Anpanman -AST AND SAUDI TELECOM 10 YR AGMT!!!

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast.
[00:00:09] Speaker B: It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large. Holy shit.
[00:00:29] Speaker A: That's how I'm gonna start this space. I'm surprised, candidly, that the stock is only up $4. This is absolutely game-changing. I'm still digesting the news, and I'm sure everyone else is. Scott wasn't lying when, you know, I had a brief conversation with him A few weeks ago, and this is after the Verizon news came out post the $800 million ATM being put in place. And I think very specifically he had mentioned that they want to condition the market to understand when they raise capital, it's for a good reason and that you can expect good things to come. And wow, like it just a few days after doing the billion-dollar convert, And by the way, fundamental convert investors are going to be absolutely thrilled, right? They invested in this convert and then all of a sudden you have this deluge of positive news. Since that convert happened, obviously, and by the way, like we're going to get more good news because of what was tweeted yesterday. I mentioned this in the Space Talks Weekly, but AT&T yesterday, Visited Midland, Texas. And we know now due to protocol that when strategic partner CEOs show up at Midland, it's specifically to sign satellites before they go up into space. And so John Stanky is— John Hancock is on BB-7, and we are going to get a press release probably in the next— probably later today or Or tweet later today or Friday if they want to just extend the news. But there's going to be news that Bluebird is shipping to Florida. So that's another thing to look forward to. This company is full of surprises, man. So let's talk about the news that just hit the tape today. I didn't prepare for this, so I'm just going to talk and kind of read through this press release again and Hopefully ChatGPT can help me out with some of these statistics. But yeah, this is game-changing. I mean, not only did they sign Saudi Telecom, but it's for a 10-year commercial agreement and they also have a long-term revenue commitment and there's prepaid revenue upfront. So I'm just sorry, I'm just kind of beside myself. So let's go back to what the company talked about before. I remember one of my conversations with Scott and he said, hey, you know, will we you sign these revenue prepayment agreements, you're going to see a step up over time because as we get closer to the constellation becoming reality and obviously once it's deployed, the amount of economic rents you can extract from your partners will go up, right? And so we've seen that steady progression. You saw on January 18th, I keep a little sheet here, on January 18th, We got a $25 million prepayment from Vodafone, a $20 million prepayment from AT&T, and then 4 months later, Verizon came up with a $65 million prepayment. And so you've seen that escalate, and I'm going to put this out in a tweet eventually, but today, now you have Saudi Telecom, who is the 4th definitive commercial agreement, and they lop out, they They put out $175 million of prepayment. So you've seen those prepayments go from $20, $25 million to then $65 million for Verizon. Now it's $175 million. And then, you know, it's funny because the bears are like, well, I thought you were going to finance the company with prepayments and why do they need to convert capital? They're accelerating production and deployment. And so they're taking any and all capital, right? And so this $175 million, for those that don't understand, it's non-dilutive. Saudi Telecom is paying this upfront for future services. One of the interesting things, and, you know, maybe the company is not going to be happy that I tweeted it out, but I guess one of the positives of having a Bloomberg terminal is that you get access to news from any security globally. And so There was a small headline that hit this morning. I have this newsfeed that watches specific news or specific tickers, and that headline came up for AST SpaceMobile that these guys had signed an agreement with Saudi Telecom. So I went to Saudi Telecom, which is traded in the Saudi exchange, and there was a release there which was, it gave much more specifics. I guess maybe because of laws there, they have to disclose more of the particulars of a contract. And so I was able to pull down what they had disclosed publicly. And one of the crazy things in that disclosure, let's see here, was a contract value. And this is something that has never been disclosed by the company, but I guess because they are dealing with Saudi Telecom, they had to disc— or on the Saudi side, they had to disclose it. But they give you a bogey of what this contract value may be. And so specifically in one of the terms of the release, it says, The contract value may exceed 9% of Saudi Telecom's revenue as per the annual audit financial statements of the year 2024. Final value is not fixed and depends on volume of transactions where Saudi Telecom will receive a percentage of the revenues. And we know how that works, whether it's a 50/50, 60/40, or who knows type of split. I assume given the marquee nature of Saudi Telecom and how much prepayment they're giving, I assume they're going to get the best terms, which is 50/50. But going back to this 9% of Saudi Telecom revenues, when you do the translation of currency for 2024 revenues for Saudi Telecom, they did approximately $20 billion of top line. So $20 billion, 9% of that is $1.8 billion. So this contract, at least out of the gate, the way that both parties are valuing it is around $1.8 billion. And that's just for one M&O out of 50 that we're working with. So obviously not all 50 are going to be worth that much, but it just kind of gives you a sense of the magnitude of these things, which is insane, right? And so just going through this press release, Let's see here. This is for services in the Middle East and North Africa. In the Saudi exchange, they actually give you more detail. So AST SpaceMobile, I believe this is how it will work, is that Saudi Telecom will not have exclusivity in the Kingdom of Saudi Arabia because AST is also working with Zain and Mobily. So they're basically working with the top 3 That own the entire market in Saudi Arabia. However, where Saudi Telecom operates in the Middle East and North Africa, these countries in particular, AST is giving them the exclusive rights. So Libya, Syria, Lebanon, Djibouti, Tunisia, and Sudan. And so those are the exclusive countries. There's also, oh, I missed this because I was in a scramble. They also get preferential commercial terms in Kuwait, Oman, Yemen, Bahrain, Jordan, Iraq, Algeria, Morocco, and Egypt. Okay.
[00:08:20] Speaker B: You know what?
[00:08:20] Speaker A: I need to update my tweet. I undersold this. Oops. I didn't see that part. Where did I tweet this? Well, you know what? I'll just put another— I just put another tweet here. Everyone bear with me. Just typing some of this stuff out. We'll get preferential treatment. Preferential. Okay. Let's see here. Preferential commercial terms. Oh, okay. Preferential commercial. Commercial terms or its other markets. I mean, some of these markets are massive, right? Like Egypt, Algeria, Yemen, Oman, Morocco. Yeah. Anyway. Yeah. So, so this is massive. I mean, Saudi Telecom is the anchor MNO for the Middle East for us. And I mean, what better partner could you ask for with deep pockets? Saudi Arabia, as we all know, is very forward-looking. They're trying to build their own space program and they're making tremendous amount of investments. So this is the country that you want to hitch onto. And so I think this is just, I mean, this is just, I mean, 10 Agreement that's worth $1.8 billion or more or less depending on how the service shakes out, but $175 million prepayment and then all the benefits that go along with that. So obviously Saudi Arabia made an announcement to make billions of dollars of investments in the US. There's obviously economic connection between the 2 countries. And so I think this is the start. It's not the end. There's going to be more probably related to Saudi Arabia. I mean, obviously you've got Zain and Mobily who are the other 2 large carriers, which it's an oligopoly of these 3 players. Like the, once, you know, because of this agreement is out there, I'm sure the others are scrambling like, oh shit, we need to sign ours too. And the great thing about that is that there's a benchmark here, right? So In order to sign service there, they might have to pay, they might have to match $175 million or perhaps more. But that's the beauty of this model. It's like once the constellation is going up, it's like game theory, right? All the other MNOs will want service sooner rather than later. And then what are they willing to pay for it? And so those dynamics are really good. So let's see, let's go through the rest of this release. AST will integrate its space-based cellular broadband capability with Saudi Telecom's infrastructure, terrestrial infrastructure.
[00:11:23] Speaker B: Yep.
[00:11:24] Speaker A: Okay. I'm just going through this under this agreement. Let's see. Oh, this is good. So the company will build 3 ground gateways in Saudi Arabia and establish a network operations center. So, so yeah, Saudi Arabia, Saudi Telecom going first, they get these goodies that they are going to be the anchor MNO there. And so my guess is that That those ground gateways, they will help support, and perhaps there's some economics related to it. But then at those gateways, the other MNOs, Zain and Mobily, will probably put, will co-locate their base stations there, or sorry, the eNodeBs and then their, the connections to their core network. Let's see here. But yeah, it's at 3 ground gateways in Saudi Arabia. That's good because as we all know from an architecture standpoint, For your customer sovereignty, you want the phone or device data to originate and also terminate in your home country. You don't want that data going outside, which is how Starlink operates. Starlink is a totally separate network from the ebonos, and they pass around the data and then they eventually get it to your ebono, but it could be going over other countries. It could be going to unfriendly countries. It can be tapped, who knows, right? So for ebonos, like, and countries, data sovereignty is paramount and they want to own and see all that data. So that's really important. Let's see here. I'm going to go through this.
[00:12:58] Speaker B: Okay.
[00:12:58] Speaker A: Yeah. Sorry, I'm just reading the press release. I mean, this is tremendous. It's funny because like, as I mentioned before, I got the headline on Bloomberg and then I was able to go to Saudi Telecoms news feed and the Saudi exchange had published that, basically a term sheet. And so I was able to buy more stock and stock wasn't moving. Sometimes it's kind of funny, like algos, they don't believe anything until it actually hits like Business Wire or PR Wire here, which is the case. And now, you know, the stock is up. Let's see here. I'm just reading the rest of this. So what's funny is that this is something This agreement has been many years in the works. It's something that we as Space Mob have been speculating for many years. And of course, some purported experts would tell you that everything's priced in. No, it's not. It's not priced in. And oftentimes when people learn about things before they happen through Space Mob, it's through tedious amounts of due diligence and kind of connecting the dots, as Ryan O'Connor would say. But it's not priced in. And obviously, like, some things may not come to fruition, but this did. So going back to 2022, 2023, you know, Abel attended conferences, the FII Future Innovation Conference in Saudi Arabia. And we know the management team was there as well from time to time, I guess, over the last handful of years. And we'd always speculated that this was going to come. And And yeah, finally it did. And so, you know, there, there is additional due diligence around other MNOs, which I think will come to fruition as well. But yeah, this is a great— As I was saying to some people, I mean, this is absolutely game-changing. I mean, this is a real validation. Every MNO agreement that is signed with revenue prepayments and The whole, all these bells and whistles. I mean, it's just another validation of what the company's doing. Another important thing to remember is that Saudi Arabia has been testing with AST SpaceMobile for the last year or so. We know this from, it wasn't me, but it was somebody else who was able to find the regulatory filing within Saudi Arabia, which showed the map of Saudi Arabia in their testing. And so for Saudi Telecom to announce this 10-year agreement with Revenue Prepayment, it tells you that testing has gone well. Scaling of the network has gone well with the 5 Block.one Bluebirds. Everything they see makes them think like, okay, everything is as planned as we discussed. We're signing this agreement. We want to be the marquee MNO in the Middle East. And, you know, and we want to accrue all those benefits. And so that's, that's one of the key takeaways from, from this agreement is that is, again, it's another further validation. If you, if you wanted validation, what, 2, 3 weeks ago, Verizon signing their definitive commercial agreement. Now you've got another one 2, 3 weeks later here. You're probably going to get another one in about a week or 2 is my guess with Bell Canada. As we saw, I mean, gosh, there's so much news out there. As we saw, Beware, which is, it's actually a global IoT company, which has tested in multiple countries around the world, but in particular, they use Bell Canada's network in Canada and they announced positive test results yesterday. Yeah. And so that's just another sign that Bell Canada, that definitive agreement is coming very soon. What the economic terms of that agreement might be, it's unclear. They were an investor back in, during AST SpaceMobile's IPO. And so my guess is that they are, there probably will be some revenue prepayment attached to that because everybody who signed agreements has made prepayments. So it'll be interesting to see what they put forward. Let's see here. Yeah, so the commercial services are expected to launch in the fourth quarter of 2026. So that's good. And yeah, and this is this agreement covers 15 countries in the Middle East and North Africa. Now what I can do here is I may try to ask ChatGPT. How many subscribers are in this? Well, actually, you know what? Let's just ask. Let's see here. Everyone bear with me. So on the one hand, it's like you should look at the overall subscribers that Saudi Telecom has, which which I think is actually let me just ask here how many subscribers. Saudi Telecom wireless subscribers. And then let's look at this disclosure.
[00:18:22] Speaker B: Okay.
[00:18:23] Speaker A: So for those who are wondering, Saudi Telecom has 29 million subscribers. So that's a lot. But then let's see, let's see what the opportunity is for them, right? So how many wireless subscribers are in total are there in— so now I'm going to ask ChatGPT how many wireless subscribers are in their expanded markets. So the thing about AST SpaceMobile is that once you launch service, It becomes a game of taking other carrier subscribers. So that's really the TAM, right? Um, so I'm gonna, I'm gonna ask ChatGPT, how many total wireless subscribers are there in Libya? Oh, it doesn't like that. Let me try that again. In Libya, Syria, Lebanon, Djibouti, Tunisia, Sudan, Kuwait, Oman, Yemen, Bahrain, Jordan, Iraq. Algeria, Morocco, and Egypt. So let's see what that comes up with. While we wait, yeah, what a crazy day. I think, as I mentioned before at the beginning of this space, I think Scott is an absolute killer now. Like, he knows we're going to raise funding and we're going to condition the market to understand that right after funding, you're going to have positive events. And so they should, you know, these funding events should be positive things where they're raising capital to accelerate the business and you should expect good things. And so now we've seen that twice in a row. And yeah, I think there's going to be more. Let's see, ChatGPT is taking quite some time here. Yeah, I guess while people wait, let's see what the real-time short interest is. Let's see how screwed these guys are.
[00:20:27] Speaker B: Okay.
[00:20:28] Speaker A: Ah, interesting. They got, they screwed themselves. So as I mentioned before, the billion-dollar convert, I think the shares associated with hedging, call it a 60% delta, and let's say 80% of the issue was placed with Converge, that's about 6 million shares of additional short interest, right? And so interestingly, over the last 3 days, shorts have increased their positions by 2, 2.5 million. Is that right? Yeah, 2.5 million. So, so we hit a low of on October 23rd, 35.2 million shares short, and now that's increased to 37.9 million shares as of yesterday. So these dipshits increased their shorts by 2.5 million shares. So they're probably not feeling too hot. And I think, as I've mentioned before, after hitting a peak of 49.5 million shares short kind of at the beginning of October, or actually, yeah, at the beginning of October, there's been roughly around 20 million shares that were short that were covered when taking into account the net additional shares that were short from the convert. So I guess some people have learned their lesson and they've covered, but I guess others have to be taught a lesson. And I will give a shout out today to our wonderful friend Pivotal Capital. He's this, I think he's a junior analyst that works at some pod shop who's gotten run over multiple times. He has the notoriety of calling bottoms for AST. So when he gets really beared up and tweets, that's a typical bottom. And so as I've mentioned before, like he's just a tremendous signal and maybe he's listen— I hope he's listening to this, but let me just go back while looking at this. And by the way, like I'm a superstitious person and I try not to Celebrate and do touchdown dances. But on days like this, like, you, everybody should celebrate. I mean, this is a tremendous milestone. This is crazy. Which is why I usually am not petty and small and go after shorts, but recently I have been because, I don't know, after many years of taking it, of listening to them, listening to them just Just give us a hard time. Now it's fun. So yeah, looking at Pivotal Capital, I think it was like October 24th at 7:40, he tweeted something bearish about AST and that happened to be, let's just look near the bottom again. When these guys like celebrate, it's usually bottom. Well, okay, so the stock, it was almost the bottom. It was at around $71, so near-term bottom. And then And now we're at what, $83? So the guy just doesn't miss. I'm going to help inflate his ego here a bit, but if you haven't, you should follow Pivotal Capital. It's pivotal_capital. He writes a lot of bad takes about AST SpaceMobile, and whenever he gets bulled up, that's the time. If you do trade around some small position, he's a great signal. That's the time you should buy. And I kid you not, like he's been the bottom signal for the last 3 pullbacks. And every time he's said something negative, the stock has been up like 30, 40%, 10%, 15%. So give him an unfollow. He's great. Anyway, so yeah, just looking at— wow.
[00:24:05] Speaker B: Okay.
[00:24:06] Speaker A: These numbers are pretty staggering. Let me see if they can add these. So ChatGPT, let me see. Can you add these up? Okay. The market just opened. We'll see how the stock goes. So just to give you an idea, Egypt has 106 million subscribers, Morocco 56 million, Algeria 51, Iraq 46, Yemen 20, Syria 17, Tunisia 16, and it goes on from there. But Saudi Telecom represents 391 million subscribers in total. So that's across 15 countries. And so that's Bigger than the United States. And I'd say a good, including Saudi Arabia, like a good portion of these are pretty wealthy countries. And so, sorry, that's 391 million subscribers across 15 countries that are not Saudi Arabia. So that's the opportunity. And that's probably how Saudi Telecom's thinking about this, that if we can incorporate this service we can go take subscribers from the other players in those markets. And so this is going to be very valuable for them. But yeah, that's, I guess I'll tweet that out later. But that's huge. And so I don't know if there's much more to cover right now. Let me just see if people have questions. Okay. Philip Wright, why use a percent of Saudi Telecom's annual revenue as a metric for 10-year contract value? Could it be that I mentioned 9% on an annual basis? $1.8 billion would be wild. Yeah, I'm not really sure why they put that in there, but it's there. It's a public disclosure. So the contract value, maybe, honestly, it could be that that's how much they think the contract could be could generate economically on a yearly basis, which isn't that far off, right? $1.8 billion. If you think about how many subscribers they have and how much they could charge depending on some penetration rate, then $1.8 billion a year annually is actually not that bad. Let's see. Sorry for yelling, asking the source. Okay, Phil. Okay, it's 170 million people across 11 countries. No, it's actually, so the total TAM across, the total TAM across these other countries is $391 million, but I'll make a post about it. Let's see here. Do you know if the first phase of Block 2 constellation aimed at main markets will cover these markets too? I think the Block 2 constellation, the initial satellites are going to focus on the most profitable markets, which is Kind of anything as far north as the United States and Canada and anything as far south as the upper part of South America, I think. But we know that the company pulled forward a billion-dollar convert to address additional markets. And so my guess is that, and maybe it's this Saudi Telecom deal is part of that, they are going, they want to get these satellites up quicker. So they can cover more markets and bring more M&Os into the fold. But actually, I've got to look at the geographies and see if that makes sense. 9% revenue share every year or over 10 years. I, now that I think about it more, it could be every year, or it makes sense that there's, that it's every year. Let's see, someone's saying that's a big down payment for no exclusivity in home market. That's true. It is a big down payment, but then they do get exclusivity in some of these other markets. But It was never going to be exclusive in Saudi Arabia because the company has these MOUs with the other 2 top carriers. So, so that would be tough. Let's see. There's some funny comments here.
[00:28:16] Speaker B: Okay.
[00:28:16] Speaker A: Well, that's it. I don't know if anybody had any questions or wants to come up. Happy to to talk. Otherwise, I'm going to start tweeting some of these statistics because it's pretty staggering. But yeah, today, tremendous news. It's probably going to take a while for the market to digest. I will say, funny enough, that some of these paper-handed research analysts like UBS, Scotia, any, a few of these guys, I'd expect for them to put out updates, and this is going to be a catalyst for them to upgrade the stock because obviously having another definitive commercial agreement with commercial prepayments and then some economic terms around it, that's going to give them new food for thought in terms of how they're viewing the stock. And then potentially, or most likely, my guess is having to upgrade. And this goes for Barclays as well, which did a double downgrade. Maybe they'll have to do a double upgrade or maybe the guy is stubborn and he'll just upgrade to neutral but raise his price target. At the end of the day, as we all know, like, who gives a shit? A lot of these research analysts are so far behind the curve, but it'll be fun to see them upgrading stock, which I expect in the next day or two. But yeah, today it looks like it's a little bit of a risk-off day for growth stocks, which is fine. I'm I'm actually going to add to my position now, now that the stock has pulled back a little bit. But but yeah, good news everyone, and we'll we'll catch up again soon. I'm gonna kind of go through this a bit more and tweet out more details. But yeah, great day, and we'll talk again probably in the next day or two. All right, take care everyone.
[00:30:04] Speaker B: Thanks for listening to the AST Space Mobile Podcast.
[00:30:08] Speaker A: 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.
[00:30:28] Speaker B: We're doing something very, very big, and I think we need to know that we can really affect billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular broadband connectivity directly from space to the everyday smartphone. People will just basically turn on their phone and be seamless. Regardless of where you are, we don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the MNOs. Listen.
[00:31:04] Speaker A: Mmm, waffles.