Anpanman - Globalstar for sale? Potential implications

[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.
[00:00:28] Speaker C: Anyway, let's talk about the latest news. I was away and then of course this news hit and yeah, I think the market was taken by surprise. Obviously there's been some mumblings about it which I can talk about, but yeah, let's talk about the implications of what this possibly means. I think first, an important thing you should always ask yourself when this type of news gets leaked to Bloomberg or Wall Street Journal or Reuters is why is it being leaked and by who and what's the intent? I think now taking this article into account and then over the last, the other 2 information articles, and then Tim Ferriss speaking very in the know way, I think it's pretty clear that this has all been leaked by Globalstar. Because they're trying to generate strategic interest. They've put their company up for sale. They're in a pretty tough spot, right? Like Apple owns 85% of the capacity of the constellation. They're looking ahead at what's going to be a huge CapEx spend to put up a new constellation. And for those that are, that do follow the industry closely, MDA Space is down a lot. Canadian ticker is MDA. And I think the US ticker is MDAALF, but a big chunk of their future revenues were going to come from Globalstar and the new constellation. They were the prime that was expected to build that. And so that's why the stock is off. But yeah, Globalstar is in a really tough spot. They kind of sold the— they gave away the keys to Apple in exchange for, I think it was a $1.8 billion investment. And so they're kind of stuck in a tough place. They do have an interesting portfolio of spectrum assets. They do have L-band assets, 8.7 gigahertz, or sorry, 8.7 megahertz of spectrum, and that's for uplink. And then their downlink is S-band, which is 16.5 megahertz. And so they do have some interesting spectrum, which is global in nature. They also have a feeder link, which utilizes, I think, C-band. But yeah, so I think, you know, some people have asked why would Starlink be interested in Globalstar? Well, it's primarily spectrum. Starlink, we know that they bought EchoStar's AWS-4 spectrum, which is S-band here in the US. However, that's just one piece of the puzzle. They don't have global spectrum. And so by acquiring Globalstar, that would jumpstart their process to consolidate spectrum. And then my expectation is that over time they would just decommission Globalstar satellites and their phones and then transition everybody over to Starlink. And so from a financial point of view, Globalstar in terms of its asset value is really primarily the spectrum because I think The business itself doesn't generate that much if you think about it compared to say Iridium. I think Globalstar this year is expected to generate $265 million of revenue and EBITDA of $137 million. If you compare that to Iridium, which is, let's see, Iridium's going to generate $880 million of revenue this year, but then generate about $500 million of EBITDA. It's just in a much better financial position. But that said, Iridium's spectrum position is not as good. So Iridium has just one sliver of LCN, which is about 10.5 megahertz in size. But I think they can only use like 7.8 megahertz of that. However, what's interesting is that that spectrum sits right next to Locado. And so there could be some interesting synergies there. But yeah, so I think what we're seeing right now is the landscape quickly consolidating because now that AC Space and Mobile's on the cusp of commercial launch and Starlink obviously is out there in the market with their product and they're trying to upgrade that and they bought spectrum to make it better. I think it's important to take a step back and think about what Starlink's position is. So They do have some MNO partners, but those partners are, there are few of them. There aren't a ton of them. And part of it I think has to do with the fact that Starlink's core business is fixed wireless and that competes with a lot of the MNOs. And so if you are a T-Mobile, part of working with Starlink is that you kind of have to look over your back to see whether or not eventually they're going to try to eat your lunch, right? Because they compete with your core internet business, but then eventually, as Elon has alluded to in interviews, they do have an interest potentially in competing directly with MNOs. And so Globalstar, interestingly, as an acquisition, could bring them a step further in doing that. Now, obviously, like the, in the current state of where Globalstar is, you can't really compete against MNOs, but if you were to If Starlink were to develop much bigger satellites, which hopefully from their perspective, that'll happen with Starship, much larger phased arrays, then they will have better connectivity. And you could see Globalstar not replace the terrestrial network, but definitely if Starlink did acquire Globalstar, they could provide some reasonable alternative in certain areas. to your wireless phone service. And so I think if you're T-Mobile, this type of acquisition, you should be shitting bricks right now because this just brings full circle what ultimately Starlink does want to do, which is eat your lunch, right? And so what's interesting about this potential deal is that you're now seeing, and we've talked about there being a duopoly, The duopoly is pretty much being formed, right? It's going to be Starlink, that vertical. And, you know, I think Elon Musk has ambitions to go throughout that vertical stack. And so it's going to be connectivity, you know, that's Twitter payments, you know, AI, just any host of things, you know, connected devices, cars, what have you. launch, of course. But then you're going to have this other stack, which is kind of what I would call like the open stack, which is going to be AST space mobile. And we'll talk about where Apple falls on this, which is unclear, but then there'll be Google, Microsoft, Amazon, I mean Meta, any host of number of companies that are going to be in direct competition with with SpaceX Starlink, Tesla, you know, Grok, whatever you want to call that stack. But that's where I think now you're seeing like lines being drawn. And in some respects, like I think if you're Starlink and you're AST SpaceMobile, you probably want this stuff to kind of evolve a bit slower. But my guess is that Globalstar basically forced the issue. Like they have a tenuous relationship with Apple. Apple's kind of like, well, I'm not even sure I want to, deal with these guys and perhaps it was a mistake. And so they, and now it's pretty, it seems clear to me like Tim Farrar, who's a paid consultant by Globalstar, pretty much like leaked a lot of this stuff to the information in January and then the most recent article. And then, and then of course Bloomberg, somebody decided to go leak this to Bloomberg that yeah, Globalstar is running a sale process and, you know, there could be other bidders interested. And of course, like I'm sure AST SpaceMobile and others, are taking a look because why wouldn't you? You would take a look. But then, you know, they name SpaceX because of course in any sale process you want to name SpaceX as like the main bidder to try to get people up in their price or to get interested. And so, yeah, I think this, the leaks over the last few months, and then of course the article today, I think is being driven by Globalstar because I mean, for For that specific quote from Jay Munroe that he thinks he could sell the company for $10 billion, like that's very specific. And that's also setting price expectations for the market where we want $10 billion if you, in the sale process, which is kind of a risky gambit because as a former banker and an event-driven investor, you can talk things up and try to make a process look very wholesome and real. But if that process fails, you're going to end up with a big egg on your face if the company ends up not selling at the end of that process, however long it is. Because I do think for a company like Starlink, I mean SpaceX, they don't really need to move on Globalstar. It's not as if Globalstar is going to sell to somebody else anytime soon. Apple's there. They have a right of first refusal. I'm not, you know, there's no, there hasn't been any disclosures about what rights Apple has, but I'm guessing, you know, knowing that the deal team there and they've got probably the best attorneys on earth, they probably negotiated a watertight, you know, an airtight contract where their rights of 85% of capacity is going to survive any deal. And so if you are Acquiring Globalstar, you're going to have to work around that. You're going to have to either appease Apple or you're going to have to negotiate something with Apple. But you're buying something that is going to be constrained because then that means like if you build some future constellation and it's like way better than what Globalstar had, you're basically giving away 85% of it to Apple, I think. But unfortunately, we don't have the full disclosures of that agreement, so it's unclear what Apple has rights to, but that could be an impediment. And so what's interesting is if this deal does happen, let's assume SpaceX does buy Globalstar. What does Apple do? Does Apple take part in that deal, which is possible? And then for Apple, it's probably good because you've got a more capable partner that can provide you with service, but then That capable partner may not be the one that you wanted to end up marrying, meaning, oh, it's Elon Musk and he wants to develop his own phone and potentially compete for customers and own your customer. That's not necessarily a marriage you want to enter into. And so Apple's probably in a weird place, right? Because they also probably don't want to buy Globalstar because Then you've got to operate a constellation, you become FCC regulated, and there's a whole host of issues with that, which, you know, is covered in some of these information articles. But let's say if SpaceX does buy Globalstar, then either Apple goes along with it or they say, you know what, it's yours. We're moving on. We're going to be kind of an open player. We're going to, which I think probably makes the most sense for Apple. Like we're going to work with you and we're going to work with some of these other guys too, AST SpaceMobile, and perhaps maybe another player, which by the way, like if this deal happens and then, you know, this player is taken out, I just don't see there being a third credible player given kind of the table stakes that are required to compete in direct advice. So one interesting thing that I was thinking about this morning is that This Saudi Telecom deal actually is quite eye-opening in that I didn't realize this, and some people had kind of pointed it out, but Saudi Telecom acquired 60 megahertz of S-band spectrum in the country's auction back in 2022, 2023. And so that spectrum, by the way, overlaps with what EchoStar has here in the US now. Starlink has control of that S-band spectrum in the US, but they don't have control of it elsewhere, but they have rights or they do have, I think, some in Europe. But basically, like for any of these players, they're going to have to go around the globe and kind of piece this stuff together. And interestingly, because of the Saudi Telecom relationship with AST SpaceMobile, we have a majority of the S-band spectrum in Saudi Arabia. And the other interesting thing about that is Saudi Arabia also covers 15 other markets. And so being able to go to regulators as a partnership of AST and Saudi Telecom, you would assume that you're going to have the ability to get those rights in all those 15 countries as well. And so right now it's kind of a spectrum grab. And I think for Starlink, Globalstar could be interesting because it gives you a global footprint of 16 megahertz of S-band and what is it? 8 or 9 megahertz? No, 8 megahertz of L-band. And so you don't have to go, you know, if the tough thing right now is that Starlink has to go to each of these countries and try to get a procurement of that spectrum, whereas AST SpaceMobile hand in hand with its MNO partners is going to the regulator. And so To the regulator, when an MNO who already has customers, who already is familiar with the local markets, asks for spectrum, that, and it says, hey, we're going to put our financial heft behind it. That probably looks more attractive to a regulator versus just Starlink coming in saying, hey, we want some S-band spectrum and we're going to come in and sell service to your customers and not have something That's locally based. And by the way, also doesn't protect your sovereignty because the data's going to go over Starlink's network and not stay in your country. And so yeah, this whole thing's super complicated, but I think that Saudi Telecom deal was very eye-opening in that it basically opens the floodgates for AST to get S-band spectrum and then The other thing, the other wrinkle is that, yeah, L-band spectrum too, because interestingly, I know there's like some legal dispute with Viasat through the Legato transaction where Viasat's saying, hey, you guys can't go get L-band spectrum around the world. You're only pigeonholed here in the US and Canada. Whereas AST is like, no, we didn't agree to that, which I mean, There could be another whole other space about this, but I think AST's in the right, surprise, surprise, but it's kind of funny because this Saudi Telecom deal kind of opened my eyes to the fact that AST doesn't need to go get that L-band. They can just let the MNOs get it, right? And so in Saudi Arabia, L-band spectrum has not been allocated. And so I would assume that AST is not going to go pursue it themselves. They're going to say, hey, Saudi Telecom, You're, by the way, you're government owned and, and, you know, you're, you're thick as thieves with regulators. Like, why don't you go pick up, get an al— the allocation of that L-band spectrum, and then we will, we'll lease it from you. And then what's Viasat going to do? They're going to say, oh, that you can't use that spectrum. It's like, well, I don't own it. Saudi Telecom owns it and I'm just leasing it, or I'm just, or they're renting our constellation to use it. So, Anyway, I think if Starlink pulls the trigger on this deal, I think it's to get through a lot of these regulatory hoops, ones which you need local MNO partners to get through, which Starlink doesn't have today. Now, that said, Starlink has picked up a few MNOs, like they picked up the, I guess, the minor player in the UK today. I forget their name. I think it's Virgin Media. And then, or Virgin. And then they also did pick up, I guess according to the press, there's rumors that they picked up SoftBank and NTT in Japan, which makes sense, right? Because NTT Docomo, KDDI, and SoftBank are the, are 3 large players in Japan. And there's Rakuten. And you would expect that, right? Because Rakuten has exclusivity in Japan for ISDSpace mobile service. So Starlink is going to pick up some customers, but as we've seen, like that has been a pretty slow process. And I think there's, by acquiring Globalstar, there's this damned if you do, damned if you don't moment where Starlink, their service is not, or the technology is not great. They need more spectrum or they will need more spectrum for the upcoming V3 satellites. Globalstar will help along those lines. I mean, it's great. It's good, but it's not great. Unless Starlink builds much bigger satellites, which as Tim Ferriss said yesterday, that's probably something they're going to do. But by doing this transaction, it's going to make MNOs think twice about what Starlink's ultimate goals are, right? So if you're T-Mobile, it's like, oh yeah, Starlink's our partner and we're working together. And then all of a sudden they buy Globalstar, who by By the way, like once you buy Globalstar, you can sell services directly to the consumers, right? You can sell handsets, you can do all these things. I mean, it's not great service, but eventually I'm sure Starlink will keep iterating it and get to a point where it's pretty decent, right? And so if you're T-Mobile, it's like, well, how long can I continue to stay in this relationship where my partner is like eating parts of my body? And eventually I will get consumed. And so, yeah, it's a pretty interesting thing. I mean, that said, I'm talking about it as if like this deal's definitely going to happen. There's a whole host of things that can happen in the process where a deal doesn't happen. Maybe it's not the right time. Maybe the price doesn't make sense. I think for Globalstar, if you're an acquirer and you've got this 85% of your capacity sold to Apple. Like, how do you sell the 15% economics to an interested buyer? Right. And yeah, and you're able to get some type of margin from Apple, but it's not as if it's Virgin Spectrum where you can just do whatever you want. You basically have like Apple over your head unless like maybe you pay Apple off. So, but anyway, What this does though is the landscape is clearly shuffling. Like the losers are now putting themselves up for sale. And so, you know, we talked about Iridium last week. Now we know why perhaps they're talking, you know, the conference call seemed like a funeral, like the writing's on the wall, right? And so I think Iridium is pretty interesting to a degree. Like they've got some L-band spectrum, which is global. It's not that wide of a channel, but it's good. it's decent. It would be decent for coverage and with the proper satellites that can really provide 3 bits per hertz and really leverage that spectrum and squeeze every ounce of capacity, it could have value, right? And so you could see a situation where AST SpaceMobile, you know, let's say Starlink does buy Globalstar. I think Iridium, there's only one partner left, right? And I think the interesting thing is Legato spectrum is right next to Iridium spectrum, there's like guard band in between that's not used, which then if you combine those 2 bands, you could use all of it, which there's a synergy there. And then I think for Iridium, they generate a ton of free cash flow, right? And so you could see a situation where if AST decided to pull the trigger on those guys, that it could help fund the constellation build out. However, if SpaceX does buy Globalstar, then Iridium is in a further compromised position, right? And so it's a matter of waiting. Do you do something now or do you wait for Iridium to keep going down and then do something? Because I think AST SpaceMobile has a huge runway in front of it. And so there's no need to do anything strategic now. There's no need to go buy Globalstar, go buy Iridium. Whereas I think for SpaceX, for them to, And I know people are like, well, they have their constellation up and so they're ahead. Well, they do, they have a constellation up, but they're zombie sats and the service is poor. And so there's a reason why they went out and bought EchoStar Spectrum and they're contemplating this deal because they really need to catch up. Right? And so I think, you know, taking a step back, if you are someone from the outside looking in, you might say, well, they're going to be more competitive. And so that's bad for AST, right? And it's like, no, actually, by playing their hands now and showing what their ultimate ambitions are, AST SpaceMobile becomes kind of the de facto— I mean, they have the technological leadership and the MNOs have chosen them, but now it's like, okay, we really do need to go support this company AST and put our eggs in this basket because Starlink is a much bigger competitive threat, right? And so the rumors of AST having meetings with Microsoft and some of these other companies, like, yeah, they become strategically much more important. And so, and I think it's, you know, from the US government's perspective, there's been this desire to diversify suppliers and make sure that you don't have Critical services that are single-sourced. And so if SpaceX is buying Globalstar, then yeah, your potential vendors goes down and those that remained, especially the ones that are not named SpaceX, become much more important, right? And so, yeah, I think it'll be interesting to see if this deal does come to fruition. And, you know, we've had this knee-jerk reaction like AST, I think when EchoStar got announced, there was a knee-jerk reaction and the stock went down and then people kind of digested and they're like, oh shit, this highlights the value of what AST is doing. And this is a real market. And the spectrum that Legato, that spectrum, the spectrum that AST, the rights for Legato that they bought are highly valuable. And so I think there's going to be a similar type of reaction where people It's going to take a few days, maybe less than that for people to kind of digest this information and think through what the strategic implications are. Because I think if this deal does happen, then there's, I mean, there was already going to be this duopoly, but I think it's becoming much more solidified.
[00:23:56] Speaker B: Right.
[00:23:56] Speaker C: And so there's As I mentioned before, there's going to be this vertically integrated SpaceX Starlink stack, and then there's going to be AST SpaceMobile and all the MNOs and the other Amazon, Google, Meta, any number of companies where connectivity is going to be paramount. And so having an alternative, those 2 alternatives are going to be key. And I think When looking at the direct-to-device market, which initially started out as a coverage for dead spots, but now because of the use of satellite spectrum where you're going to have 100% coverage and thinking about connectivity for devices, whether that's IoT stuff, drones, vehicles, whatever it is, right? Like then I think the market is now fully starting to appreciate what this means and the value there. And so, yeah, so that's, those are some initial thoughts. As I said before, I think these leaks are from Globalstar. They're trying to gin up interest because they're trying to sell the company, obviously, and they're throwing out the SpaceX name there. And you saw this before when EchoStar was in the process of trying to sell itself. And so I think the probability of something happening here is pretty decent. But the wildcard is Apple, right? And so does Apple, are they okay with this? Do they go along or do they actually buy Globalstar themselves, which I don't think they would do? Or on the flip side, maybe they just let SpaceX have it and decide that, you know, their foray into satellite communications, just let other people kind of do it and then we'll just focus on handsets. But I think what this means for Iridium is that, and this is like if you put your investment banking hat on, if Globalstar's process is going on right now and you kind of knew about it, then you would try to put Iridium up for sale too, because the last thing you want to do is be kind of the last player standing and then not be able to dictate your future. And when you have an asset like Globalstar Iridium that is kind of eroding in value over time as some of these newer players become much more capable, you try to get strategic value now versus later because that value potentially could be lower later. But I think like, yeah, I guess a crazy scenario would be if this deal does happen, then, you know, my guess is that the probability of AST doing something with Iridium at some point in the future goes up, although that's not There's no like rush to do that. But then I think another potential scenario, just spitballing, is that maybe they do something and you get strategic investment from some of these other players as well, meaning, you know, we're going to support this alternative and we want it to be, we want there to be an alternative to Starlink and we're putting more dollars behind it. But anyway, that's a lot that I've just covered. I will look at any questions here. Let's see. People usually have pretty good questions. Any insight into which investment bank Globalstar is working with? I don't know. I'm going to guess. Let me see here. I mean, I actually, they don't really have. Good investment banks that cover on their own research side. But yeah, I'm not sure. They, I mean, it doesn't matter who covers you on the research side. You can call out Goldman Sachs or Morgan Stanley, and if it's a $5, $6, $7 billion, $8 billion transaction, like anybody will work with you. So I don't think that's an issue. Let's see, could SpaceX buy both Globalstar and Iridium? The answer is unequivocally no. So from a— oh, this is a good question. So from a regulatory standpoint, I, and of course I know the Trump administration approaches regulatory matters quite differently, but from an antitrust point of view, SpaceX specifically would not be able to buy Globalstar Iridium because that would make them a dominant monopoly and that would be dead on arrival. Right? So could Starlink buy Globalstar? It's not a layup actually from a regulatory standpoint. They probably, it would be a very rigorous review and there might be concessions or changes that they would have to offer up or divestments even of some spectrum to get the deal done. The other thing too is that by acquiring Globalstar, that would make the regulatory review for EchoStar probably longer and it could make that review not as smooth. Although I think that deal probably still gets done. But yeah, they would not be able to buy both. They would, I, my guess is SpaceX would be able to buy one of them, but not both. Because there would be no other options. If they were to buy both Globalstar and Iridium, then they would basically control at least the near term, satellite phone services. Although over the medium term with AST coming in as a competitor, perhaps the competitive dynamics there would be okay. But I don't think they would be able to buy both. They would be able to buy one, but not both. All right. There's another question. Apple owning so much of Globalstar capacity, how would a sale to another buyer work? That's a good question. I'm not really sure. If Apple buys Globalstar, then that's pretty straightforward. There's no issues there. But if SpaceX buys Globalstar and Apple's rights, 85% ownership of capacity of the current and future constellation come into play, then SpaceX will have to work that out with Apple in terms of whether Maybe Apple gets paid to just go away, or Apple will say, hey, great, I get 85% of your future constellation and I don't have to do anything about it. Or Apple just says, pay me, I'm leaving. I don't want any more to do with this thing. So yeah, it's unclear. Let's see. When do you think Bezos Blue Origin will realize that this project is going to be obsolete before the constellation's fully deployed, given that both AST and Starlink are now racing to build constellations that won't require user terminals. What steps might he take to mitigate this disaster? Are there chances of partnering with AST gone up significantly? Okay, so this person's asking about Project Kuiper, which is doing fixed wireless. I don't think that changes. I think just given Amazon and Bezos's financial heft and the importance of the connectivity for AWS and all the future stuff that they want to do, I think that constellation's going to be fine. And for fixed wireless, direct-to-device is not going to be a replacement for fixed wireless, although in the future it could, if the handsets get stronger. But that's like a different application and I don't think— I think they're going to be 2 separate distinct markets. But that said, could Bezos partner with AST SpaceMobile SpaceMobile? Sure. Yeah, it could. I don't know why you would need to. I mean, you, I guess you could like get some synergies in terms of satellite manufacturing and maybe offer the service in combination with one another. But AST already partners with MNOs, so they don't really need distribution. And then, you know, Kuiper is going to be competitive with MNOs, so that's not going to be that's not going to be a great fit. But then, you know, do you, could you see Amazon or Blue Origin partnering with AST or making a strategic investment? Yeah, sure. And by the way, like the company doesn't need cash. We've raised a lot of money. And, but at the same time, I think if folks want to make an investment, just like, you know, Nvidia made an investment in Nokia, in order to kind of put down a placeholder of strategic importance that this company is important and they want to be involved and we, you know, maybe they get board observer rights or something, then yeah, that potentially could be possible. But yeah, I think Bezos and Abel are friends and they're clearly, you know, working closely together. So something could happen, but I guess at this point I'm not, I wouldn't be betting that somebody will. Now, the outside, there's an outside chance that, and I guess let me, this is worth giving some level of background. So before Abel took the company public, they did put in place dual-class voting structure where Abel has, you know, super voting power. And so he effectively controls the company. The reason why they did that is when the company was raising their Series B round, I forget, there was strategic interest. And my guess is that it was American Tower and, you know, maybe AT&T or some, maybe Vodafone, who knows, but they were interested in potentially buying the company. And when you're faced with that, when you're raising money and you have, you know, the desire to build your company and go public and achieve your aims, What you don't want to have happen is you don't have structural defenses in terms of corporate governance where perhaps someone's going to short circuit that process, right? So if you don't have supermajority voting, you know, you have an activist come in or you have a hostile acquirer come in, they buy a bunch of stock and then they basically try to, you know, replace your board and force you to sell the company because they want to buy your company. That's what you want to avoid, right? And so that's why this dual-class voting structure was put in place. It was to give Abel the control and the time in order to build a company, right? And so if you can imagine, like when AST was trading at $2, it would've been easy for Globalstar Iridium to then try to buy some stock and then force the company into a sale, which in the current structure where Abel owns the majority of the voting rights, that can never happen, which is why it's important that you do have in some of these types of companies that are highly strategic, that there is a dual voting class structure where the votes and the control of the company is closely held, where you can't be forced to sell before you get to your end goal. But that said, I know Abel wants to build this company and he's not a seller. He's not a proactive seller. He's not interested. He truly, I mean, I think someone had talked to IRR after they raised the last convert and they, the IRR specifically said to them like, Abel didn't sell any stock at $100 because he thinks it's worth much more than that.
[00:35:31] Speaker A: Right.
[00:35:31] Speaker C: And so that's his mindset. And so I don't think even if Google came tomorrow with like a check for 100% premium or 200% premium, whatever it is, like I don't think A bell's a seller. And I guess while we're on the topic, you know, what potential buyers could fit for AC SpaceMobile. Well, you know, sometimes people say, well, why doesn't Verizon or AT&T buy them? Well, that would actually be value destructive. I mean, sure, they could pay all cash and that, but then it would be value destructive for the enterprise in that if your business model is to partner with MNOs globally and be kind of this neutral party that just does wholesale wholesaling, You do not want it to be owned by an MNO. You want to be neutral in that regard. And so selling to an MNO just doesn't make sense because then if you sell to AT&T, then Verizon's going to be like, well, I'm not sure I really want to work with these guys anymore. And so that wouldn't really work. I think there are a few potential buyers where it could work, ones who work with MNOs or are semi-friendly. and the business model's compatible. And so, you know, naturally that would be Apple could be a potential buyer. Google, of course, because of Android, that could be another buyer. The tower guys to an extent, like American Tower, they could do a deal, but then that would just be, just given where AT&T trades now, it would just be really difficult for them financially because it would be very dilutive. So I don't think I think the tower guys could have did it before, but not anymore. But yeah, it could be probably one of those tech players. I mean, a Meta could do it, a Microsoft could do it as well. But I think in terms of strategic fit, Apple and Google make the most sense. That said, like, I don't think they need to do it. And I mean, financially it would make a lot of sense and strategically make sense, but they also can just play nicely with the AST and Starlink, right? Although I guess for Apple, because they manufacture hardware and handsets are important for them, that could be a problem, right? And so that could prompt them to do something. And so yeah, this is a fascinating time to be invested in the company. You know, it was only, I mean, if you were to ask people like a year ago where things were when the company was trading at $2, And Iridium was on this like CapEx holiday and Globalstar partnered with Apple, was like rolling out their SOS messaging service, or people started using it and Starlink started to roll out some beta services on its constellation. My, how things have changed, right? Now you've got Globalstar being forced into a sale. And Iridium, for all intents and purposes, is being forced into a sale. And it's unclear whether that will be a good sale or a bad sale. But both of those players, they see the writing on the wall and the terminal value's not great. And so they're basically, what they're valued today is spectrum value. And right now there's only 2 players that can really utilize that spectrum. There's AST SpaceMobile and Starlink. Like those are the those are the players that have the satellites that can utilize the S and L-band spectrum efficiently, right? And with Starlink, on the one hand, it's great. They've got launch and they're vertically integrated, so that's wonderful. On the other hand, they compete with MNOs. And so there's like this uneasy aspect of their business model, which is going to put them at some type of disadvantage. But then you've got HD Space Mobile who doesn't have launch, but then as we've discussed, launch is becoming something that's, every year becomes more plentiful. You've got SpaceX, you've got Blue Origin, you've got Rocket Lab eventually, you've got Mitsubishi, which launched their H3, you've got ISRO. I mean, there's a whole host of launch coming to market. 2026 is still going to be somewhat tight, but then 2027 is when the floodgates are really going to open. And so, but yeah, but you've got AST who has spectrum, has the MNO partnerships, has the capital, has the technology. And so, so yeah, it's a fascinating time to be an investor. And I think with these headlines, you know, people kind of have this knee-jerk reaction and think they've got to do something. In this instance, yeah, you don't have to do anything. If anything, like I bought a little bit of AST on the dip, But this stuff should come as no surprise and it should be expected, right? Like Iridium and GoldStar will ultimately not serve. They will not survive and will be consolidated as part of Starlink or AST at some point. Maybe not today, maybe not in a few weeks or months, but at some point in the future it's going to happen. Because as our favorite cat would say, Spectrum finds its way to the highest value and most efficient uses. And clearly the legacy constellations, like that's not where it's at anymore. And so that's why you're seeing these deals happen. You know, you saw AST kick it off in January by acquiring Legato spectrum rights. And then, you know, what was it, 2 months ago? SpaceX buying Globalstar's, or sorry, EchoStar's AWS-4 spectrum. And now you've got, now you've got the rest of, you know, you've got the leftovers, right? You've got Globalstar and Iridium figure out what they need to do. So anyway, let me just see if there's any more questions. Let's see. Globalstar is ass. I used it on my iPhone, could barely send a text, 5 to 10 minutes for a small text message. Yeah, that's That's the problem with Globalstar and that's why they've got to sell because that is, yeah, it's a tough service. They're limited on their service and they've got this huge CapEx spend to put up a new constellation, which who knows if it's going to work well. I mean, they're relying on MDA Space to build those satellites for them. And as we all know, you typically want to do everything in-house because Building a satellite, testing it, optimizing it is not something that you can just contract out. You actually need to do it yourself. Let me see here. There's more questions. Kind of crazy I'm doing all these spaces now. I guess, I guess it's busier. See? Oh, there's a few more questions. Lee's asking, is either Iridium or Globalstar worth more to SpaceX from a spectrum perspective? Why one over the other? They're both valuable, right? So, but I think Globalstar has more spectrum. It has, as I mentioned before, let me just look. I keep track of this stuff, like 8 megahertz of L-band spectrum for uplink and 16 megahertz of S-band for downlink. And then they've got a whole bunch of C-band spectrum for their feeder. I don't know if that's exclusive though. So, but yeah, I mean, I think it's a given for any of these companies that have old constellations. The value is not running the, you know, running status quo. The value is shutting down the old constellations and and reusing that spectrum under your new constellation. And so that's where all the value is, is the spectrum. And so Globalstar has more spectrum. Iridium has global L-band spectrum, which is about 10.5 megahertz, which I think could interestingly fit with AST because there is— that sits right next to L-band Ligado spectrum. And so there's potential synergies there. However, the issue with Iridium is that it's just a single band of spectrum. So they actually do, I think it's something similar to TDMA where you do time division multiplication access or whatever. I forgot what it's called, but you basically, you have these signals that will send up and then you wait and then send signals down, but you basically communicate bidirectionally on the same channel, but you have to do that in a sequentially timed way. And so it's not as ideal, but then—
[00:44:17] Speaker A: Yeah.
[00:44:18] Speaker C: if you are, if you're one of these new players and you're getting your hands on other S and L-band spectrum anyway, then just adding Iridium's L-band spectrum to your portfolio, like that's pretty attractive because it is global in nature. But yeah, it's because it doesn't have dedicated uplink and downlink, it's not as valuable. Although they do have a nice little business that, you know, eventually over time is going to erode. But yeah, I think for Starlink or AST, either company's spectrum would be quite valuable. But that said, I don't think Starlink or AST probably would care to do a deal now. They probably would wait because these 2 companies are in a tough spot and you would kind of let them, you know, the whole melting ice cube analogy, you would just let them kind of go downhill and then hopefully buy them on the cheap later. But, and this is kind of the risky gambit I think that Globalstar is running is that they've put themselves up for sale and they're hoping that someone's going to pull the trigger at the price that they want. And so sometimes you'll have these leaks and the company's for sale and then you don't really read anything for months and then all of a sudden they're stock can drop and then it's like, oh, the sale process failed. And then the company's in a tough spot, right? Because they tried to sell the company, no one was there, and then they're back to square one. And so yeah, we'll see. We'll see how it goes. But I think there is value here and whatever deal, first deal happens, then it's likely that the second deal eventually happens, but unclear when. But anyway, Let me just see if there's any more questions. Grok thinks there's a 90% chance that Apple takes a stake in AST if SpaceX buys Globalstar. Interesting. Yeah, I mean, it's like all these AI chatbots will tell you whatever you want to hear, or they tell you kind of awful stuff. Is it possible that Apple takes a strategic investment in AST and then tells SpaceX, like, we're fine and go ahead and buy Globalstar. Yeah, it's possible, but it's also possible that they're totally happy with SpaceX and they try to further integrate into SpaceX's ecosystem, which I think ultimately, like, if Apple does decide to sell Globalstar, they'll probably just end up playing nice with everybody. And you've already seen hints at this where even though they own Globalstar, Apple is trying to shape the next 3GPP standard that integrates NTN, non-terrestrial networks, which is satellites. And so they're trying to drive standards around Ligado Spectrum, EchoStar, Globalstar, like basically all satellite players that were trying to determine or shape that framework. And as they should, right? Because they're a handset guy, they want to make sure that their phones work with all these current and future potential services. And so yeah, I think for Apple to make a strategic investment post-transaction, whether it's in Globalstar or AST, I mean, that obviously would be pretty powerful and interesting. But yeah, I don't know. It's I think for this type of situation, you kind of have to put your chips into what company is going to carry the day strategically, like who has built a good business model and what makes the most sense, right? And so I think for Starlink, there's still quite a few questions. And by the way, like buying companies, buying these companies is not a panacea. It's not a solution. It's not as if like I buy Globalstar or I buy Iridium tomorrow and then I shut down their constellation and then I can like light up their spectrum. As anyone who's been involved in an actual merger, it's pretty complicated. And so I would assume, you know, you would slowly over time you would harvest, you know, you would run these things for the cash flow, but then you would start shutting things down. You know, merger integration would be a pretty decent lift, right? And so And then over time you would decommission satellites. You'd have to go through a regulatory process to repurpose that spectrum for LEO use. I mean, there's a whole— it's not as if tomorrow you can like snap your fingers and the deal's done and immediately like, you know, you're off to the races. There's a lot of steps that have to take place in order to get to a point where you've closed down the old constellation and then you're lighting up the spectrum with the new constellation. But yeah, I think if you're planning for the long, long term, which is what Acespace Mobile has been doing, and of course I'm sure Starlink as well, then yeah, you're probably willing to take that type of bet and go through that process, which is going to take a while. But anyway, I've been talking for a while. I'm going to end it there. Maybe we'll have another space at some point with, as more news comes out, but I'll be writing more about this. And yeah, I think you gotta really, you know, I've seen these situations over and over again where you've got like this new, you've got new players in this market and then there's, it's like a huge opportunity. And then, but it happens the other way around. It actually, large players come in and buy the small guys because the market's so big and strategic. Whereas here, You've got the new players that are worth more than the old players, and then they might go consolidate and buy them. But I think it's important to note that this market is going to be a 2-player market. There's already alliances and battle, the lines are being drawn. And so there's Starlink, it's a private company, it's highly, highly valued, $270, $280 billion. And you got AST SpaceMobile, the scrappy company out of Midland who has developed over 50 global MNO partnerships around the world. Now we've got what, 4 definitive commercial agreements, one that was announced with Saudi Telecom. They're paying $175 million upfront and the contract is worth, depending on how you read it, maybe it's $1.8 billion. And these are minimums over 10 years. Which that deal also opens up S-band spectrum in Saudi Arabia and probably over 15 other countries. And, you know, we've got strategic investment from Google, American Tower. I mean, these are all things sometimes we forget. And, you know, a launch partnership with a whole host of, you know, SpaceX, of course, Blue Origin, ISRO, and perhaps a few others in probably the next year. We'll get inked. And so, yeah, it's an exciting time. And I think for anybody, whether you are a SpaceX shareholder, you should be quite happy. If you're an AST SpaceMobile shareholder, you should be quite happy because I think this ecosystem is going to evolve down to 2 players, which are those 2, and the economics that they're going to be able to charge are going to be very high. And the service, the value of the service is going to be very high. And it's going to be dual use, right? It's not just going to be consumer, but it's also going to be defense and government applications as well. So as we think about like AI in the connected future and what's required, yeah, I think these 2 companies are going to stand out and yeah, we're lucky to have caught lightning in a bottle and now we're seeing The power of these 2 companies that are basically now putting the old incumbents out of business and taking over. They're not even taking over their businesses. They're just, they're like, I'm going to buy you for your spectrum because I can use it much better than you. And so that's a pretty powerful statement. But anyway, I'm rambling now. I'm going to end it there. We'll talk again. And yeah, if you guys have any questions, feel free to Add it to this tweet, and I'll try to answer them if I can. But we'll talk again.
[00:52:51] Speaker B: Thanks.
[00:52:52] Speaker A: Thanks for listening to the AST Space Mobile 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 Space Mobile, make sure to subscribe. Thanks again, and I'll see you next time. See you next time.
[00:53:15] Speaker B: We're doing something very, very big, and I think with this technology we can really affect a billion lives. Safety Space Mobile is the only company that has proven technology to deliver cellular mobile connectivity directly from space to the everyday smartphone. People will just basically turn their phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the MNOs.
[00:53:49] Speaker A: Listen.
[00:53:57] Speaker C: Mmm, waffles.