Why AST SpaceMobile's Grain Spectrum Deal Is Huge

[00:00:00] Speaker A: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, set up required compatibility and availability varies. 18+.
[00:00:24] Speaker B: When you think about Crocs, you think the classic clog. But did you know there's also a canvas clog? A vegan suede clog? A coastal-inspired style? A style with studs, straps, and lots of sass? Honestly, I could keep going with the surprises. You've got to see them for yourself because there is literally a style for every kind of girl. So do your thing and head to crocs.com or a store near you now.
[00:00:50] Speaker C: I'm so excited.
[00:00:56] Speaker D: Hey everyone, thanks for joining. Hope everyone had a great weekend. I was away with the family at the Berkshires and it was amazing out there. Great weather, no mosquitoes, and yeah, just a great time out in nature. Tried out walking tacos for the first time, which is a concoction you make out of ground beef with seasoned taco seasoning, and then lettuce, tomato, avocado, sour cream, cheese, and you mix it into a Dorito bag, which ended up being very tasty. And for those that are concerned about microplastics and BPA, we did not put hot meat into the bag. We waited for it to cool off a bit and then we put it in. But yeah, it was delicious. Highly recommend it. It's a very easy way to feed kids. And, you know, it's a very simple camp meal, but that was a lot of fun. But yeah, it was good to get out in nature. Being out there also did expose some issues with, surprise, surprise, cell coverage. I think when we were out there, we went to go see an air show at the Rhinebeck Aerodrome. And when we had parked, there was one bar on Verizon. And even though there was a bar, there was no service. And of course, the place where they have it doesn't have Wi-Fi. And so I'm sure many of you have fallen into this hole, but when we wanted to leave after the air show was over, I tried to put in— I fired up Waze on my phone, put it on the car, and it couldn't find signal. And so we had to kind of drive blindly for, I guess it was maybe 10 minutes east because I thought that was the way to go, but then my wife was like, hey, you should go west. because there's multiple roads to get back to New York. And so we went west, we drove for 30 minutes, and then of course, we were able to pick up signal eventually. Maybe— no, it wasn't 30 minutes, it was more like 20 minutes. We were able to pick up signal and then Waze told us we had to head back east. And so very frustrating. We spent an additional 30 to 40 minutes when we could have just headed straight down in the right direction if we had if we had cell coverage, which we had one bar, but there was no data. Maybe that partially had to do with the number of people that were there, but even leaving the area when we had a bar and it was just us on the road, there was no signal. So we wasted quite a bit of time until we could acquire signal that then enabled Waze or, of course, Google Maps, if you use that, to get a signal to then provide proper driving instructions. So pretty frustrating, but yeah, that just kind of brought home the whole need for satellite coverage, especially data coverage, not just texting, but actual broadband coverage so that you can navigate these areas when you don't have a signal. And so oftentimes when we're driving, if we pull over and maybe we buy something from a farmer's market, when you fire up your phone again, if you've closed the app by accident or maybe you've been at the location for a while, when you try to get directions, you're unable to do so. And so you have to drive blindly for a while, which is quite frustrating. And I'm sure some of you have experienced a similar type of situation. But anyway, in the future, that will be gone, hopefully. And so, but yeah, just a reminder. But Anyway, but yeah, thanks everyone for joining. I did want to talk about a few topics. There were a number of news items last week which I had tweeted about but then didn't have a chance to actually go through them, and so I just wanted to cover them briefly here. So the first one is that we, we just learned via LinkedIn that Chris Sambar, who was the former head of network and president at AT&T, he has now officially joined T-Mobile. And so he is now the Chief Enterprise Officer there. And this is an important hire because for those that know, Chris Ambar is an important advocate for AST SpaceMobile. He was essentially the point of contact and made the decision for AT&T to work with AST SpaceMobile. And so this gentleman also joined the board of AST, and then he was also on the Network Planning and Spectrum Committee. Someone who intimately knows the company well and was friends with Abel, called Abel one of the greatest inventors of modern times, given his interactions with him. This guy is now at T-Mobile and he's in a very senior position. From what I understand, discussions between AST and T-Mobile have been going well. For this guy to end up there, is just going to solidify that relationship. And it gives T-Mobile someone who has a tremendous amount of experience in the direct-to-device market, obviously someone who has warm relations with Abel Avalon and Scott Wisniewski and understands AST, the product, what the roadmap is, knows all that intimately. And so having someone who's friendly, on the other side is just a very helpful thing. And so he joined, officially started last week, and so that's a big piece of news. Additionally, I think it was on Thursday was when the FCC granted an STA, a Special Temporary Authority, for AST SpaceMobile to start testing on Grange Management's 800 MHz spectrum. And so this was a big piece of news. That spectrum in particular is 7 MHz by 7 MHz of 800 MHz band spectrum. So this is nationwide low-band cellular spectrum. This is the stuff that can go through walls, provide you with great propagation and coverage. And the key thing about this spectrum is that it is nationwide. And so for AST with the Block 1 and Block 2 satellites, for cellular coverage, most of that spectrum that will be used is primarily in use, right? So whether that's FirstNet around 700 MHz or AT&T and Verizon 850 MHz, in areas where there's terrestrial coverage, where there's towers, that spectrum is actually already being used by either FirstNet or AT&T and Verizon. However, in the areas where there's limited coverage, where there's zero bars or one bar, That is the opportunity for AST, in particular for that spectrum, the 700 and 850 megahertz. In this case, though, with grain management, this is 800 megahertz of contiguous nationwide spectrum, and so it's not being used, and so it can be deployed for coverage, right? And so I think there's been various speculation on how the spectrum might be deployed. My guess is that this could be put into the joint venture, the telco joint venture, and Grain management will get a significant amount of economics, but then AST as a partner will light it up and it'll be used, and it will also potentially augment the wireless network of those 3 carriers. That's one use. Another use could be that Grain decides to build out its own IoT network And as a result, work with AST and perhaps that capacity could be used by the wireless carriers as a dedicated IoT network. I mean, there's a whole host of ways to cut this thing, but yeah, this is something that it's a very valuable asset where it's not being used and it's 7 by 7 megahertz. I would say most of the wireless networks for the big 3 for voice and some decent amount of broadband coverage is typically on 5x5 MHz of bandwidth on the low end of cellular spectrum. And so 7x7 is great, right? And so one of the reasons why Grain is interested in working with AST is that they do have this FCC build-out requirement. So there's 2 different requirements. One is if they decide to deploy it terrestrially, typical hanging radios on towers and building that out, which is a very expensive and it takes quite a long time, but it's an expensive endeavor, or they have the alternative of meeting their build-out requirements by just deploying a direct-to-device network. And so what does that mean? When the FCC granted, they approved the sale of, this used to be T-Mobile's spectrum, but they approved the sale of 800 megahertz to Grain. And in exchange, Grain paid T-Mobile some cash. They also gave them, I think it was like some 600 megahertz spectrum that they owned, which T-Mobile has, they have an existing network and that's gonna help them. But also T-Mobile retained some economic upside depending on how the spectrum is used and/or monetized. And so T-Mobile has an ongoing interest in this spectrum, and in this filing, I'll talk a bit more about it later, but there are hints that T-Mobile and AST had some type of agreement already in place regarding this spectrum and/or other working relationships. But in particular, using a direct-to-device satellite network to deploy spectrum is the most cost-efficient way to meet billions requirements. And so the FCC has lined up the various milestones. So within 3 years, Grain has to deploy a network that is over 100 kilobytes per second per megahertz, right? So that is, let me just look here. So if you take 7, let's say 7 on one, Yeah, 7 MHz of downlink, that's, you know, multiply that by 100 kilobits per MHz, and that's a minimum speed of 700 kilobits per second, which AST can more than meet that requirement. But they need to have that for 70% of the time across 90% of the coverage area. And so that's the first build-out requirement within 3 years. There's another one in 5 years where that speed doubles to 200 kilobits per second, or for 7 megahertz, that's 1.4 megabits per second, over 80% of— across the 90% of area that they need coverage. And then there's a 10-year requirement, which is over 300 megabits. 300 times 7 megahertz is 2.1 megabits per second over 90% of the time across 90% of the area. So as long as the AST can build out the network, they should easily meet these requirements. And then grains, particular case, these build-out requirements are a legal— there's a legal framework there where if you don't meet the build-out requirements, then the FCC can actually take the spectrum back from you. And so you have every economic incentive to get that spectrum deployed. And according to— it's kind of the back and forth, which we had been speculating that Grain was working closely with AST, but it didn't become explicit until when Grain was looking to get FCC approval for the spectrum transfer. This was on, you know, the FCC gave them approval, I think it was on July 1st. AST did file a letter in support of that, right? And they specifically laid out the fact that they were working together. And so that was a big piece of news back then. And then of course, you know, AST filed an STA on July 2nd. And then of course, fast forward to today or last week, the deal closed between Grain and T-Mobile, and then the FCC granted AST the authority to test on this spectrum later in the week, which is Thursday. And so all this stuff is tied together. I think my base case is that it seems that Grain after speaking with AST and agreeing to work with them, they felt comfortable in acquiring the spectrum from T-Mobile, and they viewed AST as a key monetization/deployment path for them. And so then you take into account the fact that T-Mobile is still involved economically and through coordination. They're all working together, right? And so as part of that STA that was granted last week, we did learn that testing had to or has to comply with existing agreements between AST and T-Mobile. And so that's not, you know, that's not referring necessarily to a commercial agreement. If there was a commercial agreement, that would be pretty material. We'd probably learn about it. But it implies that they do have a direct working relationship. And so there's some type of contractual/technical relationship between AST and T-Mobile regarding the spectrum. And so yeah, that was a big piece of news. And so I think when you kind of piece everything together, it's clear that AST has been talking, or they, I mean, they are talking to T-Mobile. They have been talking to T-Mobile. When you look at how things have developed between T-Mobile and Starlink over the last few months, There was a— I think one of the first cracks we saw, which I had posted about, let me just pull this up.
[00:14:56] Speaker A: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, setup required, compatibility and availability varies, 18+.
[00:15:21] Speaker B: When you think about Crocs, you think the classic clog. But did you know there's also a canvas clog? A vegan suede clog? A coastal-inspired style? A style with studs, straps, and lots of sass? Honestly, I could keep going with the surprises. You've got to see them for yourself because there is literally a style for every kind of girl. So do your thing and head to crocs.com or a store near you now.
[00:15:52] Speaker D: One of the first cracks that we saw between Starlink and T-Mobile was T-Mobile CFO Peter Oswaldik. This was back in, I guess it was early June, June 2nd, where he was speaking at Evercore TMT conference. And I can repost that, but for anyone interested, you can Go to my profile and just search for T-Mobile CFO, and you'll be able to find it. But there, he specifically dressed down Starlink, and so it's probably worth rereading. The CFO of T-Mobile had very detailed knowledge of Starlink orbital mechanics, RF limitations, and all these different things where typically I'd pointed out that whenever T-Mobile would talk about Starlink, they always referred to the service in a very positive light, whereas In particular, during that investor conference, it was quite negative, where the CFO of T-Mobile, with all his technical knowledge of Starlink's network, which I found quite bizarre that he knew everything, but he referred to the service as being limited. It would never replace terrestrial. That was kind of the first hint that things were not going well. And then of course later, we had SpaceX come out and specifically say that they were targeting T-Mobile, AT&T, and Verizon customers. And so yeah, I mean, we've got the first— this STA, I think, is the first confirmation of some type of existing agreements between AST and T-Mobile. Maybe it's an MOU. And some people have a question, well, what about Starlink? Isn't there an exclusivity? And And I think T-Mobile on their last earnings call confirmed that there is some exclusivity that extends beyond 2026. And so I would just say that exclusivity could mean a lot of different things, right? So there is, of course, Starlink operates on T-Mobile's 5 by 5 megahertz, 1.9 gigahertz G-block spectrum, so mid-band spectrum. And that's the only spectrum that they're working on. in the US, and it's not going to be until late 2027 that they'll be able to get EchoStar spectrum in hand, and they'll, I guess, devices aren't going to adopt that spectrum until sometime in 2028, and then of course they've got to launch satellites. And so there is some economic benefit, of course, for Starlink to, or T-Mobile to work, continue to work with Starlink on that spectrum, because that is the backbone of the T satellite system, which we saw, by the way, in Hawaii, the most recent natural disasters there, it looks like T-Mobile has been rolling out T-Satellite for all of its customers who have a compatible device, which is a small subset of phones. But I think it'd be tough for T-Mobile to stop that service cold until AST comes up once the constellation has more satellites and service is at a point where they feel comfortable about it. But In regards to exclusivity, we did learn, of course, in the SpaceX IPO prospectus that they talk specifically about their MNO partners having multi-year agreements, but can terminate unilaterally at any time. So I think there is probably a good possibility that AST and T-Mobile will have some type of agreement in place before the year end. if I had to guess. And that probably comes after the joint venture between AT&T, Verizon, and T-Mobile gets inked. But yeah, I do think that there is a line of sight before the end of the year that we will see something. And especially with these nuggets that are coming out from the FCC filings and other regulators, I think there's going to be increasing pressure for sell-side analysts, investors, for the companies to disclose something. And so as Cook mentioned over this weekend, when that becomes public and the market learns that AST is working with T-Mobile as well, and that we've got 100% of the incumbent MNOs, and the company has referred to a 4th player as well, what does the stock do? And so that will be a pretty interesting announcement when that happens, which it's not a matter of if, but when that happens. Yeah, so that was the STA that was filed on Thursday, and I do think, yeah, we're just going to continue to see more nuggets. I mean, for grain management in particular, they do have a few milestones. The most important, of course, is that they need to choose a direct-to-device operator by, I think it's November or maybe end of November. And so my expectation is that that's going to be AST. We haven't seen any indications or STAs that they're testing with anyone else. Of course, Lynk might be a potential test partner given that their satellite can service low-band cellular spectrum. But besides that, SpaceX satellites are mid-band spectrum, and of course other satellite providers are all focused on MSS, which is mid-band as well. Um, maybe I'll just pause there real quick. If people have questions or comments, feel free to leave them in the, uh, in the replies and I'll try to get to them. So moving on, I did want to touch base quickly on, uh, Ozzy Ramos. And so I know Cook had talked about this guy before, but I did want to highlight, um, the fact that— so Ozzy Ramos, um, for those that saw my post before, This guy was an investment banker at Barclays for a number of years. Sorry, he was a banker at Lehman Brothers for a number of years and then moved over to Barclays because for those that are old enough to remember, Barclays acquired Lehman Brothers when they were in financial distress. It had nothing to do with the bankers, but the guys who were doing derivative products, CDOs, CLOs, and I won't go into the whole rigmarole of what happened during the financial crisis. But this guy was a very senior banker at Barclays. He was head of communications, cable, and satellite. And so he worked his way up and became vice chair of banking. And so this is a very senior position where the vice chair is typically a title you give to someone who heads up investment banking, or there could be one guy above him, but this is going to be your senior dealmaker, someone who has has the ability to manage, you know, all the, the, the teams under him, but also, um, is this basically the guy, the big guns, right? Like when you go talk to a, a potential client, uh, or an existing client, you bring him in, right, to close, to close deals. You bring him in to, um, shake hands, kiss the babies, do whatever it is to, uh, win mandates for advisory work or corporate finance work. But he's also gonna be there, just given his Rolodex of relationships, he's gonna be there to help in an advisory capacity, right? So he's not gonna be the day-to-day execution guy, but he's gonna be the one who knows where the bodies are. And if you're advising a company on a sale, like he'll know who the key executives are at which companies that would make sense to buy you, or vice versa, if they were working on a If he was advising a buyer and it was in a sale process, he's going to know who the other potential buyers are most likely, and he's going to be able to help you put your best foot forward and get the deal done. And so it's interesting that this guy, after his time at Barclays, he moved over to UBS and was vice chair of investment banking there. And so it's very interesting that this very senior investment banking professionals now at AST SpaceMobile. Now, some people have said, well, what if he's just like doing it for fun or it's a lotto ticket? Yeah, those are probably all parts of his decision. But I would say that for him to leave the industry, maybe it was time for him to retire, but having worked in banking before, you're going to have throughout periods of your career, there's always opportunities to jump over to clients, right? Because they, just like Scott Wisniewski, he was a senior telecoms banker at Barclays and he got to see all the companies. He raised money for OneWeb. He did a number of different transactions in the space sector, but out of everything that he saw, he decided to put his chips in behind AST. And so he left a Investment banking is a really tough job, but there's a steady level of progression where you make a few hundred thousand dollars a year of salary and then you have bonus that can take you up into the millions of dollars depending on how many transactions you execute. And if you're a relationship person who's actually responsible for bringing the deals and executing them, you can make, at a senior MD level, you can make $10, $20, $30 million a year. Right? And so, um, not saying that Scott was at that level just yet, but he was kind of on the cusp of that. And so he left Barclays and joined AST, and this was back in, I think it was 2022. And so that was a pretty big deal, um, for him to leave that job and that career, you know, that career path to join this startup where he was getting paid a few— I think it was like $250,000 in cash, and it was all equity comp. And, you know, when he had left, I think the stock was maybe in 6 or 7 levels, and then And then of course it went to 2. And so for someone who has a family of several small kids at the time and a wife who, I think he lives up in New England and he has to commute down to Miami, not an easy decision. I mean, you have to have utmost confidence in the CEO, who's Abel Avalon, and then the vision of what they're doing. And you've got to feel like you can make a a marquee contribution in altering the company's trajectory and achieving, increasing the odds of success. So that's what Scott did. Similarly, for this guy, obviously he's towards the tail end of his career, but he's worth a lot, meaning he has the ability to go do whatever he wants essentially, and he can monetize his relationships. Oftentimes investment bankers at this level if they decide to leave industry, they might go to an exciting startup company sometimes, but it's rare. Oftentimes they might go to private equity or go to— yeah, private equity, there you can easily monetize your Rolodex. But this guy decided to go to AST SpaceMobile of all places. And so the reason why I think it's interesting is that he clearly has relationships at C-level in the telecom sector, in the space sector, you name it. He's going to have— I think when I did a little bit of work on him, for example, he did work on the Viasat and Inmarsat deal. So this guy's been probably in the middle of a lot of the most marquee transactions, and he's going to have relationships with all these executives across several sectors. So the fact that this guy left and he has experience in structuring M&A, joint ventures, strategic partnerships, that makes him a very interesting hire, which is during this period of critical time of execution and expansion for the company. So I think what this tells us is that number one, this guy has a ton of expertise to bear, bring to bear at AST, and so the company decided to bring him on? Because it sounds like there's a lot, I mean, we know there's a lot of things that are going on in the background, whether it's the telco JV, it's Satellite Connect in Europe JV, in Japan, there's the negotiation with Rakuten around the JV there. There's also potential for M&A, which the company has talked about, some level of vertical integration. And so could that include things around spectrum? or key technologies, tuck-in type of deals? Or is the company responding to strategic interest? We've talked about this idea that at some point Google should make a large strategic investment in the company, or Apple, or maybe they just end up trying to make a run for the company. Who knows? But this is the type of guy that you want to bring in who is going to give you unbiased advice, especially if he's now a company principal as opposed to a banker. Sometimes Bankers can be a bit biased because they want something to happen, because when things happen and they do deals, they get paid transaction fees. But if you have someone on your side, then they might be able to think more in a long-term nature, so not necessarily focused on doing deals or doing something that's going to get them paid immediately. So yeah, that's a very interesting hire. putting that in the context of what we've seen in the industry, I think it was a smart one, right? And so I did want to talk about, you know, this is kind of a good entry into this next discussion. I did want to talk about the legacy direct-to-device playbook. And so what I mean by that is if you look at any number of companies, whether that was Legato, EchoStar, Globalstar, Iridium, all these legacy guys were Clearly, their existing businesses to varying degrees, I would argue that Iridium probably has the best existing business because it's got a very stable government business. It generates good cash flow. But if you look at Globalstar or EchoStar doesn't really have a business, or Ligado, most of all these players are sitting on very valuable spectrum. But aside from that, We've talked about this idea that they're probably worth more dead than alive, right? And so one interesting thing that now has become a recurring theme is that when you have these legacy players that are sitting on valuable spectrum and they've seen the industry kind of develop around them, right? So if you were to ask them 5 years ago, 6, 7 years ago about direct-to-device, they, for the most part, you can go back and look look on Google, they poo-pooed the idea, the concept. And that was why there was this legacy pushback on what AST was doing. And eventually, of course, Starlink as well, that this is a small market. There's not going to be a need for it. You can't, from a technological standpoint, you can't have a satellite connect to a terrestrial phone, a regular cell phone. There's not enough link budget, whatever. I mean, you name it. everyone hated the idea. And there was incentive to dislike it because the legacy, for a lot of these legacy businesses, they had the most to lose because they were going to get disrupted. But as the narrative changed and as Starlink deployed service and a decent amount of its forecasted growth was dependent on direct-to-device, and as AST went from the valley of death $2 to then all of a sudden bringing on board not only AT&T and Verizon and all these other carriers and the stock re-rated, the tune of these companies changed, the narrative. They went from poo-pooing the idea that it was a niche market to then becoming this future panacea, the solution for their legacy woes, that this is going to be a massive opportunity. So they changed tunes. part of the strategy was to put together a direct-to-device plan, which makes sense, right? If you're on the board of these companies, you don't just sit there like a frog in a boiling pot and wait for you to get— you don't wait to get cooked. You actually put forward a plan, right? Because you need to tell investors, you need to tell regulators, we're doing something about it. And so that has been the playbook over the last 12 to 18 months. And so we saw Legato do this, We saw EchoStar do this. I mean, EchoStar famously, Charlie Ergen and I think another Hamid who is no longer there, they came up with this idea of a direct-to-device constellation. They actually contracted out MDA Space to build it for them. And then of course, Globalstar did the same thing. Paul Jacobs there, who came over from Qualcomm, he stepped into Globalstar and, hey, we're gonna develop this direct-to-device strategy. Iridium as well. You saw Matt Desch go from poo-pooing the idea to then saying, hey, we are going to provide a narrowband direct-to-device strategy. They originally tried to get incorporated into a Qualcomm chipset that was going to be a proprietary solution called Stardust, but then eventually they said, hey, you know what, we want to be part of the NTN standard and we're going to go down that route. So all these players came up with direct-to-device strategies and it actually worked. It was a good gambit. So you saw Legato, that was the first transaction where in January 2025, AST SpaceMobile announced that deal. And then a few months later, EchoStar suddenly gave up their plans for a direct-to-device network because obviously SpaceX came in and acquired the AWS-3 and AWS-4 spectrum. And then of course, Globalstar was bought by Amazon, and more recently, Rocket Lab bought Iridium. And so this gambit of coming up with a paper constellation in order to, to some extent, fake it till you make it, or fake it till you sell, that's been a pretty successful strategy. And so why would someone do that? Well, by putting forward a paper constellation, The most important thing is that it buys you time, right? So if you file with the FCC, like what EchoStar did, they thought, okay, if we file a paper constellation around direct-to-device, maybe we'll get more time for build-out requirements. And interestingly, they did get saved. Well, because the FCC came in and threatened Charlie Ergen and said, hey, we're gonna take away your spectrum unless you sell it. Interestingly, that paved the way for this whole idea of direct-to-device becoming good enough for buildout requirements. Because then when Starlink bought EchoStar, as part of the approval process, the FCC said— well, Starlink asked, hey, can our buildout requirements be focused on direct-to-device? If we provide coverage across the US, is that good enough? We don't have to build a terrestrial network. Is that good enough for us to keep hold of this spectrum? And the FCC said yes. And that was a huge sea change for the industry because then That precedent now applies to AST and Legato. It applies to Amazon and Globalstar. And I mean, for Rocket Lab Iridium, Iridium already has a network out, so it's not as big of a deal. But for any spectrum that's kind of floating out there, and this is applicable to grain management, where with the FCC, the FCC has given them 2 paths to go down, right? You can either build out the network terrestrially, which is putting up towers and hanging up radios, that's really expensive, or you can meet your coverage requirements by utilizing a satellite provider, which is what AST and Grain are working out. And so that was a huge sea change. And so that was a big positive that came out of this. And of course, the big overarching positive is that all this spectrum, as Katzi, I see him out in the audience, has talked about, all the spectrum eventually will find its way to the highest and most efficient use case, highest valuable use case. So for all these legacy players, Agado, EchoStar, Globalstar, Iridium, they didn't have the mandate, mandate meaning the valuation and shareholders buying in to go pursue some of these bigger ideas. They were kind of trapped in their legacy businesses. So In the case of Iridium, for example, a lot of people who own Iridium stock are income guys. They own Iridium because it pays out a big dividend. Iridium generates a decent amount of cash flow. One of the things that Iridium kind of, I guess they conditioned their investors over time was that if you own our stock, we're going to buy back stock. If you own our stock, we're going to return capital to shareholders. We're going to pay dividends. We're going to buy back stock. We're going to do financial engineering to hopefully get the stock price up. And so Banjo was trapped. They couldn't then pivot and say, hey, you know what? This direct device is important. We're actually going to turn off the CapEx holiday, and we're going to spend a few billion dollars to build out the next-generation constellation. They would've gotten completely eviscerated by shareholders. So now you've seen the sea change where a lot of these legacy players had to sell to to the disruptive newer players to deploy that spectrum. And so interestingly, the reason why I brought this up today is that you did see a transaction where SES has been working with Omnispace and Lynk, and they announced that finally that deal had closed where I think Omnispace and Lynk merged, and SES, from what I understand, I think they invested some equity and they also got preferred stock as well, but there, You've got kind of 2 mismatched players, right? Omnispace has some interesting ITU priority rights around S-band globally, although they don't have necessarily country-level authorizations, but they have priority rights. And then you've got Lynk, who is this smaller direct-to-device player who does have satellites that can work with low-band cellular, but they're very limited because they're small. They don't have a large phased array. And of course, the partner that they're partnering with is OmniSpace, who has mid-band spectrum. So you'll have to re-architect the satellites in order to work with that spectrum. That said, again, this goes back to the whole paper constellation legacy D2D playbook for OmniSpace. Those ITU priority rights are valuable to a degree if you have credibility in deploying them. And so SES is making a bet that with Lynk, if you can go to regulators and say, hey, we have a satellite company now that can go potentially utilize this spectrum, it's going to give us more time to figure this stuff out. And so there you've got one potential party that's trying to figure things out. They've been left out of the M&A game, but who knows, maybe at some point there might be some value seen in OmniSpace. And of course, SES is a real player in Europe. They are one of three parties that are working the Iris constellation, and so you know by by making that equity investment and preferred investment, I think that gives them some level of optionality on potentially what to do in the future. The other party, of course, is Viasat, right? Viasat, who is in partnership with Tharaya, I think that's how you pronounce it, and they have this joint venture called Space 42. interesting thing about Viasat is that they own S-band in Europe, and I think it's a 15 by 15 megahertz allocation. I think there's a very high probability they end up losing that in the reallocation process, and there's probably a good possibility that EchoStar loses their allocation as well, but they also have valuable L-band spectrum globally. So for those that don't know, Viasat They acquired Inmarsat, which owns L-band spectrum globally, and then Inmarsat had this agreement with Legato where Legato entered into a licensing agreement to use L-band spectrum. It's 45 megahertz in the US and 40 megahertz in the US— sorry, in Canada. That was for, I guess when it was struck, it was probably, maybe it was 90 years, I forget. But of course, AST entered into a license agreement with Legato, and so AST was able to get the most valuable parts of L-band, which is in the US and Canada. But then outside of the US, there's still that L-band spectrum that is there to be used. And so ViaSat actually uses that L-band spectrum for its legacy businesses, whether that's connectivity for maritime, airlines, but they don't use all of it. there's a decent amount that they could free up and then they could either sell it or they could lease it to somebody else. And so there is a transaction potentially there for ViaSat to enter into some, for example, partnership with AST or someone else. What's interesting, of course, is that the pairing of the two is most optimal, meaning AST has the most valuable parts of L-band, which is in the US and of course Canada. So that kind of acts like a poison pill, meaning if Viasat wanted to lease out, enter into a spectrum licensing agreement with some player, it would be hard to make that economically attractive for the other player, because they're missing out on the most attractive market, which is the US. Now, Viasat does have, I think it's like a few megahertz here and there of L-band in the US, but it's not enough. So yeah, there should be at some point in the future, maybe some type of agreement, a partnership, where the 2 companies work together to help monetize that spectrum. But we'll see. I don't think that there's any— I don't think there's any rush to do so, especially if you look at the traction that they're getting around S-band. So in Europe, it looks like they are going to get an allocation of 10 by 10. And then if you see what happened in Brazil, where they're getting 10 by 10 of S-band there, there's a lot of spectrum to go go pursue. But I think in the case of Viasat, the most valuable and optimal use of that spectrum would be in partnership with AST, because you don't want to, for example, build 2 constellations serving the same spectrum. And for Viasat, that's a really expensive proposition because they're servicing the markets outside the US. And so if you think about removing redundancy, cost synergies, and having harmonized service across one band of spectrum, it would make sense for the two of them to work together, but we'll see. But I do think obviously there's been a lot of strategic moves in the industry and we're probably not done yet. And I think the company having raised money has given them more flexibility, not only to buy launches, but to potentially structure other types of deals. And I think if you had asked yourself a year ago, 2 years, 3 years ago, hey, would Rocket Lab— do you think Rocket Lab would buy Iridium? I think most people would've told you that you were crazy. But here we are. And so I think just given the consolidation around the industry, now people are making moves. And I think one of the cool things about AST is that they don't have to do anything because they're leveraging terrestrial MNO spectrum, which is differentiated. And for the service that if you're doing direct-to-device, then that's kind of the, I would say, the minimum that you need for coverage. You need to have exposure to low-band spectrum. And I think Starlink eventually, because they want to compete directly with AT&T, Verizon, and T-Mobile, they're going to have to get that low-band spectrum from somewhere. And so there could be some type of partnerships with some of these other companies like ATEX or NN. That's certainly possible. Or they truly believe in their heart of hearts that they are able to get one of the MNOs to fold and give them an MVNO grant. But yeah, I think in AST's case, they're sitting in a really good strategic position where They hold a lot of the cards, and the optionality to unlock even more value is there. Anyway, I'm going to pause there. I don't know if people had questions or comments. I'm going to check. Okay. Someone's saying, would love to hear potential reasons for strategic advisors to go to launch providers, acquisitions, being acquired, OEM partners. Okay. So it's actually all those things. Having a strategic advisor with that experience who knows all the players, yes, he could help out with negotiating launch contracts. There could be acquisitions, tuck-ins, maybe transformative deals. Maybe the company has strategic— is responding to inbound strategic interests, right? Someone wants to buy the company. He would be a good person to have. OEM partnerships, yes. Like all those things, this is the type of person you want to bring in. who the current management team is focused on production execution. Scott's wearing— all of them are wearing multiple hats, and so you need more horsepower, right? And you need someone with relationships, someone who from a strategic standpoint has gravitas and knows what they're doing. You're not going to bring in some mid-level banker or junior banker. You need somebody who is a seasoned veteran. And so that's what this guy brings. Let's see. Can you cover the change in total shareholding of institutions versus partners, insiders, and retail? I did post today that we've had quite a bit more institutional buying, but part of that, of course, is there's more shares to go buy because the company has raised capital. Let me just take a look. I didn't look at the difference in ownership, so let me just compare this to the beginning of the year.
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[00:47:21] Speaker D: So yeah, I mean, institutional ownership. Oh, this is interesting. Maybe I'll post this. Institutional ownership at the end of 2025 was 37%. Now it's at 52.6%, which is decent, but it's not great. Right. So the companies that have the most institutional support and ownership are probably, you're probably looking at 80 to 90%. So we've got quite a bit of room to go for institutional ownership, which is a good thing. If you're under-owned by institutions, that's potential upside because you want institutions to buy positions and build their positions, which for example is what we're seeing in SpaceX where the lockup Exbury has increased liquidity. So for players like TCW, Fidelity, any number of institutions, they're able to buy larger positions versus the sub-1% that they had before the lockup at Exbury. So that's a good thing. I'll post this ownership change after I'm done so people can see it. Let's see. Why do you think Fidelity does not own nearly as many shares as Vanguard and BlackRock? Seems like they should be acquiring a relatively similar amount for their total market funds. Well, Vanguard and BlackRock, a lot of their ownership is going to be in ETFs and index funds. And so Fidelity tends to not have as much of those funds exposed to just tracking particular indices. And so I don't know, maybe the portfolio managers at Fidelity didn't like the risk-reward of AST, and so they decided to sell as of Q2. Maybe they're buying now. But yeah, Vanguard and BlackRock are always going to have pretty decent exposure to most companies, especially those of over $10 billion in market cap, which AST is over, what, $25 billion? Let's see. Is Green Management supposed to be the 4th carrier, which AST alluded to on the call? That's a good question. They might be. But I doubt it because they don't have an existing subscriber base or business. So I don't think they could be characterized as a carrier. It could be— there's a small carrier called Spire, that could be it, or the 4th player could be the JV itself, or it could be referring to one of the cable companies. It could be Cox or Comcast or Charter. So unclear. Let's see. Sadly, none of this matters if we can't get the satellites out of the factory. Okay, that's an obvious statement. Yes, so we are getting satellites out of the factory and we're launching them. We've launched, we've had 2 batches go out recently and we've got another one coming soon. So I don't know what else to tell you. Let's see. $130 is so far away. It is and then it isn't because I will tell you the path to— I remember after Bluebird 6 was launched, sorry, after Bluebird 7 was not put in the right orbit and that failed, I remember people lamenting and being sad about that and the stock kind of bouncing around the 80s. It was 63, this was in the beginning of May, and then over the course of 3 weeks, it went from 63 to 133. As quickly as things go down, they can go back up depending on catalysts. I talked specifically about T-Mobile. I think a T-Mobile announcement would take us beyond the most recent all-time high. Can you comment on LVO? This is the Link and Omnispace JV becoming a global D2D player. I think the chances are very slim because the They don't have the technology, the satellites. So Lynk has been in existence for almost as long as AST, or they probably were started around the same time. They have had an inability to raise capital. They also tried to do a SPAC merger with Alex Rodriguez's SPAC, which failed. I actually had met with Charles Miller once, and this was back before they— I think it was like in 2023 when they were trying to do a round. I was not impressed. If Lynk is the technological linchpin of that joint venture, I don't think they're going to make it. The fact that OmniSpace does have some regional S-band and they have priority rights, but you have to go to each of the countries to get approval for service. The fact that that's S-band spectrum versus Lynk's satellites, I think they've got a handful that are in space, but those are low-band spectrum. They're tuned for low-band spectrum. I don't know. I don't see it, see them becoming a global player because obviously beyond that, you've got to build up MNO partnerships and there's a host of hoops to go through that I guess I would say the hurdles to becoming a global player are increasingly more difficult, especially if you've got players like Amazon and Starlink and AST, of course, that are building out their advantage, I think it's going to be tough to catch up. Let's see. Someone's asking, how do you interpret Abel's answer to the last question about JLEO? Is Japan paying for half of the satellites with its $1 billion contribution? That would imply there would be around 90 Japanese-flagged Bluebirds. I don't know. We don't know yet, right? I would just wait and see what the joint venture, the details, once that gets struck, what the details are. $1 billion, that's not all going to procure satellites. It's also going to pay for launch and infrastructure in Japan. And so could they pay for 45 satellites? Absolutely. Could they pay for more? Yeah. It depends on, of course, the cost of the satellites when we build them, but we'll find out more. I think the issue, of course, is that that JV has to get finalized and the MIC in Japan and I think it's CIJA, they have to put out the formal approval and we'll go from there. We'll learn once that JV gets formalized. But at this point, it's all speculation. But I mean, the billion dollars is real, and of course, how that money can be used is real, but we'll find out. Where is BB14 through 16? If I knew, I would tell you, but I do know that they are in final stages of testing and we'll see, right? Like, I think they're going to be shipped soon. I don't know exactly the day or time, but that's going to happen, right? And those will go up on a Falcon 9. So just wait and see. I think my guess is if that happens, you know, you're probably looking at a September launch, but we'll find out sure enough. Anyway, that is all I had to say. Yeah, it's good to be back. We'll see as news unfolds. There's a lot of— I posted this last week about— let's see where— let me look at the post. What did I say exactly? My post was, the puzzle pieces are all clicking into place. Only the few following closely and doing research understand. Be patient and stay focused. When the news finally drops for several big catalysts, the market will be overwhelmed and wonder why it missed it. Yeah, so I absolutely believe in that. I think there are a number of things that we're tracking that if any of them hit, it's going to be market redefining. So everyone sit tight and just be patient. And with that, I'm going to end the space and we'll probably catch up again at some point later this week. Take care.
[00:55:21] Speaker E: 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.
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