Why AST SpaceMobile Is About to Own 100% of Japan's Satellite Market

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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. Hey everyone, thanks for joining on this early Monday morning. We have some great news out from the Nikkei, and as a reminder, Nikkei is the equivalent of Japan's Wall Street Journal, so it's a very reputable publication. But, uh, they are announcing that it is expected that the JLEO project will be awarded to the consortium of Rakuten and AST SpaceMobile. So this is huge news. For those that don't know, this is a project that was created out of the Japanese fiscal budget. I think it was in the fall of 2025, and then the tender for the project opened up in March, and then it was closed in May, and you have a decision pretty much around now internally. So I don't think we'll see a formal award until perhaps a few weeks from now, but clearly the press is already running with it. And as we know, Miki gave an interview recently, announced the formation of the JV, and the MIC, which is the equivalent of the Japanese FCC, approved the 700 megahertz, the specific 3 by 3 megahertz bands or use for satellite communications to unmodified phones. And so all these things kind of lined up and hinted that this was coming. And once again, Space Mob due diligence is undefeated. And so with the most reputable business publication in Japan reporting that it's expected to be awarded to AST SpaceMobile, I think you can pretty much put that in the bank. And so This is absolutely huge news. The market, you know, it's not on Bloomberg, it's not under Rakuten or AST SpaceMobile. And so this article, which by the way, I tried to register for access and it requires a true Japanese name. And so Npenman just didn't, doesn't cut it in English characters. And so, you know, I was willing to pay for a subscription just to get this article, but I went to the Nikkei Asia website, which is the English version of the Nikkei, and unfortunately the article is not there yet, but it will be. So once I'm able to get a full article, I will try to share it with folks. But it's important to note that this network, which is being awarded, is— there were a few requirements that were needed, and then I'll talk about the benefits Which, you know, some of these things are pretty much going to be fait accompli. And again, I think the market, it's going to take some time for the market to digest it, but there's going to be some massive benefits from this. But first of all, the JLEO project required that there would be, the service has nationwide availability to ordinary smartphone users by March 31st, 2029. This is a requirement that Starlink would never be able to meet, whether it's the current constellation or the future constellation. Neither are architected to work with ordinary smartphones. They all require a new chipset, which the current Starlink service only works with a handful of phones. And then the future one will require a new chipset. And so that requirement, obviously for the market, I guess, Maybe they weren't able to distinguish what Starlink was capable of doing, and they haven't been able to, I guess, distinguish that. But for Space Mob, we've known that. So for this service, importantly on the emergency disaster first response side of the requirements, you need to work with existing phones, right? There's a lot of people, Just like any country, but a lot of people in Japan who have older phones, especially older generation. And so if you— those folks who are most exposed and potential for— in these disasters who will need help, you need to be able to connect to their phones. And so that was a very important capability. Also, this constellation needed to support video calls, across Japan for approximately 70% of each day. And so I think perhaps that was a nod to the fact that within a, let's see, it's June 2026. So under a 3-year period, for any of the, to encourage people to apply for this, they wanted to have the buildout requirements be somewhat reasonable. Although, let's be honest, even 70% of the day, like that's a big ask. AST is going to get to 100% of the day. Probably sometime over the course of 2027. But importantly, the biggest ask is support video calls across Japan. So Starlink's service can't really support that now. The future one may support it, but there's been some talk about these competing constellations. No one's demonstrated video calls to your mobile phone except for AST SpaceMobile, and that's specifically in Japan. Now Starlink has, if you guys will recall, there was a video of 2 engineers doing a video call next to an office and they claimed that that was Starlink doing a video call. But as I had pointed out before, those 2 engineers were likely, the one engineer was connected to the satellite and then that satellite was beaming signal directly down to the other engineer. It wasn't actually over an MNO network. And so when you do that over a single satellite, that's a pretty easy accomplishment, but doing that over a large geographic distance over 2 different MNOs, which is what AST has done, they haven't been able to replicate that. So that's very important to note. This service also requires roughly 16 hours a day of service, which we'll obviously be able to meet once the constellation's up. This part's important, emergency roaming across participating Japanese mobile operators. And so this network, from a regulatory standpoint, opens up AST to work with KDDI, NTT Docomo, and SoftBank. And so this is huge. Previously, AST SpaceMobile was in a mutually exclusive agreement with Rakuten, which was a seed investor, sorry, a Series B investor and a big supporter over time. And that agreement, because of their funding, we gave them a sweetheart deal where we would not get any economics from Japan. However, now with this agreement in place, not only will we get economics in Japan, we will also have access to the other 3 carriers. So through this, my guess is that those 3 carriers are going to drop Starlink and they will join this joint venture because this joint venture is government supported. It's probably going to make them feel a bit more comfortable competitively. And then of course they see everything that Starlink's doing. And they're probably going to drop them like a bad habit. So that's likely to happen. Let's see. So this JV also will support or should support free voice data and SMS during qualifying disasters. And so as I talked about before, that would be earthquakes, tsunamis, and other situations where the terrestrial network is down and you need to get to people. And this was also an important aspect where in order to serve people during natural or unnatural disasters, manmade disasters, like Fukushima, the nuclear meltdown, you're going to need a service that actually works and gives coverage to people who are trapped under buildings, right? And so low-band spectrum is the key enabler of that. Mid-band spectrum can't do that, right? And so that's a big reason why AST works with FirstNet here in the US, because the signal is going to rival terrestrial. So, or it doesn't, it won't rival terrestrial, meaning it's going to be equal to terrestrial because it is using low-band cellular spectrum, which has all the benefits of propagation and coverage. So going through multiple walls, getting through tree canopies, those things which mid-band spectrum will have some level of degradation or inability to penetrate. And then the final one here is that the winning service has to utilize domestic gateways, satellite control, payload control, network control facilities. And so that the Constellation can be fully operated from Japan, which is something, again, as I've pointed out before, Starlink is not architected to do, nor do they have any interest in doing that. So it's really the key thing that I think the market will eventually kind of figure out once this news is more widely disseminated, which as I mentioned before, it's not on Bloomberg under Rakuten or ASD Space Mobile. It's really just, I guess, few Twitter accounts. And maybe if someone could do the honors, someone should go post this on the Reddit. But anyway, I highlight this in the tweet where once this project is formally confirmed, which again, this is speculation from the Nikkei, but the Nikkei is really good at this. And, you know, there's also been some hints here and there that this is pretty much done. First of all, the key takeaway is that this greenlights full commercial approval for AST. So obviously they're not going to get this project and this JALI award and not get in turn full commercial approval. And so that's something that you can take to the bank. That's going to happen. I believe the timing for full commercial approval is set for sometime in August or September. But that event is pretty much, that should be something that people pay close attention to. And just like US approval earlier this year, that's going to be a big milestone for the company. And so that's different than getting approval for 700 megahertz to be used for satellite services. This is, we're talking full commercial Approval for AST and Rakuten, which is big. As I mentioned before, SACCO JV—I don't know what they'll ultimately call it. They—they this pretty much opens up business for KDDI, NTT, Docomo, and SoftBank. And as I mentioned before, the reason why that is is that the government will require that this system work with all the carriers, and so it should. You know, from a, not just, my guess is not just emergency services, but commercial services as well. There will be some type of roaming agreement where those 3 carriers will be able to join. And then that opens up the checkbook for AST SpaceMobile. So depending on the structure of this JV, my guess is, you know, there'll probably be some type of 50/50 ownership, but then the economics will be split differently and AST will get a big economic piece of that. So the Japanese market is opened. One other thing I would note is that some people have asked about Satellite Connect Europe. In that JV, Vodafone is the majority partner. So I mean, whatever number you want to pick, 60/40, 51/49, but they are from an ownership perspective for voting control, they are the controlling entity. However, the economics of that entity I think are split differently where AST has a higher cut. And that's not initially just top-line dollars, but in terms of expense sharing and some of these other things. And so my guess is that this Japan JV is going to be structured similarly. So the other really important things, I know people are very focused on launch. This pretty much guarantees that a multi-launch agreement with Mitsubishi Heavy is going to happen. And so whether we see that in the next few weeks or months, you can pretty much write that into your mind as to another important step for the company. And so my guess is, as part of this JLEO project, when they went to the government, they said that they were going to use Japanese launch to help the sovereign space program in Japan. And so that's, again, that's something that SpaceX and Starlink would never sign up for. And so that's really important. And that opens up another capable vehicle. My guess is that with that $1 billion of funding, which actually happens over 3 years, a good portion of that will go towards launch. And I'm not sure if Mitsubishi Heavy is part of this Japanese project, if they get some type of discount. My guess is because If they do enter into a multi-launch agreement, there probably will be some type of discount. And interestingly enough, there was a Japanese account over the weekend, and now it escapes me, but I think they had talked about how Mitsubishi is lining up to do 6 launches this year and then bumping that up to perhaps double or more next year. And so the timing of that increase in cadence Probably has something to do with this project. And so, uh, for those that don't know, the Mitsubishi Heavy H3 rocket is, you know, that one in the heaviest configuration of, if it's, I forget if it, I think it's like 4 solid rocket boosters, maybe it's 6 solid rocket boosters, but, um, that, that rocket is capable of taking 3 composite Bluebirds into low Earth orbit. So that's really great to have another vehicle ready to go to help build out the constellation. The other really important point, which perhaps the market's not going to figure out until later, is that once you have government funding and backing, so this joint venture is going to get a billion dollars over 3 years, you can actually bank that. And so that entity becomes eligible for Import-Export Bank supported, JBIC, which is the Japanese version of Ex-Im, but supported debt and guarantees as well as US Ex-Im financing as well. So for the US, now that AST will be selling BlueBird satellites and shipping them to Japan, we will be eligible for Ex-Im financing on that part. And so there's a whole host of things that really open up here in terms of funding. And so I know in the articles it said that Rakuten and AST have to contribute up to half of this funding. Well, guess what? Like that half could be debt funding supported by the JV, which in turn is bankable because of this And so it's kind of, it's interesting, like once you get government dollars and they're guaranteed and there's support, an implicit guarantee, right, that you're building this out and there's future business that can be underwritten, then it opens up all kinds of debt financing. And so I think that's something that we all should explore over the coming weeks, and it's something I'm definitely going to ask the company once I have a conversation about this, I'll ask what types of funding options become available on the Japanese side from the JBIC and then US EXIM financing. And the way that those programs work is that the US steps in or the Japanese step in, and then they, as part of spurring economic development, they will enable a Japanese bank like Mizuho or Sumitomo, or in Japan, or sorry, in the US it could be JP Morgan or one of these other banks that participate in these programs. But yeah, that's huge. So we're talking about non-dilutive funding and as people have pointed out before, this, the Japanese in this federated model, the Japanese birds, which we still need to come up with with a name for it. They're gonna, they're gonna still be called Bluebirds, I'm sure, but, um, but though it would be cool to have like a Japanese nickname for them. But these satellites, um, will be fully owned and operated by the Japanese. However, just like the Planet Labs J-Sat partnership, once those satellites are in other areas, not Japan, um, then AST SpaceMobile will be able to utilize them as part of the, the the overall constellation. And so this model is going to exist for Europe and it doesn't need to exist for the US, although US, as we all know, the 3 carriers are building a joint venture. And so by the way, like this model for Europe, which Satellite Connect Europe, you can pretty much see the benefits of what this JV brings to Japan. And and how government bureaucrats and regulators are thinking about it in turn, you know, around sovereignty and having the the assets owned by the nation or you know the the region. This pretty much I think is a is a very solid template for how the EU is thinking about as well. And so when you think about satellite connect Europe. Obviously Starlink is going to pursue the 2 GHz. There's 30 MHz by 30 MHz of MSS spectrum that's being put up for renewal. And AST with Vodafone created Satellite Connect Europe quite some time ago to position for that. And similarly, behind the scenes, Rakuten and AST created their JV in order to win this award. And so I think this is pretty much a template that shows that this is a very attractive model for governments. And so I think, I mean, if I was a betting man, I think Satellite Connect Europe is going to get a pretty nice spectrum allocation in Europe and also win business effectively creating the first net of Europe, right? And so this is now creating the first net of Japan. And so this is really important stuff, which again, I don't think Starlink can do. And so my final point on this award is that I do believe this entity, and I actually need, I haven't done any work on this, but I need to go dig around and see what spectrum could be coming up for allocation in Japan. And so for those that don't know, Rakuten, it was several years ago, they went in and because they were the startup carrier competing against the top 3, they were given an allocation of 700 MHz, which is called the Platinum Band in Japan. And so that's what actually forms, or that's the spectrum that will be used for this service. But my guess is that there's probably other pockets of spectrum that's going to come up for allocation in Japan. And so the natural party To receive that spectrum would be this entity, which by the way is now government-backed. It's you know all those things, right? And so this is just the beginning, right? I think I think satellite we'll call it Satellite Connect Japan is going to be well positioned for future business, and as I said before, is probably going to start signing on KDD, NTT, Docomo, and SoftBank. And so. AST is going from having the 4th player in Japan, the scrappy 4th player, which obviously without their help we would be nowhere. But going from that to, in my estimation, what we'll have 100% market share in Japan. And so that's pretty crazy. I don't, again, I don't think the market clearly understands that. I guess it's starting to get it. You know, the stock is up $5.30, but this is huge news, right? Like this is This is a sign of things to come. This is how things will unfold globally, and the market just doesn't get it yet, but they will. I mean, everyone's, I guess, focused on SpaceX and that IPO, but as Kook mentioned, I listened to part of his space last night. Once people start digging, scratching the surface and seeing the competitive landscape, and they learn about this small company called AST SpaceMobile who's working with pretty much everybody, They're going to come to the realization that they have to own this name. And that's, I don't think that's me being sensationalistic or, you know, that's not a superlative, that's just fact. Like it's going to happen. So yeah, those are some of my thoughts there. Let me see, someone's asking a question. The JV is going to buy satellites, right? Which also means other JVs can't stay behind. I'm not sure what that means. The first part of the question is right. Yes, this JV is going to buy satellites directly from AST, which is why there's $1 billion of funding and there's going to be launch associated with that, like all, you know, buying, building out ground stations, doing all these different things. And my guess is the entity will be well positioned for future spectrum allocation. But yeah, this is really good. Let's see. Oh, the other piece of news I did want to mention, which was quite interesting. I need to dig into it more, but this morning Verizon announced that they will be combining their international operations with British Telecom. And so it looks like they're doing that to save, to get some cost savings and synergies. And so As we all know, Verizon's an important part of AST SpaceMobile, and British Telecom is working with Starlink for fixed wireless to home, but I don't think that they have any direct-to-device plans yet. But my guess is that you can pretty much put the pieces together. British Telecom will probably start working with, you know, will start working with AST SpaceMobile. So that's another piece of news where— I think you can kind of put one and one together And ASC will likely pick up British Telecom as a customer. And then finally, it looks like the— just one, I guess, one note on cable. This morning it was announced that Comcast is splitting up their media business from their internet business. And so that stock is up. But I think the news around Charter, Charter, as I mentioned before, is a distressed asset. It's actually up today on the Comcast news around the restructuring. My guess is that people are going to start speculating that perhaps if the cable companies, which are more regional in nature, you know, Comcast is strong in certain areas and then there's Charter and I think there's, I forget, I don't know if Cox is still around or if Cox got consolidated. But the reason why Charter is up is obviously there's a little bit of premium because of the Starlink news. But eventually what these guys want to do is create a national player of cable company, like one cable company that covers the entire nation. Because since these guys are all regional, they don't compete head-to-head. They would probably go to the Department of Justice and the FCC and argue that A fully consolidated cable company across the nation can bring down costs, right? And they would also argue that nowadays they have much more competition. So the consumer has a choice between AT&T, Verizon, T-Mobile in terms of home internet. And so whether that's 5G or fiber, you pick it. Then they would argue that there's Google Fiber in some of these markets, but any moves where the cable companies do consolidate, which is what this is, a Comcast split-off of the media and tech business, makes it cleaner to then potentially combine Comcast internet with Spectrum internet. That's why those stocks are up. But it's important to follow those because I think that movement in the competitive landscape, you know, eventually, you know, there's always been talk of wireless companies potentially combining with cable companies and all this stuff, but This is the interesting pieces moving around the chessboard. And oh, I forgot to mention another big competitive issue for cable, of course, is Starlink in rural and suburban markets. But one counter to the supposed talks between Charter and Starlink is that those guys should be talking, Charter and Comcast should be talking to AST SpaceMobile because AST does not directly compete with these guys on their fiber business. Obviously Starlink does, but the natural extension of the Verizon, T-Mobile, and AT&T joint ventures would be to then bring the cable companies into that envelope because the cable companies already work with the MNOs. Verizon, sorry, was it Comcast or Charter already resells Verizon Verizon and T-Mobile service as an MVNO. And so eventually those folks should also obviously resell AST space mobile services as well. So it's important to like, yeah, keep a tab on that. It looks like excitingly consolidation's going to be happening around communications. And so, and part of the impetus for all this is Starlink. I mean, they are becoming, bigger and they have more ambition. Starlink is a big reason in addition to, you know, the fiber businesses of the wireless carriers, but those are the biggest reasons why cable has been getting absolutely derated. And by the way, like the fact that Starlink is contemplating a terrestrial mobile service has derated AT&T, Verizon, and T-Mobile. Like those dots have come off quite a bit. And so this is top of mind of all these executives. And as I mentioned before, the FT article about Starlink being interested in moving into the terrestrial wireless service business, that is an article that's been passed around every board member of all these companies and all these companies, including not just the 3 carriers here in the US, but all the carriers globally. And then add on top of that, Google, Apple, I mean, you name it, everybody. And so as I mentioned before, there's one player that is increasing in strategic value every day, and that's AST SpaceMobile. So I'll end with that. And yeah, this is exciting news. We'll see. Ooh, uh-oh, look at this. Iridium trading halted, news pending. It might be breaking something near here. Who's buying Iridium? Maybe, maybe it's being bought. I'm going to stay here with you guys because it looks like, excuse me, trading is halted in Iridium. My guess is that if there is a deal, it's, I would be shocked if it's SpaceX because from a regulatory standpoint, that would be anti-competitive. But who could it be? Could it be AST? Could it be someone else? I'm gonna, I'm gonna wait here with you guys. I guess it could, it could, um, could hit at some point here, or it may be something else. It may be something, although I don't know, trading halted, it's got probably got to be a deal. Let me just look at the options activity from Friday. I know there were some rumors that from this James Altucher Altucher, it's a speculative newsletter. This guy writes, he was saying like, was it him or somebody else was saying that there was a potential deal coming? Well, I will say the, let's look at the option chain here. So August has an assload, a tremendous amount of calls, 19,990 open interest on the 50 line. So that's pretty big. Let me see here. Let me see it. Let me check Twitter if there's any news. That was speculated. Well, if Iridium is being taken out by somebody— This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, set up required compatibility and availability varies, 18+. This would be another industry consolidation happening, which is, which is huge. All the chess pieces, piece puzzles Yeah, all the chess pieces are moving. Someone had speculated that maybe Rocket Lab buys Iridium. That would be kind of interesting. Anyway, actually, you know what? I'm going to, I'm going to end this space and then I'll fire up a new one if we need to. But anyway, yeah, awesome news out this morning. Maybe we'll get more news from Meridium, but thanks everyone for joining. And if there is some Meridium news to report, maybe I'll fire up a space on that. So thanks everyone for joining and take care. Bye. Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time. Listen. Mmm, waffles. I'm Glen Washington. This is Snap Judgment from KQED. When everything is falling apart, what do you do? Hurricane Helene shut everything down. No roads, no cars, no way through. But his daughter was getting married, and somehow, some way, he was going to walk her down that aisle. All Systems Down, a new Snap Judgment miniseries from KQED. Tap to listen now.