side. So it'll be interesting to see, but we are at this time for AST where there's a lot of strategic transactions that are going on. And so obviously Globalstar traded, Iridium traded. By the way, for those that don't know, I did a tweet We missed Friday. Just looking at the merger background. And so whenever a deal is announced, as part of the merger proxy, you will have a summation of the strategic interaction between the buyer and the seller. And then also in that is disclosed other parties that may have been part of the process to potentially buy the company. And of course the other parties aren't named, but when you read through that background, you can kind of figure out who's who. So for Globalstar, it was very clear that SpaceX was there, and it was clear that Rocket Lab was there because they used similar type of structures for their offers, but both of those parties could not get Apple to agree to work with them, and it was only Amazon that was able to do that. So Amazon ended up winning Globalstar, and then of course, Rocket Lab had to move on and pursue the next best thing, which was Iridium. But yeah, so there's obviously a lot of strategic activity going on and there's assets that are out there, assets that have spectrum. I mean, one logical conclusion you could make is that AST should work with Viasat in some capacity, whether that's leasing spectrum outside of the US, or maybe there's some kind of M&A that could happen, which I don't believe it will. I don't think the company is interested in buying ViaSat because there's obviously the dying fixed wireless business that they serve commercial jetliners with, but they do have valuable spectrum assets and perhaps you could work out some type of leasing deal. The issue for ViaSat, of course, is that if they don't utilize spectrum assets, then they can lose them, just like in Europe, they're probably going to lose their 2 GHz allocation. So there might be something there to do. But this guy, I think importantly, has significant experience. He has relationships. He can do M&A. He can do structuring. He can work, whether it's a joint venture. I mean, obviously we're now dealing with Satellite Connect Europe, We're dealing with the Rakuten JV and the US JV. And so there's a lot of things for this particular individual to do. But I think it is important to highlight that he is a very senior executive. When I was in banking, you work with all these great companies and you get opportunities left and right because people at these companies want to hire you just given your experience. And so this guy is going to have a tremendous amount of opportunities in front of him, and yet he chose to work at AST, which I think is a big vote of confidence. The question you have to ask yourself is, what is this guy seeing at AST versus working somewhere else? And so he's voting with his feet. He's joining the company. He left vice chair position at UBS and he's joining AST, which some people affectionately are like, oh, AST is a shitshow. No, it's not. You don't have a vice chair of investment banking join a shitshow. So I would challenge people to look across the universe of companies, whether in the space sector or any sector, and find someone at this level who has been hired recently. By the way, this guy isn't the only one. They did hire Abell hired a senior partner from Abri who sat on the board of EMC when he was there. And Abri, of course, is a PE firm that had bought EMC from Abell. So anyway, yeah, a very interesting hire. I was going to talk about him at the end, but I think we should talk about him in the beginning because when I go through the quarter, there's a lot of stuff going on. And I think having someone with this tremendous amount of experience, relationships, it's going to be very useful. I mean, the company could be contemplating M&A, or if the company— I mean, just throwing this out there— if the company is responding to strategic interest, if Google is like, hey, I want to buy you guys, it doesn't hurt to have someone who's unbiased who comes in and is working on your behalf outside of your own, obviously, strategic advisors who you would hire, bankers. But yeah, so let's talk about the quarter. This is in no particular order. I just was taking notes as I was reading the transcript and listening to it again. But first, let's talk about spectrum. One big thing that came out today, and we had discussed it before, I had learned from Abel that he had C-band spectrum in his roadmap back in 2021. Well, he talked about it today. He highlighted that the C-band auctions are happening next year, and of course, AT&T, Verizon, and T-Mobile already have C-band, but he talked about the idea of C-band being incorporated into Bluebird satellites. And so in my mind, I thought that C-band satellites would be the next thing after mid-band Bluebirds, because mid-band Bluebirds can address 1.5 gigahertz to 2.5 or 2.6, and then C-band is 3.5 to 4 gigahertz, right? And so I thought, okay, we've got Block 1, we've got Block 2, those 2 are for low-band spectrum, and then we've got Block 3, which is going to be mid-band, and then there'll be a Block 4 for C-band. However, today on the call, which I need to actually do a follow-up and ask the company about this, but it seems like the C-band capability is actually going to get built into the mid-band satellites. This is a part where Catseye probably has to offer up some of his technical insight, but perhaps the way that the microns for mid-band, the spacing of the elements, the way that they do that, perhaps because of the wavelengths, C-band is, you've got 1.5 to 2.6 and then 3.5 to 4, maybe you can use the same microns, right? You just change the which of the elements that you're using in order to adjust for, to tune for moving from L-band and S-band to C-band. And so we'll see what Kathy says about that. But what was interesting is that Bell referred to the fact that C-band would be built into the mid-band Bluebirds or the 3rd generation. So 3rd generation, at least as of today, based off of this call, the Block 3 satellites will be able to tune to L-band, S-band, and C-band. Which is crazy because I thought, again, I thought C-band was probably going to be Generation 4, but it's not. The other thing that was highlighted, I think Quilty asked the question, he asked specifically, which by the way, the ASICs are in production, which is good news. And it sounds like we have all the low-band, the initial batch of low-band satellites that are in production, which is through Bluebirds 46. So that's the 45 you need for coverage. And the reason why it's 46 and not 45, obviously we lost BB-6, and so— or sorry, we lost BB-7. So you got to make up for that. However, Bluebirds 47 and I guess over the next few will be mid-band Bluebirds covering mid-band spectrum. And so that was disclosed today, and those are going to enter into construction later this year. And we'll be launching in early 2027. So that's good news. Obviously, we own L-band spectrum from Legato and we've been paying interest on that. And so we want to put it to use. And so rolling out mid-band Bluebirds makes sense. We have enough production capacity, which I'll talk about in a bit, but to run these things in parallel. So we're going to continue to build low-band Bluebirds and we'll incorporate the ASICs into those. And then of course the mid-band, you definitely want to use the ASICs. The other thing that I was referring to Quilty asking, Quilty had asked specifically, do you need to spin up a new ASIC in order to incorporate C-band spectrum? And the answer was no. So for what it's, you know, these guys have been planning from the beginning, that ASIC can actually do signal processing in low band, in mid band, and C-band spectrum, which is pretty crazy. And as everyone knows, that ASIC already incorporated Legato spectrum, which that was disclosed when they did announce the Legato transaction. And people asked, well, do you need to recast the ASIC or does it already incorporate L-band spectrum? And lo and behold, the company already incorporated it. My guess is that the company has incorporated all spectrum, all low-band, mid-band, and C-band spectrum because of the idea that some point, they were probably going to be able to work with some combination of all those spectrum or maybe all of it. So that was a pretty big piece of news. So yeah, as the carriers think about, and I've talked about this, when you deploy C-band spectrum, it requires a lot more towers to do that. So I made this post, I guess it was 2 weeks ago, where I believe the vast majority of C-band will be deployed over satellite because it's just the most cost-effective way to do that. I think it's an order of magnitude of 3 to 4 times more expensive to deploy nationally versus low-band spectrum. And so it's on orders of magnitude in order to deploy that. It just makes economical sense to do that by satellite versus— in urban areas, you're going to use towers, of course, but everyone else, you'll just use satellites. Let's see. So the next point, which I thought was quite interesting and I tweeted about it, the company did refer to having the ability to use 100 MHz of spectrum in the US, which is pretty huge, right? I think, as we all know, SpaceX is using AWS-3, and that's about 65 MHz of spectrum. And so for 100, my key question was, where is that coming from? And so I kind of did back of the math envelope, back of the envelope math. I said that in reverse order. And so to get to 100, you take 45 MHz from Legato, 20 MHz from FirstNet, and then 20 MHz of AT&T and Verizon around, call it 850 MHz. And so that gets you to approximately 85 MHz. And then the plug figure, I think, maybe is grain management. they've got like 14, or you could also put in other parts of low-band spectrum that AT&T and Verizon, and of course T-Mobile, you throw them in there. But that all adds up to about 100. Let's see, just over half of that is low-band spectrum, which is great for coverage and going through walls. Then 45 of that will be the company's own spectrum, which is, they said, we're going to bring to bear Legato, and partner MNO spectrum. And so that's how you get to 100. And when you look at that, that's a very robust spectrum portfolio that you can deploy across the US. And so you're going to have coverage and capacity across that 100. And so the service is going to be really good. And the company referred— one of the key questions I've had for a while is, okay, well, Legato is an over— it's a layer on top of what the carriers offer, and this is what AST is going to bring to bear. My guess is that Legato gets contributed. Of course, AST owns it, but it probably gets contributed to the JV. And then they talk specifically about, for example, IoT utilizing that spectrum. So my guess is that perhaps the JV with the carriers in partnership will sell broadband access to IoT devices and you can throw robotics, cars, whatever it is into that. And so it's not going to be a burden on the carrier's networks, but it'll be something separate. And it's going to offer a great quality of service because it's dedicated, It's not going to have mobile traffic on it. It's just going to be for that use. But that's just a point of speculation. We'll see if that actually comes to fruition. But yeah, 100 MHz across the US is a big deal, right? Because the service is going to be very robust and it's going to have great characteristics where you're going to have true broadband. And I know SpaceX had talked about delivering a great service over 65 MHz. Well, we've got 100. Of course, they've got more satellites, but quality has a quality all its own. It's not necessarily a quantity. The other comment that was made is that they are seeing more and more S-band allocations outside the US. So they specifically referred to Brazil, which we know Anatel gave them a 10 by 10 spectrum allocation. I think they're also referring to the EU. So they feel pretty good about getting an allocation of 2 GHz spectrum, which will likely be a 10 by 10 band. But then there's also other jurisdictions where they're getting potential allocations. So that was good to hear. And as everyone knows, spectrum is really valuable and expensive. And so if you can get it for free from regulators, then even better, right? And so this is going to be an area of contention for the US regulators versus foreign regulators, because as we saw, the FCC said recently, for any US constellations that are flagged here, if a company has priority rights over S-band spectrum, so for example, let's take EchoStar, which SpaceX is buying, you need to respect those rights globally. But then for AST and other players, if you have parts of your constellation that are flagged elsewhere, like in Japan or in Europe, and you're given by regulators who own that spectrum in their country, they say, well, we don't want to give it to EchoStar. We want to allocate it to AST. then as a US regulator, what do you do? Because do you throw up a stink and try to impose your will over someone else's sovereignty, or are you just happy that you do have a US operator that's utilizing that spectrum elsewhere? So it'll be interesting to see how this unfolds, but my guess is that for countries that want to maintain their sovereignty, they're going to allocate their own S-band spectrum to players players that respect that. So I think that's the big unknown around EchoStar. SpaceX is buying them and they have global harmonized S-band spectrum, but then over the next 2, 3 years, are they actually going to hold onto all that spectrum? Because regulators know that SpaceX is buying them. By the way, EchoStar still has to get through international regulatory approvals. Do they keep it? So in Europe, they have a 15 by 15 megahertz allocation, I think. Are they going to be able to hold on to that or does that get taken away? And so I think on the—
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[00:23:22] Speaker C: Gosh, now now I'm forgetting which call it was. Oh, on the on the Deutsche Telekom call, they referred to the fact that EchoStar. is running into some regulatory issues and maybe they're not going to get it. Deutsche Telekom has a big say in that because they are a local European MNO that can either help EchoStar or hurt them. They know they hold the cards. When you have SpaceX saying, we're going to come after everybody, then what incentive does Deutsche Telekom have in helping EchoStar get their licenses renewed. So these are all really interesting questions and we'll find out. So moving on, US joint venture. Today was— so these were the questions that I was really looking forward to. Deutsche Bank asked Abel the question of what the joint venture means for AST and are the existing contracts with AT&T and Verizon, does that stay in place or does that get superseded by the joint venture? He flatly asked Brian Kraft, are you working with T-Mobile and Deutsche Telekom? They didn't answer it directly, but they pretty much said it. So first, AT&T and Verizon, those exclusive contracts stay in place. They also, because of the joint venture, they will have the ability to add a 3rd and 4th player. So 3rd player clearly is T-Mobile. Then 4th player, there was some speculation what that meant. A 4th player could have been referring to the JV itself, or it could be referring to Comcast or Charter as the cable operators who obviously have MVNO contracts with Verizon, T-Mobile, and AT&T. There's also a smaller player called C Spire who has pieces of valuable low-band spectrum. They're their own MNO, and they have actually talked about very openly about getting direct-to-device coverage. And so my guess is that it could be that player. But we'll see. But the most important takeaway is that AST was very optimistic. I mean, clearly they're in talks with T-Mobile. We know they're testing with Deutsche Telekom. And so that's going to happen. And so the exclusivity of AT&T, which is probably 5 years from launch of service, and Verizon, my guess is around 3 years mutual exclusivity, you will see another contract put in place with T-Mobile. And so there will be There will be these direct commercial agreements with each of the parties, and then there will also be this joint venture, which my guess is that AST is a party to that, and they'll probably contribute something to it, maybe Legato and/or other things. And then you could have other parties like Grain Management, maybe they throw their spectrum in there too after signing an agreement with AST. So there's a whole host of ways that this can unfold. But yeah, it's very exciting. And I think, as I covered earlier today, I don't think that joint venture— I mean, clearly it was put together as a strategic move in response to SpaceX, unlike your favorite consultant who said that the joint venture was created to better negotiate with SpaceX. No, they don't want anything to do with SpaceX. And Starlink. And then I think you can extend that to Amazon. Amazon has the same strategic issues that Starlink does and is a competitive threat. So I think the US joint venture, as I've said before, you couldn't write a script better for the company in that now you've got the 3 carriers and perhaps a 4th, albeit quite a bit smaller, working with AST. This is the first time where the company has talked about it publicly and it was very bullish. I mean, without saying it explicitly, which I'm sure there's sensitivities to it, they confirmed it. So that's good. Let's see. I won't talk about it anymore because I've talked about it quite a bit. So I'll just move on to the next thing. I made this point before, the ASIC chip is in production. It's going to be incorporated into the satellites 47 and beyond. Okay. So we've been pretty excited about the whole disclosure of radar applications and the company talked about that at length. And today it was the first time where Scott and Abel talked about some of these other applications as well. And one of them was AI compute. Specifically, the company talked about how the Bluebirds, given the novel unfolding mechanism, and you've got the ability to generate 100, 120 kilowatts of power, you dissipate the heat there in the microns, you've got processing, communications all built in. They talked very specifically about adding AI compute capability to the mid-band Bluebirds, which is 47 and beyond. And so I guess there's a few ways to look at that. One is the whole idea of using AI optimization to increase throughput. And so they've talked about this idea of increasing performance by a magnitude of 10, but then also having the ability to put compute resources or I guess work with partners to leverage the architecture in order to address the orbital data center applications. So that was introduced as a concept today, which this is the first time the company has talked about it at length, which I don't think they would talk about it unless there were discussions going on. And so my guess is we'll learn a bit more about that opportunity in the coming quarters. But yeah, I mean, the company usually is pretty guarded about this stuff, but today they talked about it. So to me, that's a pretty big positive because obviously that's a large TAM market that is where people are going. And if you could imagine whether that's current strategic investor and partner Google or the company that they are currently in talks with, which is Meta. There's a whole host of customers. And of course, the MNOs themselves. Obviously, they own and operate data centers and serve customers, and so they would be natural customers as well. But I think the most compelling takeaway is that a Bluebird satellite, if it costs all in, This is, of course, scaled production further out, because you can't get to this cost just yet, but $21 to $23 million with launch baked in per satellite, that's really compelling. I'm not sure for other players, SpaceX will get there in terms of cost, but for StarCloud and some of these others who are looking to do AI compute out in space, how much for 100 to 120 kilowatts of power, how much are you spending on each satellite inclusive of launch? And so I think it'd be interesting to see what the comparison is there. But yeah, so that's exciting. And we did get a few nuggets about launch. And so there were a few questions about how much launch has been booked. And so the company did talk about 10 launches being booked with 2 different providers. My guess is that they are still referring to SpaceX and Blue Origin. However, for SpaceX, instead of a handful of launches, my guess is that we're probably looking at more like 6 to 7, maybe 8 launches, and then Blue Origin would be the balance of those. So they've booked additional launches. And then, yeah, I mean, I know there's some questions about people wondering if they are going to launch in September. Well, in one of the slides, they did disclose that Bluebirds 14, 15, and 16 are close to being ready, and that would happen— they would be shipped in August. So that next launch is going to be a Falcon 9. I know some people have had heartache and said, well, the manifest doesn't show Falcon 9 just yet. Well, yeah. Some of these flights don't show up until in our case, 2 to 3 weeks before they actually happen. And there's this interesting wrinkle. I know not everybody knows about it, but back in 2022, when we signed a multi-launch agreement with SpaceX, part of that agreement, there had to be a— or we had to get SpaceX's agree— to allow us to announce that we were working with them. There was a very controlled communications. And so, for example, if you look at all of our recent press releases, we don't say SpaceX. We actually just say Falcon 9. And I don't know if that's because of competitive reasons. It probably is. But, you know, they are in control of communications. And so that's why, for example, we may not hear about launches until the very last minute. And so from what I understand, I think we have several launches that are booked. We also have the ability to go standby on some of these cargoes. As I mentioned before, or there are some companies that have commercial cargoes reserved on Falcon 9. However, they are unlikely to hit those reservations. So Telesat is one name that comes to mind. There's also a few others. So there could be some, I guess, variable launch that could open up and helps us get there. But I think the company, in terms of 45 satellites to in the first quarter, that's probably primarily Falcon 9, and then you might have some Blue Origin in there. But as the company also disclosed, there's not— I think in one conversation someone had with the company, there's plans without Blue Origin as well. And so they feel confident they're going to get there. And I know there's been some heartache over that, but yeah, I mean, the company's production cadence is ramping and I don't really see them slowing down. So We're going to get there one way or the other. Let's see here. So we did hear today that Bluebirds through 46 are in production now. This is up from 42 just maybe it was a week ago when that was disclosed. And so clearly production is ramping. What was a very interesting nugget today, we've been speculating about this, but the company finally disclosed it, is that the expansion from 500,000 square feet in the US for an additional 400,000 square feet, which is Midland, they specifically said that it is to address US government demand. And so overall, we've got about 1 million, or we will have about 1 million square feet of production capacity. But here, I mean, this is— in this call, it's about— they are disclosing as much as they can without saying things directly. But here, the expansion of Midland is being driven by US government demand. So that's obviously a big nugget there. So the work around Golden Dome and Arsenal Freedom, it's all there. And one interesting nugget as well was that, and they've disclosed this in conversations in the past, they are moving towards larger form factors. And so 15 meters by 15 meters is not the endgame. I think they're probably looking to move to 20 by 20 and perhaps even bigger. For those that were early in space mobile, there was this idea early on, and of course it had to get sized down. There was this idea of actually doing a 30-meter by 30-meter phased array. And so my guess is that eventually they'll get back to that that form factor, which has numerous benefits. And so part of it is, I think, the company's view of having larger satellites, as we see now, the entire industry is moving that way. Obviously, Starlink has gone from a 2.5-meter by 2.5-meter array. They're trying to get to 5 by 5, and perhaps it'll even get bigger. And you need to do that if you want to communicate efficiently with the mobile devices over 3GPP standards. But yeah, as we've— as we're expanding space, production space, not only are we looking to ramp up Blue River production to address U.S. government needs, but then also there will eventually be increases in size. And so 15 by 15 to maybe 20 by 20, and then eventually 30 by 30. Let's see. So moving on, it was disclosed today that there's $1.3 billion of contracted backlog, which is up from $1.1 billion, and that was a quarter ago. I think a big part of that move up was the 3 new government awards, which I think were valued at around $125 million. And so I think that brings us to a total of, because I've been keeping count of this, I think that's like 16 different government contracts. Either through being a subprime, or of course, we might be the prime on some of those contracts. Yeah, that's a big move. And as we all know, as the company has mentioned, you know, these contracts start off small initially, but then they ramp up into programs of record. And so this is good. I mean, we've got additional— and, you know, I think a number of folks have wondered, they're like, well, I'm seeing all these different awards that are getting handed out, where's AST's? In particular, Scott said that there will be some disclosure soon about those 3 new awards. So my guess is we'll probably learn about those in the next few weeks. But yeah, that's— and he talked again specifically about Golden Dome and Arsenal Freedom, which I think someone had asked him about what the government opportunity could be in 2027, because there was this question about Okay, so you guys are— the goal would be to get to $1 billion of revenue in 2027. How comfortable do you feel about that? And candidly, for me, just given the slowdown, the pushout of getting to 45 satellites by basically a quarter because of the Blue Origin mishap, I had always thought that that would impact that $1 billion number, but at least on the call today, Scott talked about getting to $1 billion, and maybe that's run rate, which could make sense. Maybe you don't get to $1 billion overall in 2027, but $1 billion run rate. But he talked about when they launch commercial service and they'll be able to start recognizing revenues, their focus is to getting to that $1 billion of revenue over the course of 2027. So I think maybe there's some nuance there, but the other nuggets were that the government, if things go right, and I need to go back and listen to this again, but if things go right, you could be looking at up to $500 million of revenue opportunity in 2027. And so that was another big nugget. So they're still kind of pushing the billion dollars of revenue and government could be $500 million in 2027. That's all huge, right? And in particular for government, there was a disclosure around applications that not only— the biggest one so far has been non-communications applications, specifically radar, which makes a lot of sense given the large phased array that we have. And then the other thing I would point out is that I think Chris Quilty asked, well, what spectrum are you using for these radar applications? And the company specifically said, that is low-band spectrum. So call it probably 900 megahertz, which by the way, no other satellite provider is focused in that area. And so I think we have a very unique position in that, because obviously SpaceX is more focused on mid-band. And of course, Globalstar and some of these other companies, if they do get into these areas, they're not or they don't have the ability to leverage 900 MHz. So where was I? Yeah, so in addition to these non-comms radar applications, they did point out today that obviously for low-power 3GPP-compatible secure communications, there's going to be, or they're doing work around handsets, existing radios, wearables, headsets and drones. So when Scott talked about that, the thing that immediately popped to mind was Anduril, because obviously Anduril has a number of different products that work over cellular spectrum. I mean, it's not just exclusively on cellular spectrum. They also leverage other spectrum as well, but obviously if you're putting together military hardware, you want to have multiple bands of spectrum available just in case, for example, an adversary tries to jam one channel of, or one means of communication, you need to have fallback on others. And so there was a Palmer Luckey interview, I think on 60 Minutes over the weekend. I posted about it, how he was talking about cool stuff that they're doing. Not only are they making satellites, they're putting payloads on other people's satellites, and then they're doing cool stuff with their various products with satellite communications. And so that was the first thing that came to mind. We all know that whether that still holds true to today is unclear, but we do know that as of last year in 2025, Palmer did have a personal investment in AST. As Cook has disclosed, when he went camping with a number of Anduril folks, it seems like a lot of people have investment positions in AST, and so I wonder why that is. But in particular for those use cases, Yeah, I mean, if you can imagine the connected warfighter and everything we're doing around Halo, there's a whole host of things that need to be connected on the battlefield. And so I think ASD is gonna be front and center in all that. The company did reiterate guidance for 2026, which is $150 to $200 million of revenue. And just to give people an idea, I think FactSet has like $155 million for consensus and then Bloomberg has $168 million. That was a big surprise for me because I think for the company to stick to guidance in the face of the Blue Origin mishap and the launch of satellites getting pushed out, that means that— and a big part of that revenue is from the government. That must mean that everything that's— the testing that's going on with BlueBird 6 and some of the other satellites is going well. So for them to reiterate $150 to $200 was a pretty big deal in my mind because I thought that number was going to come down, but it didn't. I think the Street, some folks were kind of hung up on the fact that the quarter came in lighter. Let's see. I think it was like it came in lighter than the consensus by a few million dollars. Andy Johnson specifically said, we're not managing the business quarter to quarter. The second half is going to be more backend loaded, but the way that they're managing the business as of now, until we get to this level of having all these commercial subscription revenues and the business being more predictable, they're really managing the business for the full year. And so having specificity around the quarters is a bit tough, but for full year, they feel Really good about 150 to 200. Let's see here. So there were some questions around the JLEO sovereign opportunity, and one thing that was a good confirmation is that Abel specifically talked about the ability to— while the satellites will be flagged in Japan and there will be a kill switch for those satellites, they will be part of the federated constellation for AST, so they can be used outside of Japan. and monetized. And my guess is that Rakuten will probably get some share of that revenue because, as I mentioned before, Miki Mikitani talked about the idea of the JV being able to provide service globally. And for me, that was a head-scratcher. I didn't understand what he was saying, but then of course, in the context of those satellites being used outside of Japan and the JV being able to monetize them, partnership with AST, that makes a lot of sense. There was a question about whether other countries are looking at sovereign solutions, and I think Scott answered it very well. He said there's a lot of discussions going on, and he specifically said, what G20 country would not want their own sovereign capability that is affordable, right? And so obviously, for any of these countries, having a sovereign solution would be attractive, but then building a satellite constellation from scratch and running that is difficult if you're just going to have it serve your country. So you want to be able to amortize the cost and of course leverage global service to support that. So in a world where if you built, I don't know, I'm making numbers up, but if you built 20 satellites for Spain and you get You get the call on what those satellites do when they're over your country and you can turn them off. You can turn them off globally, right? But when they're over other parts of the country, we will have the ability to monetize them. Scott specifically talked about the model existing in the Earth observation world, and as we all know, Planet Labs did this deal with the— I think it's JXA or maybe it was someone else, but in that deal, Japanese paid for the satellites and Planet Labs built them, and in exchange for the Japanese having control over Japan and utilizing the satellites exclusively there, when the satellites were over other regions, Planet Labs will be able to monetize them, right? And so I think that's the model that's being followed here. Another important point about sovereignty, I think it was Scott calling out the ability to leverage 700 MHz specifically across the globe. And so why that's important is that obviously here in the US, we have dedicated 20 MHz for FirstNet. And so that's our emergency first responder network. And we've talked about this before, but in Mexico, Altan Redes has 700 MHz. It's actually pretty— I think it's like 60 MHz in total, right? 30 by 30. And so it was interesting for the company to call that out because we know that they're working in Mexico and that they specifically talked about the European region, Latin America, and the US. And so I think that was a specific shout-out to Altan Redes, who is the super wholesaler in Mexico. And so my assumption is that in addition to commercial service, there will be, or that spectrum will be used for first responder emergency backup. And then in Europe, there is a similar framework. It's not quite dedicated like FirstNet, but there is dedicated— in various countries, there's dedicated 700 MHz spectrum. It's not perfectly aligned, but it's either 2x5 MHz channels or 2x10 MHz channels. But in Europe, there is a preexisting kind of framework for emergency services. And so my guess is Satellite Connect Europe will be used to create an entity like FirstNet that will bring the first coordinated pan-European emergency backup system. So this is something that IRIS wants to do, which by the way, this IRIS constellation, God bless them, man. This is good for Europe. It's a European solution and they're putting in— I think the number went up from $10 billion to $15 billion today, and it's going to operate on MSS spectrum, Which is fine, that's good. You'll get a 10 by 10 megahertz allocation, but when it comes to emergency services and trying to communicate and coordinate with police, fire department, military assets, if there's a natural disaster or something manmade, MSS spectrum is great to a degree, but if you really want if you really want signals to pass through, if you have an earthquake, if you want it to pass through a collapsed building, or you need to get to people that are in a tough area, there's a lot of tree coverage, right? 700 MHz, that's the spectrum that you want to use, right? And IRIS is not going to use low-band spectrum. It's going to be MSS. And so if you want to deploy an effective emergency backup network, you're going to want to use 700 MHz spectrum, which is why I think the company specifically called out Europe in regards to 700 MHz. And this is only spectrum that can be provided by the MNOs, right? And so it's not like SpaceX can do this or eventually Amazon Globalstar, any of these players, right? Because they're all stuck in MSS. It's because of the technology that we use and we're doing this in partnership with with MNOs that you can use 700 MHz spectrum. So that's an important wrinkle that I think, again, this is— the market will eventually figure out maybe one day in the far future, hopefully not too far. But yeah, all this stuff is very bullish, right? And there was another question about beta service and 25 satellites. What does that get you? And the company asked, how much of the day can be covered by that? And the company responded, approximately half a day. And so I think for intermittent coverage, if you're covered for half the day, that's good. That's good initial service as long as people understand that and that the constellation will get better over time. So for me, I thought about this practically speaking. If someone told me you're going to get intermittent coverage for half the day, but the time that you get coverage, it's going to be broadband, then I would try it out. I'd try it out and for those for the 12 hours of the day that I use it, it's like, oh my gosh, this is broadband. Then the other 12 hours, someone's explaining to me, well, we need more satellites up and it's going to improve. It's going to go from 12 hours to 14, to 16, to 18, to 20, and then 24. I could live with that as long as the experience that I have for that half day is good. So my guess is if they do roll out a service like that, there will be an app that that will tell you, or they'll tell you specifically, these are the times of day that you're gonna have service and these are the times of day that it's gonna be offline. But I think people will be okay with that. So anyway, that's kind of mostly what I had. It's already 11:20, I probably need to go to bed soon. I will check and see if there are questions. Let me just look here. Hi. Any thoughts why BB6 isn't showing up in PPE in 10-Q? Satellites in orbit asset value hasn't changed versus Q4. I'm not sure. I'm not sure. I know that the company has talked with some investors and BB6 is operating just fine. Some of us have speculated that because it is a military satellite to a degree, maybe they're not Maybe there's some different accounting there, but yeah, I'm not sure. We'll find out. But I will say, if things were not going well with it, then we wouldn't be getting an additional 3 military contracts for $125 million. Let's see. Someone's saying AST said it has 10 launches booked with 2 providers, excluding Blue Origin. Did they say that? Okay. If they did say that, then that's really good, right? Because I do know, obviously we do have some launches booked with Blue Origin, but if it's 10 excluding Blue Origin, then that changes the math quite a bit. My guess is that that probably means that we have, and thanks for this, that probably means that we have 8, my guess, 8 launches with SpaceX, and then probably 2 with the other guy. The other guy is probably— at this point in time, probably ULA. So that's good. And again, some people have asked, well, why can't we just say it's SpaceX? Well, the multi-launch agreement that we have prohibits our ability to talk about SpaceX, and it probably has to do with competitive issues, but that's fine. Someone asked, maybe the guy that they hired today worked with Scott at Barclays. Yeah, there's probably some overlap there. So Scott probably knows him. Let's see.
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[00:54:22] Speaker C: Exact comment in the call, launch every month or 2. Do you think it means launch every month or launch 1 or 2? Okay. So, um, I think that meant that we may launch once or twice a month. I'm pretty certain. Um, cause the math doesn't work out otherwise. Let's see. Second, we are up to Microns for 46 sats. Why are satellites not cranking out the line yet if we are at 6 per month? We are at 6 microns per month. We are not quite yet at 6 satellites in total per month. We are probably at 3 to 4 right now, but that's getting to 6 soon. But I do think that the company has slowed down or did slow down the total satellites per month because we obviously had the mishap with Blue. If Blue was up and running, then we would be cranking out satellites much faster. But because we've procured more launch, we do need to crank out satellites faster. Let's see here. Someone's saying, I think panikins are just loud investors or people who have a level of emotional control agree it's one of the best earnings calls ever. Yes, I agree. It was one of the best earnings calls ever. I think due to the space sector kind of trading off today with the exception of SpaceX, go figure. But then after hours, I think Rocket Lab, they reported what seemed to be good earnings, but then I think there were some people upset about Neutron potentially getting delayed, which I think the people who are following Rocket Lab very closely were kind of prepping the market for Neutron, which is their medium-lift reusable vehicle. they were saying there were likely going to be delays, but I guess maybe that's a surprise to the market, which by the way, not everybody follows these companies as closely as you and I. So even today, someone reached out to me and was like, hey, they're saying that 45 satellites, not at the end of 2026 anymore, they're saying Q1. I had to tell this person, yeah, they've been saying that since the convert offering formally, but then even prior to that. I think everybody pretty much assumed that 45 was impossible by the end of the year. So it takes time for the market to catch up. So I think Rocket Lab sold off after hours and kind of dragged everybody down, but I thought today was quite bullish. Let's see. How do they get to $21 to $23 million per sat if an F9 launch costs $40 to $80 million? So $21 to $23 is the average over the long run, right? And so You will get to that cost when Blue Origin New Glenn is in full cadence and that's 7x2, and then of course moving to 9x4 where you can forget about 8, you could do 12 on those. And so that's how you get there. Let's see. How do you think the JLEO work on revenue split for satellite usage outside of Japan? That's a good question. I'm not sure. If a satellite is used outside of Japan, it depends on how they structure the funding. I mean, it's a give and take. So if Rakuten pays AST 100% of the sticker price for satellites, then they'll probably want more of the revenue share outside of Japan. But if AST says, hey, we'll build the satellites for cheaper for you, then— will operate them together, then maybe they'll have less of a revenue split. So yeah, it all depends. Let's see. Wasn't the FPGA Microns supposed to be used for the first 24 Bluebirds and ASICs coming right after 24? Yeah. I think the Microns, the ASICs took longer to produce at scale. And so I think you're probably not going to see the ASICs until at least from what I can tell on the call, the mid-band BlueBirds. But I think Catseye has made a good point several times as well, which is for the low-band BlueBirds— excuse me— because they're being used for radar applications and other things besides commercial apps, you might actually want the flexibility of FPGAs instead of using the ASICs, because then you can reprogram them and change them Versus the ASICs, which are more rigid in their use. Let's see. With 50% capital needed for JLEO, average cost satellite ranging $23 million, even if the board is up to $1 billion, Japan is surely not funding 90 sats. No, Japan is not funding 90 sats. We are funding 90 satellites ourselves. What Japan is funding is satellites in excess of 90. Right? So satellite Japan will be funding an additional. I mean, you actually haven't gone through the numbers, but if it's twenty or thirty satellites, what have you? But this is beyond the ninety to a hundred. The ninety to a hundred is is what we're covering. Let's see here. Why is that involuntary? conversion on the insurance. I, you know, I, I've got to come back to this because I, I know some people would ask questions, but I haven't looked at the queue closely, so I'll have to come back on this. Um, yes, iPilot is— Omni America is saying 10 launches booked, ex-Blue Origin. So that's good, that's great. Um, so yeah, my guess is that it's probably 8 Falcon 9s, maybe even 9, and then 1 ULA or 2 ULA. So that's really good.
[01:00:15] Speaker A: Okay.
[01:00:15] Speaker C: So I think that's it. Yeah, those are all the questions that I can see here. It's 11:30. I've actually got to get to bed because I've got an early morning tomorrow. But yeah, we'll see what tomorrow brings for the market and for our Street reaction. I can tell you that Cantor Fitzgerald upgraded the stock price from $80 to $90. Piper Sandler did the funny thing. They initiated coverage, I guess it was 2 weeks ago, and it was obviously during a really bad time in the market, so people didn't pay attention to them, but they initiated with a $100 stock price target. They did adjust it this evening, so they moved it down by $2. I assume that's just for the solution, the convert, which is But yeah, they moved down the stock price target from $100 to $98. However, they reiterated that AST is their favorite space stock in the sector. So that's good. But yeah, tomorrow we'll see how the Street reacts. I'll try to post some of these reports and we'll go from there. But anyway, thanks everyone for joining. Just in summary, today it was a very long and detailed call. There was so much to cover. It was probably hard for people to digest it all, which is why I wanted to talk about some of the key points. But even I doing this space, I probably missed quite a bit. And so maybe Kook will cover it this coming weekend. But yeah, that was very— there was a lot to sink your teeth into. And don't let the stock price fool you. I was joking with someone. He who ignores after-hours stock price movements will inherit the earth, which I think is true. Just ignore the noise. I mean, that was a very bullish call. There's a lot of things that are cooking right now. It sounds like the company's about to disclose these 3 new government awards, and they just confirmed that the additional 400,000 square feet is to build for the US government. So it just doesn't get any better than that. They also confirmed that we are working with Deutsche Telekom and we are working with T-Mobile and a 4th player in the US. They reiterated the ability to hit $150 to $200 million of revenue this year, which in my mind, I thought that was going to come down because of Blue Origin and the shift to the right of launching the constellation. So there's a lot of positives and I'm just scratching the surface on what was covered. So anyway, Thanks everyone for joining. I'm gonna hit the sack here, but, um, yeah, we'll see what tomorrow brings. And, um, it'll be interesting to see what folks write. And, um, but yeah, thanks for joining and we'll talk again soon. Good night.
[01:03:08] Speaker A: Thanks Thanks for listening to the AST SpaceMobile Podcast.
[01:03:22] Speaker C: 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.
[01:03:38] Speaker A: Listen. Mmm, waffles.