$ASTS: Why the Telco JV Is Really Aimed at Starlink

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[00:00:59] Speaker B: Everyone, thanks for joining. Thought I'd fire up a space post-announcement yesterday of the telco JV and also wanted to cover a few other items as well. So, um, we'll just get right into it. And yeah, today, frustrating day. Of course, we, we got downgraded by B. Riley for, um, I guess what they view as good reasons, but I will cover that as well. But yeah, it just seems like, I think for anyone who's invested in AST, pretty frustrating. This stuff can and does happen. And so we'll just have to, at least for me, I'm okay with just riding it out because I know as the company continues to execute, the fundamentals, the price will catch up with the fundamentals, but it is what it is currently. Anyway, so I did want to talk first about the AT&T T-Mobile, Verizon joint venture, which was announced yesterday. I think it was yesterday. I think there's obviously some level of market confusion, and that's partially on purpose, because I think those 3 telcos want to keep things somewhat vague and also open. The reason for that is this joint venture once it actually gets fully inked out and has to go through regulatory review, this has to pass muster in terms of antitrust, right, with the Department of Justice and then the FCC. And so some of the language that was used there might have thrown people off to a degree, and I'll cover why I think it squarely fits with AST, but they kept it open, right? And over the long run, I think it's good for the industry to encourage competition, let the best technology win. But I think also it introduces for some people some level of uncertainty. And of course, the question of whether Starlink is going to get some type of contract from this joint venture, which I can tell you that's unequivocally not the case. 'Cause this joint venture was actually created to counter Starlink, which I think maybe is over the heads of some people. But yeah, let's just get into it. So AT&T, T-Mobile, Verizon, they announced the formation of this joint venture, I think it was back in May, and it was in strategic response to Starlink. Starlink, who, as we know, is looking to go direct, compete directly with carriers, and is looking to stand up its own terrestrial service. Starlink, ideally, in a perfect world, would get one of these 3 carriers to defect and operate as a mobile virtual network operator. So what that means is whether it's Mint Mobile or Boost Mobile, Starlink would hope to enter into an agreement with T-Mobile or somebody that would allow them to essentially rent network capacity on the terrestrial side, and then they would augment that with their satellite service. And so as we've been seeing over the last several months, as T-Mobile became smarter to what was going on, and then of course, AT&T and Verizon, they've been very adamant that none of them are going to provide an MVNO agreement to Starlink. And so as a result of that, you had Gwynne Shotwell and Elon Musk say, well, with our EchoStar spectrum, which is in the 2 gigahertz range, we're going to go compete directly with the carriers. And of course, industry skeptics, including myself, wondered how that would be possible. And then Starlink in their most— or SpaceX in the most recent earnings call said that they're going to deploy a ton of femtocells. They're going to utilize the Starlink dishes that people have, and then they'll create a new I guess, a new dish that's going to have these repeaters or these small cell radios that will allow them to deploy terrestrial service. There's been some speculation, maybe they'll use Tesla cars and a whole host of other things, but needless to say, there's a significant technological hump they've got to get over and a massive CapEx spend if they truly want to build a terrestrial network. And they'll have to get their hands on some low-band spectrum if they do want to make that a true competitive alternative to the 3 carriers. So as a result of Starlink's positioning and SpaceX's ambition to go after the carriers, the carriers formed this joint venture. And so this joint venture has several aspects that it's putting forward. So previously, AT&T and Verizon came together in their own partnership. They contributed 850 MHz spectrum, which is the pooling of low-band spectrum, and they put that forward to work with AST SpaceMobile. They also made strategic investments in the company. And so this joint venture, if you think about it, AT&T and Verizon have already kind of laid the framework for this joint venture. Both companies have been testing with AST. They've been developing ground stations, and they've been doing the integration work with their network cores to the AST gateways and the satellites. And so this joint venture is really an extension of what AT&T and Verizon have already been doing, and they're just welcoming in T-Mobile. Now, the reason why you would create this joint venture is that, you know, there are, first of all, originally there were 2 parties, AT&T and Verizon, who dislike each other. But then they decided to work together with AST. Now you're welcoming in T-Mobile. And while that sounds really interesting and a joint venture puts a better wrapper around the ability for the 3 carriers to work together, because if it's— I mean, if you can imagine if you're a manager at AT&T and a manager at T-Mobile and someone higher up is like, hey, you guys need to work together and we're going to go launch this thing. That's really hard to do because you probably don't trust each other, right? And so in the framework of a joint venture where it has its own separate management and there's gonna be people there, you would hope that that goes a bit more smoothly because the joint venture is governed in a different way, right? And so here, the first aspect of what the joint venture is doing is that they're pooling scarce terrestrial spectrum, right? And so what does that mean? If we're talking about scarce terrestrial spectrum, we're most likely talking about low-band cellular spectrum, 600 to 900 megahertz. And so I think it's important in the context of the joint venture to understand that when they say, hey, we want to work with a bunch of satellite guys, we want to foster competition, let's drill down. What does that actually mean? If they're pulling together a terrestrial spectrum, which is on the low-band side, 600, 900 megahertz, there's only one player that utilizes that, and that's AST SpaceMobile. There's only one player that can reuse that spectrum in an efficient way that has a large phased array that can actually put down very accurate spot beams that does not interfere with the existing terrestrial network. That's only one player, right? And so when they talk about pooling scarce terrestrial spectrum, they're talking about AST, and they're talking about something that they've already done, AT&T and Verizon, which is pull together 850 MHz spectrum. Right? And so here you're just formalizing that previous, you know, hey, we're working together, we're going to enter into lease spectrum leasing agreements with AST. Now we're going to do that on a more formal basis together, right? We're not going to do that independently, we're going to do it together, and we're going to bring in T-Mobile to do that. And so, you know, someone might point out that Starlink does use T-Mobile's PCS G-block, which is closer to MSS, it's 1.9 GHz, And yes, but when that agreement with T-Mobile ends, which I expect probably in the next few months, because I think T-Mobile, either that agreement will sunset or they will terminate it, then Starlink is going to lose access to the G-block. And as a result, those first-generation satellites are not going to have access to any spectrum until EchoStar that spectrum gets approved for satellite use, and then of course phones actually incorporate it into their chipsets, then maybe those first generations will be able to light that spectrum up. But T-Mobile will probably take that spectrum back, and guess where it's going to go? It will go most likely to be used for the Block 3 Bluebird satellites, which can utilize mid-band spectrum. So that's adding on top of Legato spectrum, which is 1.5 and 1.6, or sorry, 1.7, and then this T-Mobile PCS block. And then we've talked about potentially AT&T contributing, I think it's their WCS band as well. But anyway, but yeah, so pooling together spectrum, scarce terrestrial spectrum, that kind of hints at where this is going. The players, the other players who might conceivably work with the company don't need terrestrial spectrum. So that would be Amazon, because they already have Globalstar spectrum. If you're thinking about potentially Iridium being a player here, Iridium already has their L-band spectrum. It's just under 8 MHz of total spectrum. It's within one band. There's no uplink and downlink. It's actually shared as one. And then there's ViaSat, where actually ViaSat is not in the US market, Actually, I take that back. They have a little bit of L-band spectrum in the market outside of Legato. We'll talk about Equitas and why is that, and I guess B-Rally's reaction to it. But I think it's important that this JV seems to be focused on one particular area of pooling of spectrum. I mean, we'll find out more, and one player that will be leveraging that. which is AST. There is this discussion. So another point is that the JV wants to create opportunities for more satellite operators to compete and grow. And so that's good. That's good for the US consumer. Like, hey, let's open up competition over the long run and may the best technology win. And so from a commercial perspective, that makes a ton of sense. And by the way, these carriers over the long run, and I mean, if beyond the 5 years that AST has with AT&T and Verizon 3 years, they don't want to necessarily be locked into one player. And so with that said, obviously, from a competitive and regulatory standpoint, that's language that you need to use. You can't go to the DOJ and say, hey, we're going to form this JV and we're going to use just one company. You have to say, hey, we're doing this to foster competition. We're going to open it up and this is going to be great for the consumer. And so that's how they position it. But could they conceivably work with more than one satellite operator in the future? And the answer is yes, they absolutely can. So we already have a model of that and there could be tiers of service. So the model that exists today is Verizon. You can look at Verizon, they're working with AST on broadband, and then they have an interim solution, which is Skylo for texting. Right? And so Skylo aggregates capacity on GEO satellites, and they've been able to, you know, provide some level of texting service similar to what Globalstar does for Apple. And so Verizon offers 2 tiers of service. I mean, they're not offering anything yet for AST, but for emergency texting, they provide Skylo, right? And so the key question though is in the future, what could that look like? And so Could the MNOs provide multiple satellite services? It's possible, but I think the key question is, you know, what for your customer— you might provide them with a menu of options like, hey, you can have broadband or you could have texting, but, you know, what level or what quality of service do they really want to push forward to customers? Like, in the premium plans, you're not going to incorporate just texting, you're going to offer broadband. Then maybe for low-end plans, you would give them a choice, hey, you can add broadband for, I don't know, $12, $15, you can add texting for $3. But I think over the long run, for the MNOs, they will try to keep things simple. So maybe offering 2 tiers of service and leave it at that. For AT&T and Verizon, in particular, in AT&T, it's just going to be AST for that 5 years. For Verizon, they can continue to offer Skylo and AST. And then for T-Mobile, that's where it gets interesting, because there's no exclusivity there. And so I've argued that once AST launches service and they sign their definitive commercial agreement with T-Mobile, T-Mobile will likely offer both AST and Starlink for some period of time. Because I think from a regulatory standpoint, in order for this JV to get approved, you wouldn't cut off Starlink early, 'cause you're gonna say, hey, we're giving customers the choice. And maybe T-Mobile will continue to do that. But the key question is, and this is what part of the JV is trying to address, is how do you maintain the ability to service 2 satellite systems?
[00:15:17] Speaker A: Right.
[00:15:18] Speaker B: Right, and so, and that's a key question. I don't know if that's going to be possible, but you know we can dig into that a little more here. So one of the things that J.V. talks about is pushing forward common technical standards covering satellite integration devices, operating systems, apps, apps. You know when discussing that, for example, as we know Meta is working with A.S.T., but they also did some level of optimization with Starlink because Starlink is. The Gen 1 satellites is low-band, or sorry, narrowband data. So they had to optimize WhatsApp for that. And so when it comes to standardization and optimization, it makes sense that this joint venture is going to try to work with AST and conceivably maybe another satellite operator to make sure that there's common technical standards, right? And that's easier to do with AST because—
[00:16:17] Speaker A: College football is back. So Hilton called in me, the Superstition Concierge, to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Ooh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition, even a marching band wake-up call at 5:55 and 55 seconds.
[00:16:40] Speaker B: Hit it!
[00:16:41] Speaker A: When you need a team that will do whatever it takes on game day, It matters where you stay. Hilton. For the stay.
[00:16:47] Speaker C: This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9% of grease, leaving your dishes sparkling clean. And the new convenient pump makes Cleaning even easier so you can spend less time tackling dishes and more time together. Shop now at palmolive.com.
[00:17:17] Speaker B: That's already happening with AT&T and Verizon. And so here, if you're bringing on T-Mobile and you're saying, hey, we're going to circle wagons here, we want you to work with us, T-Mobile is going to say, well, hey, I'm behind on integration. This is not fair. the joint venture, it's like, hey, okay, we will share IP with you based off of all the integration work that we've done to date. We'll get you up to speed. Oh, by the way, you can tell us what the pains were and the learnings from integrating with Starlink, and then we're just going to create this open standard for everybody to leverage this system. And so that's the aim of this JV. They want to have open standards. And interestingly, what company works with open standards? That's ASC, right? Because the architecture is bent pipe. There's no processing that happens on the satellite itself in terms of— there's signal processing, but there's actually no processing of routing calls and things like that. That actually happens on the ground with the eNodeB is actually the brains of the network are on the ground versus Starlink, where the brains are in the satellite itself. And so when the customer is using the AST constellation, the MNO actually keeps control of the customer and all the traffic stays on their network. It doesn't go anywhere else. It doesn't go to a different region. It doesn't go between satellites. It goes from the phone up to the satellite and back down to the network core of the MNO. And so there's only one player doing that right now, which is AST. Now, Equitas, which B. Riley brought up today, Equitas is actually, which is the joint venture between ViaSat and Space42, which Space42, I'll talk a bit more about some interesting aspects of that company, but Equitas is actually proposing the same architecture, because they saw the writing on the wall. They saw what AST, the amount of commercial traction they're getting, and they're like, hey, we're going to go do that too. So at least in theory, that's the way that they want to approach the market, right? More of a bent pipe. The MNO controls the routing, the customer, and we're just here as infrastructure. The folks that are not doing open standards are Starlink. Starlink has its own proprietary network. Everything happens on the Starlink network. The eNodeB is out on satellites. There's inter-satellite links. Your traffic can go between satellites. It could go to a different country for all you know. And what happens is Starlink actually operates as a separate roaming network. So if you can imagine having like an eSIM on your phone, once you're out of coverage for T-Mobile, then you would roam onto the Starlink network. And so Starlink takes the customer that point. And that's obviously a big risk for T-Mobile, right? Because T-Mobile, currently their customers do roam on the Starlink network. If that network gets better over time and Starlink starts pushing its own service, then who's to say that your customer won't leave for Starlink? And so when talking about the JV, or the context of the JV about pushing open standards, Starlink doesn't fit that. Amazon, interestingly, as we learned in FCC filings over the last few months, is pushing the same architecture. They will run a proprietary network. It'll be separate. I think Amazon's okay with that because I don't believe Amazon is looking to start their own service, but they have a whole host of reasons why building an Amazon ecosystem via satellite, you have a lot of Amazon devices, drones, delivery trucks, whatever it is. There's a whole host of reasons of why Amazon was interested in buying Globalstar, and they can run something in terms of their consumer business. There's a lot of things that they can do with that, but they are going to be a separate proprietary network. So when it comes to interfacing with the JV, that's not open. Take what you will of that. Iridium also similarly has their own proprietary network. And so back in the day, if you would ask, would Iridium work with AT&T? The answer would be no, because Iridium actually operates a completely separate network. They're not obviously direct competitors with the MNOs, but you can use an Iridium phone in lieu of AT&T or T-Mobile because they have, of course, nationwide spectrum, but they have intersatellite links. They have their own system. If you were to somehow use the Iridium system, remember when they tried to develop their own direct-to-device technology and were working with Qualcomm on Project Stardust? They were hoping that handset manufacturers would incorporate that in into their chipsets. And of course the MNOs threw up all over it, right? Because at the end of the day, Iridium is a direct competitor to the MNOs. And so will the joint venture work with Iridium? Highly unlikely, but we'll see. So the other thing that the joint venture pushes forward is that the existing agreements stay in place. And so, as I mentioned before, AST has a 5-year agreement with AT&T. Verizon has a 3-year agreement. I think it's 3 years. That's my own speculation, by the way. And then Starlink is with T-Mobile, and I believe there's only a few months left on that agreement. And as we learned in the SpaceX IPO prospectus, that agreement can be terminated at any time. So let's talk about regulatory positioning. So in order for this joint venture, some might view this, and some of the AST bears would say that, oh, this is a buying cartel. They're going to push down prices. That's possible. Yeah. It could be viewed as a buying cartel, but I guess my take on it is AST gets 50/50 with AST and Verizon for those periods of time. And then after that, yeah, they'll have to be renegotiated. But is it attractive to have 50/50 with 2 of the 3 largest players or to have, I don't know, 30/70? with the entire market, probably the 30/70 of the entire market. The other thing that I think is important is that, and this was pointed out in the B-Rally report today, they were talking about, oh, I don't know if pricing's going to get pressured and how much AST is going to earn. Well, by the way, the agreements with AT&T and Verizon, it's a 50/50 split of the end price that you charge consumers. So if AT&T and Verizon lower prices, then they don't generate as much revenue. So they're incentivized to push forward a valuable product that they can charge more for. So this idea that they're going to lower prices at their own detriment, that doesn't make any sense. Additionally, when some of these people talk about, well, ARPU is going to be lower due to competition, but folks don't talk about, well, if the price is lower, adoption goes up. And so there is something called supply and demand and Economics 101, where if you truly believed that pricing was going to come down 20% or 30%, then you also have to look at the other side of what How does that drive— do penetration rates go up? And so that's something that people immediately leave off. And this is, by the way, for these satellite services, they're not something that someone's gonna be connected to 24/7 and just draining a ton of capacity. And that's one of the great things about direct-to-device is that whether IoT devices are sending and receiving data intermittently, If it's a mobile user, it's for some short period of time. If I'm skiing and I don't have internet connection and I want to send pictures or do a few things, I'm not on the slopes watching a movie. I'm on the slopes skiing. Maybe I'll send messages to people or I'll take pictures, but it's not as if in these locations where you have no service or 1-bar service that You're looking to stay connected completely the entire time, which I think people forget. And so this is where, for example, with satellites, you overbook the service, right? And this is just like a terrestrial network. Like how many people are actually hitting the same cell tower at any given time? If you think about like where you live, most of the time you're spending in your house, right? But then when you're in your car, that's when you might use your cellular service. If you look at the utilization rates of people in the suburbs, it's not going to be that high. They're not taxing the cellular network. Now, if you're at a New York Giants game, then the cellular network there obviously is going to have different demands. Anyway, but yeah, I think— what was my point there? Going back to the regulatory positioning, yeah, in order to get this through the DOJ and the FCC, you have to frame this as a pro-competition, the aims of this joint venture being for competition. So that's one, opening up satellite services to other potential competitors, and then 2, giving consumers more choice. So you want to avoid this idea that somehow you're creating a buyer's cartel or that you're doing this defensively to keep someone like Starlink out. And so the wording and the aims of what you are planning to do have to be carefully put there. But I think for the joint venture in the near term, and by the way, the people who say, well, direct-to-device, it's a niche market, it's not going to really be that big. Well, you have the 3 largest and most important carriers in the world. They got together, formed a joint venture because they viewed this as potentially a competitive threat, especially from Starlink. And so they have to— this is the taboo word, but they have to coordinate. They have to coordinate the development of the technology. They want to open up additional options for it, and they need to make sure that they control it. They control— because even I bet in the boardrooms of AT&T and Verizon, there's probably some discussion of, hey, AST is a great partner today, but in the future, could they be a competitor? They just bought Ligado Spectrum. They're saying they're going to use it with us. That service will only be— that spectrum will only be brought to bear through us as partners, but in the future, what if we become too dependent on them? And so that's where this joint venture, as I talked about before, makes sense for the 3 to work together cooperatively, and to advance the technology. AST is gonna be an enabling provider. Could there be more? Yeah, maybe at some point in the future. Is that gonna be Starlink? No, absolutely not. But could Amazon get invited at some point? Yeah, maybe. And then some of these other players, Equitas, I guess, according to B. Riley. But yeah, I think it's important Perhaps for people that aren't close to following the industry, reading the joint venture press release may have been somewhat confusing. But let's move on. Those are my thoughts on the joint venture. Someone had asked the other day, does this mean that T-Mobile definitive agreement is probably— is it coming sooner? I don't know if the definitive agreement is coming sooner, but my guess is that there'll probably be a memorandum of understanding with T-Mobile first, just like we saw with AT&T and Verizon. So that could come at any time. But then a definitive commercial grant probably doesn't come until after the beta service is up, is my guess. Or actually, I take that back. I mean, a definitive commercial grant could come sooner, but those things take time, right? And then you've got kind of 2 things in parallel, this joint venture, which the company is working closely with, company meaning AST, and then T-Mobile, right? They're talking. So we'll see. But I do think we could, because this joint venture now has an executive, which by the way, someone had pointed out, well, that seems interesting. They appointed an interim head who's this former executive, Cingular Wireless, which was acquired by AT&T back in the day. That seems a bit rushed, but yeah, there's it's a strategic imperative that these guys get their house in order because obviously you've got Starlink who is coming for them. So I think AT&T, T-Mobile, and Verizon tried to stand this up very quickly, and they're trying to get this through regulatory review, which John Stankey, the CEO of AT&T, said that there is a good chance that there will be a second request, meaning the DOJ will review this and Beyond the 30-day antitrust review, they'll probably ask for additional time, which is a second request. And so maybe it would take 5, 6 months in total, maybe at the long end, 9 months to get this done. But yeah, so the ball is advancing. Let's see, let's move on. So I do want to talk about this guy, Wayne Thorson, who was added as an executive vice president and chief commercial officer. He was previously the an EVP and COO of SiriusXM, which is quite interesting. This guy, he oversaw major commercial agreements. He was focused on product, technology, distribution, and strategic initiatives across what— for those people that are unaware of SiriusXM, maybe out of the US, but SiriusXM is one of the largest subscriber businesses in America. Every car that you buy, in America comes with the ability to subscribe to SiriusXM. It's a satellite radio service. Sirius operates in the mid-2 gigahertz spectrum area. By the way, SiriusXM has been a speculative name too because it owns valuable spectrum, and some Sirius bulls think that eventually the company will sell its spectrum and then just become a streaming service over the radio, which I don't know if that makes sense. Maybe if you sold the spectrum and entered into an agreement with whoever bought it, maybe that could work. But I think giving up one of your strategic advantages, which is direct connectivity to the car, going around AT&T, Verizon, T-Mobile, maybe not a good thing. But anyway, this guy's pretty interesting because he has a tremendous amount of experience. One of the areas that I thought was that I thought was very relevant is that he led the device and services business development at Google. He was there for, I think it was, what, 6 or 7 years? And so he worked on Pixel, Google Fi, Fitbit, Nest, and other hardware platforms. And so in the context of working with handset guys, this guy's got tremendous experience. He also worked at Telefónica, so he's worked at an MNO. He worked at Microsoft, he worked at ADT, ADT is a security system company. They also are probably one of the bigger subscription businesses in the US. I have an ADT security system at my home. Then he also worked at SoFi. So this guy has an unusually strong background across multiple verticals and disciplines. He just recently joined AST. We only learned about it because he was granted 200,000 shares, and that was filed last night in a Form 4. So he Good for him. He came at a good time when the stock is low. But yeah, this guy looks like someone who, in terms of timing, seems like a perfect fit. So as AST's scaling relationships with AT&T, Verizon, T-Mobile, the joint venture, Vodafone, Orange, Telefonica— Telefonica is one of our partners and he used to work there, so even better— Deutsche Telekom, I think, what was it, Justin found that the language on the website has changed from 60 operators to over 60 operators, and so my guess is that they're starting to count T-Mobile and Deutsche Telekom as folks that they're working with. And so this guy seems like a really good fit, right? And so working with all those players while getting into government, automotive, IoT, and Android device integrations, right? Like this guy is gonna bring all that to the table. And so when he was at Sirius, I did see this interview where he had done a tremendous amount of work with auto manufacturers recently, 'cause I think they added new bidirectional capabilities to Sirius, you know, the radios that we all have. Typically it's just been one way where Sirius, you know, transmits music and events to your car, but now they've created this ability where it's like 2-way communication where you actually— it can interact with you. And so he talked about some of these new initiatives where previously at Sirius, if you owned a car and you sold it and you bought another car, you would have to basically reprogram all your new settings into it. There was no user ID that was transferable, whereas He brought in that innovation and then, yeah, there's more interactive stuff, right, that Sirius is doing now. But this guy just left. He left, I think it was at the end of July, and then he was hired by AST. And so based off the timing, my guess is that he had to take 2 months of garden leave before he could come to AST. I don't know if he was poached or, you know, I don't know his personal circumstances, but— but this guy seems like a hitter. We've got a really good person to come in. If you look at his experience, his career has evolved. I tweeted this around taking complex technology platforms and then turning them into commercial partnerships and distribution channels. So his experience too, the fact that he has a tremendous amount of experience with consumer subscription businesses around technology, and Sirius also owns satellites, and it's a service that's beamed down to customers. This guy's going to know a lot of the ins and outs around the commercial side of the business that quite frankly, folks at AST won't have. So some have asked, and I looked into this, does this guy replace Chris Ivory? Because Chris Ivory, as some people may know, he's been a long-tenured executive He came over, he had worked with Abel at EMC before, and his current title before yesterday was Chief Commercial Officer and the CEO of AST Defense. Well, I think Wayne comes in, takes over the Chief Commercial Officer, and I think given all the things that we have that are going on on the defense side of the business, I think that's where Chris Ivory is gonna be spending a vast majority of his time. So I think splitting up that role gives both more bandwidth capacity, and so just given the importance of what both are doing, I think it makes sense to bring on Wayne Thorson. And so yeah, this guy, the timing of his hire, I think just shows that we're, you know, obviously with our production hiccups, but we are getting closer and closer to building a revenue-generating and ecosystem around that building phase. So yeah, that was a good hire. There was also another, I won't talk about it too much, but there was an IP attorney who was recently hired as well, who was also a former engineer. I forget the lady's name, but she has an impressive background. The fact that she was hired and she has engineering background and has done extensive IP work, I think Perhaps that is kind of a hint of where the IP business is going, meaning there's going to be more attention focused on that area. And so someone had asked, well, has she had litigation experience? And I didn't see that, but you typically aren't going to hire an IP litigator. You typically want someone who understands IP, has engineering background. I believe she actually has space-related background too. But if you need to go after people, that's what you hire, Skadden or some of these other IP attorneys for. You don't hire a litigator, you outsource that stuff. But anyway, I guess my point is that we've got a number of key strategic executive hires that continue to come in through the door. And so yeah, exciting times. All right. So last topic, let's talk about B. Riley. So they downgraded the stock today. This guy, Mike Crawford, A friend of mine who works at a hedge fund gave him a call and talked to him, and I guess his takeaway— let me just read his words exactly this morning— was on the phone with Mike. Guy doesn't know what he's talking about. Affected by price action. Disconnected from reality. So that's what this guy wrote. But instead of poo-pooing it, I just wanted to kind of go through some of the points of this report. And so B. Riley today, they weren't downgrading AST because it thinks the technology's an issue or the core thesis is broken. It was really a reduction of the rating from buy to neutral, and then cutting the price target from $85 to $65, because this person, Mike Crawford, thinks that the risk-reward has become less attractive as competitive intensity has increased and there's more capital requirements supposedly, and then the uncertainty around consumer pricing. All right, so the main points are— let's go through this. So competition and cost are now the primary concerns. So B-Relay thinks that AST may need to significantly— may need a significantly larger constellation than originally planned. They referenced something closer to 248 to 344 satellites configuration in the FCC ITU filings versus the roughly 90 that previously were discussed for broad global service. So I want to make sure that people understand. The company has talked about getting 45 satellites for initial commercial service and then 90 for good broad coverage. But the plan was never to stop at 90. It's always been to keep going to eventually 248, and then with Europe, which I assume the delta between 248 and 344 will be the European satellites. And then we haven't even talked about the Japanese ones. The fact that B. Riley is like, hey, they might need more satellites, and so I'm going to downgrade the stock because of that. Where was this guy for the last few years? They've always had plans to develop multiple shells. And so I think it was a bit interesting that this guy is partially upset that there could be material— what he describes as materially higher long-term build and maintenance CapEx. Okay. If you didn't know before and then you woke up yesterday and, oh my gosh, this company's going to build beyond 90 satellites, then I don't know what to tell you. Which by the way, in Japan, they're spending— there's $1 billion allocated by the government, which actually Mike does bring up in the report, that is going to be provided to build satellites there. And I would expect similar things to happen with the US government when it comes to Golden Dome. I started reading The Kill Chain, which Cook recommended highly. I'm only shortly into it, but I can see why he, after reading the entire book, he understands how compelling— I mean, the book, the entire book, the premise is that the US military was built with these exquisite, high-value, low number of platforms, but they're not connected. The future of war is what China is doing, which is putting together swarms of autonomous drones and platforms that can be coordinated and connected. That's why space is so important. That's why AST, whether it's with the warfighter having cellular connectivity, but also for radar and sensing, being able to detect threats before they come, and tracking assets, and not only your assets, but also incoming missiles and jets. And then I think there was someone who posted yesterday that talked about how large phased arrays in space, and they referenced Starlink's Starshield, can actually detect and track stealth aircraft. And then Elon Musk was like, yeah, this is why stealth no longer makes sense. And so, and he specifically talked about, you know, if you use 2 GHz to, what was it, I think 36 GHz, then that can track stealth pretty well. Well, if you like 2 GHz, you're going to love 600, 800, 900 MHz, which can do an even better job with a higher level of granularity, right? And so that's where I think the radar and sensing applications, which people don't really give the company credit for, they'll start learning about that relatively soon. But anyway, but to my point, the constellations, yes, it's going to cost money, but as you deploy constellations, you get subscribers, you get commercial prepayments, you get those funded. And for the sovereign countries, some of them are going to put forward money to help you with that, just like Japan did. And just like AST is working with the US government and they're getting— at some point we'll learn that they're building a US government shell, and that's why we expanded our square footage significantly and are going to eventually get to— I know it sounds crazy, but we're going to get to 12 satellites a month because some of these satellites are not going to be bluebirds, they're going to be blackbirds. Right. So anyway, so let's move on. What else did he say? One of the issues that B-Rally said is that more spectrum may be required. And so they believe that AST will need additional— they might need to acquire additional spectrum rights beyond what has already been secured in order to maintain capacity and differentiation. And so that could potentially mean more investment. Well, Yeah. You might have to buy more spectrum. And for anybody that's followed spectrum for years, spectrum has always been a good investment. It's an asset that appreciates over time. And with AST though, you don't need to buy spectrum. I mean, they did with Legato, and perhaps there's other deals that they'll be doing. Not all of it is something that you have to pay for. Some governments will grant it to you. Like Brazil has granted AST a 10 by 10 megahertz block of S-band spectrum. In Saudi Arabia, I think STC has all L-band spectrum rights. They'll probably light that spectrum up with AST. Or in Europe, this is pretty fun. So the S-band 2 GHz allocation in Europe, which is currently owned by Viasat, they have a 15 by 15 MHz band of spectrum, and then EchoStar, which is 15 by 15 MHz. Both of those companies are potentially going to lose those allocations in May of 2027. And so we do know that 10x10 is going to be taken away and given to IRIS, which is the EU homegrown solution. There'll be a 10x10 megahertz band given to an EU-based competitor, which is most likely going to be Satellite Connect Europe. It's been well telegraphed. Bloomberg has reported that Satellite Connect Europe is well positioned for it. And so that's the joint venture with Vodafone, Telefónica, Orange, and now Deutsche Telekom. One day we'll see that PR when Deutsche Telekom joins Satellite Connect Europe. And so that will get a 10x10 allocation. And then the last 10x10 is up for grabs, right? And so interestingly, I'd made this speculative point before that with AST reflagging in Germany, there is this possibility where AST actually goes for that last 10x10 allocation. And so it's going to be up to the EU to say, do we give this to Elon Musk? Do we give this to Viasat? Or do we give this to AST? Or maybe another player, maybe back to Viasat. But I think one of the most compelling reasons why Viasat and EchoStar, but let's just focus on Viasat. I think one of the reasons why you wouldn't give it back to Viasat is that Viasat currently uses the S-band spectrum for providing broadband connectivity, if you can call it broadband, to airlines in Europe. And so I believe they generate somewhere around $60 million of revenue, which is crazy, right? Just $60 million on 15 by 15 megahertz of S-band in Europe. That's woeful underutilization, right? And so if I was the EU, I wouldn't give it to them. Similarly for EchoStar, now obviously if Starlink were to come in and get that spectrum, then they're going to have much better usage out of it. But EchoStar today has an IoT network that it uses and it generates, I think, around $20 million of revenue on that spectrum. And so I think their case for getting a renewal of a 10 by 10 band, which by the way, SpaceX is like, hey, we don't want— not only do we you should give us the 10 by 10, but that's not enough. You need to give us 15 by 15, which the U.S. said, no, that's not happening. But yeah, for both of those players who have sat on the spectrum for, what is it, well over a decade, they haven't used it. So if you haven't used it, then you should lose it. Anyway, so yeah, more spectrum. Could AST buy more spectrum? Sure, they might. But given the business model and how they're partnering with MNOs to leverage terrestrial spectrum, and then they're friendly with governments and they're building sovereign solutions, I don't think it's a foregone conclusion that they need to buy any more spectrum. Now, may they partner, might they partner with others and help light up?
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[00:49:53] Speaker B: You know, Spectrum, sure. Grain Management is a partner that we're watching closely. The companies got an ex— they applied for an STA to test on Grained 800 MHz, and they got that extension, I think it was this past week. And so by— was it November 5th? We're going to learn whether Grain is working with AST or Grain is working with someone else. And so one of the important things is that in the FCC approval, of the transfer of that spectrum from T-Mobile, which was sold. It was sold to T-Mobile partially in a spectrum exchange and then also for cash. And Grain Management agreed to pick a D2D provider to light up the spectrum, and there were requirements to— time requirements of when that spectrum had to be put to service. And we'll go back to what I'd said earlier. There's only one player that can light up that spectrum. It's AST SpaceMobile. Starlink is focused on mid-band. They'd have to come out with a completely different satellite to utilize low-band spectrum. And for Grain Management, they have to use it or lose it, right? They're on a very tight time schedule. So there's a reason why Grain has been testing with AST for the last several months, right? We haven't seen anybody else test with them. And so in an auction process where you're soliciting interest in leveraging, lighting up the spectrum, Do you go with the player that you've been working with and you know it works, or do you go with somebody else who's like, hey, I'll put together a satellite with a large phased array that can utilize low-band spectrum and I'll do it within a year's time and you'll be able to meet your build-out requirements? I don't know. I mean, I guess if you're a gambling person, maybe you might take that bet. But I think for grid management who has spent several billion dollars in acquiring the spectrum, and that's very valuable, that could be leveraged by the joint venture, the telco joint venture, I think you take the safer route. Not the safer route initially, but the one that actually can use the spectrum and provide broadband coverage. The other thing I would add is, on the spectrum front, is that we did learn that Abel met with the FCC this past week. I think it was on Tuesday, maybe it was Wednesday. He was in DC, probably meeting with other tech execs, but also dropped by the FCC and met with Chair Carr. commended him for trying to free up additional unlicensed spectrum for direct-to-device use, but he also advocated for the freeing up of this additional spectrum in 1.6 gigahertz that is going to potentially be auctioned off for direct-to-device use. And so that spectrum happens to sit right next to where Ligado is, and so it would be a big boon and windfall if the company were able to acquire that spectrum and integrate it, providing a much wider channel. So the company did talk about evaluating that spectrum with partners, partners meaning probably AT&T, Verizon, eventually T-Mobile, and the joint venture. So it's important to let— when you look at all these pieces around the mosaic, you can see the elephant, it's right there, but you're just seeing small parts of it. So I guess the market is kind of blind to this stuff. Maybe they're not paying attention. I mean, it was interesting. I think the Berenberg analyst, someone was talking to them, asking them, hey, what's the reception been in Europe? No one knows about AST SpaceMobile, literally nobody. The only people who have heard of it are actually short sellers. So yeah, I guess there's quite a long ways to go in terms of expanding awareness about the company. But let's see, let's move on to the next point. So B. Riley talked about the pressure on pricing power. And so the concern is that maybe consumers will pay a lower cost if there are multiple direct-to-device alternatives that emerge. And so I think it's important to understand the channel So what is the distribution channel? Could Amazon go directly to its Prime customers and say, hey, we're going to give you this direct-to-device service. You just put this eSIM in your phone, and then when you are off the network, it's going to work. That's a possibility. That is a true possibility. Is it going to be seamless with your existing carrier? No. Is it going to— does it require Globalstar to put up new satellites in order to push more performance? Yes, absolutely. You can't use the current system. Is that system going to have good coverage? It'll be decent. It's mid-band spectrum, but it's not low band, so it's not as if it's going to work in a cabin or a house. And when it comes to having a seamless experience that's augmenting the network, it's going to be separate. And as we've seen with T-Mobile and Starlink, when you have a separate roaming network, which is Starlink, and then T-Mobile, and you're fighting for a signal in any given area, that service can suck. It can be bad, right? Because you have 2 services that are trying to fight over who's talking to your phone. And as we've seen with Starlink too, something that the press doesn't really talk about, when you have thousands of satellites, or I guess in the case of V1 D2C, you have hundreds of satellites and they're doing constant handovers, then the power gets drained pretty quickly. But yeah, so Amazon could have some potential pricing impact, but I would say that for AT&T, Verizon, T-Mobile, the vast majority of the people who are gonna use this service, it's gonna be baked into a premium plan. And then there's gonna be the ability to buy it on a one-off basis, like a day pass or a monthly pass, or you can be an add-on to a lower plan add-on to the lower plan, it'll be interesting where pricing falls there. But for the high-end plan, you're not going to see it. They're just going to raise your monthly bill by some amount of money and say, hey, with this, you get this additional awesome service, and that's the end of the story. But what Mike Crawford pointed to as his key point of pricing is that there's this company called Equitas, that is a JV between ViaSat and Space42. They're emerging. And so they might put pressure on pricing. Well, I guess the key question is, sure, okay, let's assume that these guys get their act together and they launch a competing direct-to-device network, which by the way is going to be 2,800 satellites as soon as 2028. So they haven't even put together a satellite, but let's say they do. I don't know which rocket they're going to launch on. I guess it could be Starship, right? Maybe if it— maybe probably Starship, but there's a lot of things that they have to get together in order for that to happen, right? And they also have to develop the technology. And AST has not to date flexed its patents, but at some point it probably will, right? And so there's a number of hurdles to overcome. And if you think the challenges that we've had in terms of production and unfolding satellites supposedly and all these things, any other player who wants to enter the market has to go through those things too. And so it's not something where you can write on a research report, Viasat is going to enter the market starting as soon as 2028 with a 2,800 satellite constellation. Yeah, that's what they're telling investors and that's what they've got an activist in their stock and they're trying to keep it up. But the reality is, let's see the execution. The one thing that I did want to point out about the Equitas JV too is that Viasat's working with this other partner called Space42, which is based out of the United Arab Emirates. UAE is a US strategic ally. However, when it comes to telecommunications and sensitive data, not even just MNO, I mean, beyond just MNOs, but just the network itself, That introduces interesting implications, right? So if Equitas wants to enter the US market, there would have to be some ring-fencing or some, I don't know, maybe it's a CFIUS type of review, Team Telecom review. There are some things that I think that company would have to go through a few hoops in order to provide service here. The other thing that B. Riley intimated was that, well, Viasat, Space42 could come with equities, and then maybe at some point Rocket Lab will work with them, and then that could be pretty powerful. I think it's important. So Mike Crawford, I don't think he understands technology, which is fine. He's a Wall Street person, but what does that mean? So for the layperson, if they look at spectrum map and they say, okay, look, Iridium's at 1618 to 1625 megahertz, and then Viasat has their uplink at 1626 to 1660. Those 2 spectrum bands are actually right next to each other. So what if in a perfect world, I just combined those 2 and then we have more capacity? So I think that's the message that Crawford was trying to convey, but I think it's really important. You have to dig into it. So what is Iridium? Iridium has about 8 megahertz of spectrum, only one band. And out of that, I think, because it shares some of it with Globalstar, I think about 7.75, something like that, megahertz is actually usable. It's a very small sliver of spectrum, but you can do a lot with it, right? However, because it is one band of spectrum, you have to utilize something that we call time duplex, or sorry, time division duplexing. So that means that on a timed basis, you will send packets up and then, so maybe I'm just making stuff up. So every 5 seconds you send packets up and then every 5 seconds you send packets down. And so through TDD, you're limited in the amount of actual usable capacity you can have on that spectrum, which is why Iridium today is a low-band service. I think it's like, I don't know, 7 or maybe peak 900 kilobits per second, which is okay for voice and for IoT and things like that. That spectrum is all you need. But if you were then to try and say, okay, we're going to combine it with Viasat's uplink, which Viasat uses full duplexing, full FDD. So 1625 to 1660 is their uplink, and then I think their downlink is somewhere in the 1500s. You can't combine those 2 and then say, hey, we're going to combine Iridium's TDD with Viasat's uplink spectrum, and then we're going to have all of a sudden this new capacity. That could conceivably happen to a degree, but for you to then combine those 2 channels, you would have to go through to regulators all around the world and say, hey, we want to change ViaSat's current authorization, which is from device to satellite. We're going to change it to TDD, which is both ways, device to satellite and satellite to device. And that also introduces potential interference issues with the band that is above ViaSat's. And so that is a very long regulatory process. And then of course, for Viasat, any devices that are working on that band, there would be interference issues and they're not compatible. So I'm not sure how that would work. So it's not a matter of like, hey, we're going to slap together these 2 adjacent bands and get something better out of it. Again, one is using TDD, which is dividing the packets going up and then down. And then for Viasat, it's using FDD, full duplex, right? Like that band is only sending packets up because they have a dedicated band in the 1,500 megahertz area that's for downlink. So the regulatory hurdles are massive there, but if you're writing a research report, you say, well, these guys could maybe work together and then pressure pricing and then call it a day. So anyway, that's lazy Wall Street for you. Not much thought into it, but hey, it serves its purpose. It's part of the narrative, I guess. And then he talks about Starlink being the biggest competitive benchmark. We've talked about Starlink for, I guess, the beginning of time, or at least since 2022. He says, Starlink V3 highlights that ultimately the Gen 2 satellites are going to be great. They're going to have more capacity, more speed, which is fine. That's true. It's absolutely true. They're going to be able to throw up a lot of satellites. One of the key questions that I think Cathie had brought up is, is Starlink going to focus on direct-to-device satellites, or are they going to focus more on AI orbital data centers, which is what they've been selling investors on? That's a good question. I'm not sure. We saw Elon Musk talk about targeting daily launches next year, and then he walked that back to maybe once or twice a week, and then Who knows where that ultimately ends up, but are they going to be a competitor? Absolutely. Starlink is totally going to be a competitor, but from a business model perspective, the fact that Starlink is competing directly with MNOs, it goes back to distribution. Who is the channel? Who is the channel for that service? Starlink has to sell that service directly to users, and maybe it's an add-on eSIM, If we go back to the Viasat Space 42 Equitas JV, who's selling that service? Okay, let's assume that you can raise billions and billions of dollars and you put up the constellation, who's going to sell it? I mean, that's the key question. You can talk about pricing pressures, but ultimately, if it doesn't get to market, how does that impact pricing? For Starlink, their service is going to be— it should ultimately get to a point of being pretty decent and offer some level of broadband connectivity, but if they're selling it only to their users, what's the penetration going to be? I think Starlink fixed wireless has what, 13? No, it's less than that. 12 million subscribers? Compare that to The global MNO market, which is what, 5 billion subscribers or no, 6 billion subscribers around there. We've got access to what, 3 billion? So yeah, Starlink's going to catch up technologically to a degree. There are advantages of their system. There are advantages of our system. There are drawbacks for both, but ultimately who has a distribution channel? and who's working in partnership with MNOs and governments, and who is working in an adversarial manner. I mean, I think for governments outside of the US, the big concern is that Starlink is going to create somehow a global mobile network. It's not going to be as good as a terrestrial network, but it's going to be good and decent to a degree. It's not going to work in cities. It's not going to work in dense areas. It'll work in rural areas. So For governments who have incumbent operators who have invested in those countries, who bring revenues to those countries, and have developed spectrum in those countries, do you let Starlink eat your lunch, the local operator's lunch? No, you don't. Do you trust this Starlink network, or I guess we could call it Skynet, because that's ultimately what it will be, to lord over your country? Probably not. You probably want to work with a company that is working with local MNO partners that give you data sovereignty and allow you to keep data in your country and you own it and you have the ability to control that, not somebody who is, during the Ukraine war, can turn on the network and turn it off depending, for the Russians, not for the Russians, for the Ukrainians, not for the Ukrainians, depending on how they want to see it unfold. That's probably something that you are going to move away from. And so I think people like Mike Crawford, maybe he's not thinking this deep enough, but there's a lot of issues here and it's not just about the lowest price. So let's see, B. Riley, a few other things. Yes, near-term commercialization appears pushed out. Captain Obvious, yes, it's been pushed out because things are delayed. And so for this guy, he's cut his numbers. So I think his revenues for '27 go from $623 to $604, and his CapEx rises for 2027 from $1.3 billion to $1.4 billion. And so that's how he justifies his price target cut of $85 to $65. So there you have it. I mean, this guy, I kind of wrote about this before. Nothing changes ratings analysts more than stock price, just like sentiment for investors. And so this guy decided to justify a change in stock price target based off of stock price performance, and then he's come up with reasons why he's lowering it.
[01:07:47] Speaker A: So that's that.
[01:07:48] Speaker B: But anyway, I think I've been going on now for an hour. Let me just take a quick look. Maybe I'll answer a few questions if I can. Let me see here. After seeing Iridium revenue for IoT, can you speak on how the market includes IoT revenue for AST? We have way better tech to do the same thing as extra revenue on top of government and commercial. Yeah, the market doesn't take into account any IoT revenue. The way that most Street analysts, by the way, model AST is that they look at subscriber uptake, so just mobile subscribers, and then for the business— sorry, for the the government business, there are a few people that model out defense and there are some people that just leave it out entirely. So I would just view the way that the Street looks at AST SpaceMobile is the valuation is predicated solely on the consumer mobile handset business. No one's really priced— so when you look at Street estimates, that's what's really driving it for the most part. And then I would just view government as an option. upside, and then IoT and some of these other markets as not being priced in. So that's how I would think about it. Let's see. What do you think will be the next big catalyst announcement that moves the stock? Golden Dome, T-Mobile, does grain excite analysts, early shipment? Yeah, I think— well, let me just make sure that people understand. One of the big things that's driving the market right now, aside from obviously the space sector trading together and sentiment. And by the way, if B. Riley didn't downgrade the stock today, I think AST would probably be up, what, 6%, 7%? But that's not the case. We're only up 2.3%. So that sucks, but it is what it is. In terms of big catalyst announcements, I think T-Mobile would certainly move the stock. I think GRAIN would have a pretty decent impact, but it depends on the structure of that deal. golden dome, an actual confirmation of that should move the stock to a degree. But I think we're kind of in this holding pattern for now, just given where rates are, because you saw the market rally significantly and then pull back when rates started going up again, which they are up again today. It is kind of weird because the stock market, there's been people who've written about this, but the stock market has actually hung in there quite well, even though rates have gone up the last several months. And so you never really see that dynamic happening. That said, the key growth drivers of the market have been anything AI-related. And so AI-related names have led the market. If you take those names out, I think the S&P is down this year. And so the rest of the sectors have not fared well. And so what's interesting is that Those names keep going up and those names are also partially responsible for rates going up as well because there's been this huge demand for resources, whether it's semiconductors, electricity, any number of things. And so that's why we have this very odd dynamic going on. But if we do have a relief in rates, I think that's when things start getting the ability to price in some of these bigger catalysts will be outsized, versus having somewhat of a muted effect, which has been recently. Let's see. The other question here, if you were Abel, what's your selling price to an acquirer, assuming they offer to keep you on to lead the program? I think the company understands that the stock price is undervalued, so I don't think they would entertain anything that would seem reasonable to an acquirer today. And when you're on the cusp of commercialization, it probably makes sense not to sell. You would wait until you're able to show some level that the network works and that you have subscriber growth and any number of things, government programs are humming along, and then you might consider selling. But I don't think he's a seller, not at $200, $300, $400. Maybe if so many things were priced in, you might consider it, and if he could continue on, but I just don't think— he's not a near-term seller. Let's see. Are you able to lightly discuss the Iridium FCC filing opposing AST yet again, if you haven't already? I believe you saw that filing. For what it's worth, Iridium has thrown up— they're throwing sand in the gears of SpaceX and Starlink. They're trying to kibosh the EchoStar deal. They're doing the same thing here, and it's in Iridium's interest, right? Because Iridium is going to get disrupted by both SpaceX and AST SpaceMobile. So you have a number of things that you can do as a competitor. So what Matt Desch, as the CEO of Iridium, did over the last, what, 5, 10 years, instead of reinvesting in the network and innovating, they took a CapEx holiday. They paid back dividends and they bought back stock. And then as the train started coming in the tunnel and they realized what was happening, they decided to sell the company. And so they're selling to Rocket Lab. They're hoping that Rocket Lab can take them to the next level. And as part of that playbook, they are trying to slow down the competition. So in the FCC opposition filing, they're saying, hey, AST, they haven't addressed these interference concerns, which by the way, AST can operate within the given interference requirements as dictated by, you know, when you use MSS spectrum, but they can even do better than that, right? We saw this all play out with SpaceX, where SpaceX could not operate within interference limits and they had to get a waiver to operate at higher levels because their satellites suck, right? And so with AST, here I am saying, hey, you haven't proven that you're able to operate within limits that could impact our spectrum. I don't think that's really an issue. Then I think they were arguing about AST because they're working with Iridium, maybe it invalidates their ability to operate terrestrially. I don't buy that. Anyway, they're just trying to slow things down. Lawfare, for people that don't know, is pretty typical in space and telecom. And so I guess one funny analogy is, for the longest time SpaceX complained about AST's large phased arrays, the satellites. They're like, these large satellites pose too risky of an orbital debris. If they get impacted or they break apart, there'll be too much orbital debris, and because they're so big, They're much bigger targets. And then of course, now we see the SpaceX V3 satellites and their AI orbital compute satellites. You're going to see that argument from SpaceX completely go away, because they're not going to ever, ever talk about orbital debris risk, because now their satellites are huge. They're huge edge to edge. And so they're much bigger, not in terms of actual area, but they're much bigger in terms of width. Than AST satellites. And so it's funny how you'll argue one thing a given day and then you'll shut up and argue the opposite because it obviously suits you. Let's see. The hiring of a CEO at this time puts a pin in immediate acquisition rumor talks. Yes, that's a good point. So I think hiring of a CEO could put a pin in it, although if you had talks, you wouldn't stop your strategic hiring. You would put your pedal to the metal, put to the, you know, pedal the metal and keep executing, right? So it didn't matter. You're going to need this executive regardless. But that is something to consider, right? Maybe this executive wouldn't join if he knew that something was going to happen, or he might join because if Google is buying you, then maybe that's a good acquirer, right? And well-funded, and you might want to continue working. And by the way, like your stock grants, They all accelerate and you get re-upped, so that would be a good time to join. Let's see. Why are we so confident that a functional New Glenn is the solution to our launch bottleneck problem? Since Amazon is so far behind Starlink, won't they prioritize Amazon satellites as much as possible? Do we have any evidence that more than a couple launches are booked? Yes. So we actually have a number of New Glenn launch is booked. We have options for more. We're their marquee customer outside of Amazon, and so we have priority, and they owe us a launch too. Why are we so confident? Well, New Glenn has demonstrated that they are capable. They can get payloads into space now, obviously due to mistakes, second stage not launching. It cost us BB-7, and then they had their own issues with the launch pad. By the way, we're not putting satellites up on New Glenn until they've had a few successful commercial missions, but when it comes to launch providers, you've got Jeff Bezos and a ton of money behind it. They just raised a massive round. Well-capitalized players with innovative leaders ultimately succeed, and so that's our bet. We still work with SpaceX. Eventually, are we going to buy Starship capacity? Yeah, we could. I think Starship, was it StarCloud was able to, or one of the, is it Voyager's next generation space lab or whatever it is? I think they were able to buy a Starship dedicated launch. I'm pretty sure it's dedicated for $120 million. So that's the price, right? And so could we launch on Starship? Yeah. And especially if Starship starts moving towards Elon's claimed daily launch, then that's going to— anybody else who's doing launch, that's going to put a small dent in pricing, but we'll see. Let's see. Do you think they'd hold off on any commercial agreements until the JV is approved by regulators? No, I don't think so. I think the timing could be impacted, but I think For T-Mobile, they're going to want to sign a JV, sorry, their commercial agreement as soon as AST's up and running. If there was a cancer and it was in your body and it told you, you have, I don't know, a year to live while I slowly eat away at your body and kill you, do you continue to leave that cancer in your body or do you go to the doctor and have it removed? You go to the doctor and have it removed. So I think for T-Mobile, time is of the essence, which is why the JV got inked pretty quickly and they have this interim CEO. So I think that commercial agreement will get inked as soon as they can, but obviously the JV will have some— the regulatory approvals for the JV could slow things down to a degree, but I don't think they're going to wait for it. Let's see. There's a few more questions here. Actually, I got to run soon. Do you think management is holding back definitive agreements so they can do them one after another in a short span of time later on? I think they're going to sign and execute definitive agreements when it makes commercial sense. So the balance is that they don't need money. The longer you wait, the higher the rents are that you can extract from parties, unless of course, You're worried that they're going to go to Starlink, which is less of a competitive concern today because Starlink has said, we're out here to eat everybody's lunch. So I think you take your time there.
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[01:21:06] Speaker B: Let's see. Frustrating doesn't even begin to describe the absolute travesty that's hampered this stock. Poor management guidance, increasing competitor pressure, ongoing Legado Iridium spat. No, that's not right. Okay. Constant mishaps on launch, and the list goes on. This stock can't catch a break. I agree. This stock hasn't caught a break, but I think people, I think we have been somewhat spoiled, right? Because the stock went from $2 to $133. And so I think at points in time it has caught a break. then points in time it hasn't caught a break, and we're just in one of those points in time where it hasn't caught a break. But can we be in a point in time where we catch breaks? Absolutely. You just have to be patient. Don't be in options. Don't be margin. But poor management guidance, sure. Yeah, they gave guidance and they slipped because of issues that they came across. So that happens. Increasing competitive pressure. Maybe to a degree, but I think Starlink took themselves out of competing for MNOs. So that was actually a very positive thing. Ongoing Legato-Iridium spat. This is not true. Iridium is trying to slow things down for Legato, but I don't think that's having any material issues on AST. And if you look at what Chairman Carr has been saying about AST, and freeing up spectrum, I think Iridium is pounding on sand. I don't think it's going to be an issue. As I pointed out earlier, Iridium's throwing sand at everybody because they're trying to slow down the inevitable. Constant mishaps at launch. There was one mishap, which was a big one, a doozy, which was New Glenn blowing up on the pad in May from static fire, but that's not constant. Aside from that, every launch for AST has been Aside from the New Glenn, obviously, never tell me the odds, Bluebird 7 being put in the wrong orbit, everything else has actually gone spot off perfectly. So for the satellites that we've been able to get to orbit, the proper orbit, we've been 100%, batting 100%, opening all of them successfully and deploying them. So it may seem crappy, It certainly feels crappy, but if you take a step back and think about everything that the company has executed on over the last 5 years, it's been absolutely tremendous. There's been a lot of lucky breaks and there's been mishaps, but in the end, yeah, I haven't been more bullish. Let's see. Are we still waiting for official Jay Liao news? Is this an unaccounted-for catalyst? We are waiting for the JLEO news. The key aspect there is the JV with Rakuten has to be formalized and announced. That's the key catalyst, because JLEO is pretty much granted. We just need that formalized JV. Let's see. Can high beta stocks escape bad macro by reaching sufficient commercial milestones? I would say probably, but you can't say that definitively, right? What if rates go If I were to make up a scenario where rates went to 10%, then nothing could survive that. Yeah, we definitely need the macro environment to improve. Let's see. After this, I think I'm going to hop off because I've got to go pick up the kids. But let's see. As we have seen many times from management, they tend to miss their marks on many things. What makes us think their guidance on how many sats are needed for full coverage would be any different? This B-Rally guy may be spot on. So the actual satellites you need for coverage, that's just math, that's physics, right? Like 45 for coverage, and then for wholesome service, you need 90. I don't think that number changes. Now, when can you get those up into space? That's the number that kind of moves around, right? So for the company to miss the marks on many things, I guess I'll keep saying this until the cows come home, for space companies, this is typical. This happens. For SpaceX, I'll just go back to the original analogy that I made. Starship was supposed to be landing people on Mars in 2022, and we're what, 4 years beyond that, or basically 5 years beyond that. These things are hard and they take time, which we have this ability, we're taking something that was viewed as an impossibility to something that is just late. And so you've got to have some level of patience. I've talked about trusting in management. If you believe in their capabilities and you think that they can execute, they've assembled the right team, There's going to be hiccups along the way, but you have to give them the room and latitude to operate and execute, and it takes time. I mean, imagine AST SpaceMobile shareholders when stock was at $2, and those were really dark times. Rates were high and everybody questioned, what am I doing investing in this company? How are they going to get from $2 stock price and $100 million of cash on the balance sheet to deploying multiple shells of a constellation and working with all these global MNOs, but they did it. I mean, it's insane. Just imagine them raising $1 billion, like a convert for just 2% dilution or 1.5% dilution versus the entire market cap back in 2024 was $700 million. where in 2024, the beginning of 2024, they had to raise $100 million to tie them over to get Verizon on board. That cost them, that was like, they sold, was it 30 million shares? Which is absolutely insane. But that's progress. It takes time. You have to execute. There's going to be problems that you come across. I talked about For example, when the requirement that you couldn't leave launch vehicle adapters out in space, and you— so these guys were like, hey, we have to go back to the drawing board. Our old design doesn't cut anymore. We have to create a new design, which is the composite ring, the tuna can with the arrays that fold out, and there's a tail. They did that in several months. And it was something that Tim Farrar, our favorite resident regarded consultant said was impossible, they did it. Those spacecraft are out there operating and testing and executing. So if you ask me, would I invest, bet on this team, and are there going to be problems, and are things going to take longer than you think? Yeah, absolutely. But the rewards are worth it. I think that's, if you look at SpaceX, there's all these people that are going to shit all over orbital data centers or all these things that SpaceX are doing, but people, they're like, hey, this guy executes, and it may take way longer than you think, and there's going to be a ton of doubts, but ultimately they're going to get there. So this is similar, and it's no different than some of these other space companies that are doing difficult things. It takes time, it takes longer, it takes more capital, but is the ultimate reward there? Yeah, absolutely. So with that, I'm going to end it in the space. I've got to hop off. It's been, wow, it's been an hour and a half. But yeah, everyone hang in there. Yes, markets have been absolutely frustrating, in particular for AST, but I'm as bullish as ever. And yeah, the best things are bound to come. And I think it's important, even with the stock price here, the concerns that people had, whether it was shipping Bluebirds 14, 15, and 16, which by the way, from our due diligence, they arrived at the Cape, I believe yesterday. And so they're being integrated into Falcon 9. My best personal guess is that we probably will see a— we'll probably hear about the launch date being set sometime at the end of next week or the early week of August 12th. My guess, if I was a betting man, is that we are going to be launching on a Falcon 9 either on the 21st, 22nd, or 23rd of October. There's also some early speculation from some of us that we might see a second launch. This is just our speculation. We might see a second launch sometime around November 7th, 8th, 9th, around that area. So you might see another batch being shipped soon. Don't quote me on that because I could be totally wrong. This is Absolute speculation, but but yeah, so just hang in there. We've got we got a new CCO that was hired. Bluebird Eleven people who claimed that was bricked or having problems, and even even David Cook had a mea culpa where he was like, maybe I guess I was wrong. There wasn't any issues. Katzy was right that it was part of a process of spacing out the satellites and bringing BB Eleven closer to. I think it was 12, maybe. But yeah, it was part of the process. Anyway, I'll end it there. Thanks everyone for joining. Hope this was helpful and have a great weekend. Take care.
[01:30:47] Speaker A: Bye.
[01:30:52] Speaker B: Thanks for listening to the ASMR 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.
[01:31:14] Speaker A: Listen.
[01:31:18] Speaker B: Mmm, waffles.