Anpanman talking $ASTS on Space Stocks Weekly

[00:00:00] Speaker A: Well, I guess, and Pan, do you have a, are you on a time crunch tonight?
[00:00:06] Speaker C: Uh, yeah, I wouldn't mind going first. I'll try and quick.
[00:00:09] Speaker A: I know you already did a Spaces. That was good.
[00:00:12] Speaker B: Yeah. Yeah.
[00:00:12] Speaker A: So if anyone wants a deep dive, they should listen to that too.
[00:00:15] Speaker B: Yeah. I'll, I'll, I'll link that, but then I was just gonna, before you get started, just, I'm gonna cut it off at 30 minutes. So we had to end it at Rocket Lab. No, that's fine. So just for everybody's aware. And then at the end, at the 60-minute mark or so, we can open it up for question, comments on anything, just so trying to keep it semi fair tonight. 'Cause I know there's a lot of people wanna talk about both.
[00:00:35] Speaker D: Yeah.
[00:00:36] Speaker C: With that, no, not floor.
[00:00:37] Speaker B: Floor is yours, sir.
[00:00:39] Speaker D: Yeah.
[00:00:39] Speaker C: So, uh, just re— just go to the other space and then that's it.
[00:00:43] Speaker B: Done.
[00:00:43] Speaker C: Oh, okay. Uh, yeah. Uh, just, just quickly, um, and feel free if people have questions to just post them below or you can come up as well. But yeah, ESD announced earnings today, or sorry, yesterday. They had the first quarter of material revenue, which was about, I think it was $15 million. And they reiterated that they're guiding towards $50 to $75 million of total revenue for the second half of this year. So that means this coming fourth quarter, it's gonna be $35 million to $50 million, of which most of that is going to be, or I think it's going to be like $10 million of gateway sales. And then the rest of, or the balance of that is revenue from military, government-related work that they're recognizing. And so, yeah, I mean, given this, the state of where the company is right now, the financial results really aren't that important at this point in time. However, just going through the quarter, I think I'll just briefly go through this. Let me just pull up my old tweet. But key takeaways are that they, for the first time, disclosed $1 billion in aggregate contracted revenue commitments, which is a really big deal. And that's all from commercial partners. I think there's speculation that a majority of that is from Saudi Telecom, which is the $1.8 billion 10-year contract that they announced, or definitive agreement they announced last week. A little nugget for everybody, for what it's worth, I did catch up with management and that $1.8 billion, the way it was characterized is that that number, it'd be a disappointment if they're not well over that number. So I guess what's unclear though is What are the minimums of that contract? Because there is minimums across 10 years. And so, and as we know, $175 million of that contract is being prepaid as revenue, which they disclosed yesterday will be paid before year end. And so that's a nice inflow of cash. But yeah, that $1 billion in aggregate, or over $1 billion, that's the first time they disclosed that number. And so what's nice is that That's a real tangible number that people can hang their hat on. It's also good from a debt funding perspective because they can go out and raise some quantum of capital from debt that would be basically backed by that $1 billion in aggregate contracted revenue. Now, could you raise $200 million off of that or $100 million or $300 million?
[00:03:34] Speaker B: Who knows?
[00:03:35] Speaker C: I mean, it really depends on how solid that number is. But anyway, it does open up another potential funding avenue. And then the company also announced that they got their 9th contract award from the US government, even during the shutdown, and they're expecting to hash out those details. And I guess we'll learn more once the government's open. But that's another positive thing that came from the call. Also in terms of manufacturing, I think we all know now that the control bus is the key critical path item. They've made, I think, enough microns, which are the solar panels on one side and antenna elements on the other side. They've made up to, I think it's 19 satellites worth, and they're expecting to get to 40 satellites worth. By early 2026. And as we all know, BB-7, BB-6 had already been shipped to India and it's waiting to launch. They gave a hard timeframe now, which is the first half of December. And then BB-7, they also disclosed that that will be shipped this November. And so whether that's a week or 2 weeks from now, that'll be sent to the Cape. where they expect that will go on top of a new, sorry, Space Falcon 9 rocket, which is probably going to happen in December. Anyway, back to production, the new control set, which is the center, which is the hockey puck-shaped center, or not center now, it's actually off-center, but—
[00:05:22] Speaker B: Yeah.
[00:05:23] Speaker C: That controls the brains of the satellite. And then also where the, it's where the, the microns fold out from. That is the kind of critical path item right now. And so they've shifted from making 2 metal ones, which is BB6 and BB7. Now they're shifting manufacturing to composite materials, which is, I think, carbon, primarily carbon fiber. And so in the presentation yesterday, we saw pictures of 3 of those. In production. And the company disclosed that they've got, let's see, they've got satellite number 8 through 19 in various stages of production. And so, so yeah, they're a little, they're about 1 month behind BB8 through 10. And then eventually they do plan to catch up by the February, March timeframe to the original timeframe, plan of deployment. And so what that means is I think we'll see 2 launches this year, BB-6 going up in November, or sorry, early December, BB-7 going up in second half of December. And then you'll see probably 2 batches of 3 launched by SpaceX Falcon 9 in January. And then by the time February rolls around, we'll have caught up and maybe we'll see our first New Glenn launch. But anyhow, but yeah, the company's still targeting 6 satellites of production per month by the end of 2025. And let's see here. One interesting thing to note, and I've tweeted about this, so I won't go into detail, but they did disclose that they've been working on an AI engine that will be running on the AST-5000 ASIC chip. And so that AI engine will help, you know, I think it was BRI that had a note today where it gave a little bit more specificity that that specific AI engine will help increase capacity of Bluebird satellites by 2 to 3 times, which is kind of crazy if you think about it. But I think through managing the power and satellite capacity, you know, doing that dynamically, where you need being able to, I guess, shift processing power to areas of high demand and then using and reusing spectrum more efficiently. They expect to increase the capacity of these satellites by 2 to 3 times, which is something new that was released yesterday. And then I guess, let me just look here through here. They did disclose that in the US they'll have 80 megahertz of deployable spectrum. That includes 40 to 45-ish of LDAN spectrum from the Legato transaction. And then the rest of the balance is going to be coming from AT&T and Verizon, which I think FirstNet is going to provide about 20 of that, if I'm not mistaken. I think it's 10 by 10. And so 80 megahertz overall though, that's a lot of capacity.
[00:08:31] Speaker D: Yeah.
[00:08:31] Speaker C: And so I think that's going to be, or that is a good sign for the type of service we should expect from AST in the US through AT&T or Verizon. Because that's, you know, with that amount of spectrum, they're going to be able to deliver a pretty robust broadband service. And so, so yeah, that's a quick overview. There's a bit, there's a bunch more stuff that I went through in a Twitter post, which I think you'll post. And then I also had a space this morning, but I'll just pause there. I don't know if anyone had any questions.
[00:09:04] Speaker A: No, it sounds like they had a, you know, they have a lot going on. They're making good progress. Do we know if there's any update on the satellite going to Florida?
[00:09:14] Speaker B: Yeah.
[00:09:15] Speaker C: So they said that they expect BD-7 to be completed this month and shipped this month. And so I think it's going to be, my guess, it's going to be probably in 2 weeks or so. And then that means if it takes, call it 30 days to integrate the satellite into, you know, the Falcon 9 fairing, then I think that's probably, you're probably looking at like, um, second half of December. And so I think what we'll see is 2 launches in December, um, the first 2 weeks on ISRO and then the last 2 weeks on Falcon 9.
[00:09:51] Speaker A: Cool. You'll have to keep, uh, keep everyone in here updated on Which Waffle House we're meeting at for the Christmas launch.
[00:09:58] Speaker C: Yeah, yeah, yeah. No, there's, there's this really specific Waffle House. There's also this, uh, restaurant that serves, you know, just plain American food. It, but it has a, um, outdoor deck area that overlooks the whole launch area. Um, it's called Shiloh's. And so we had a big meetup there last time and, and hopefully if, if the, the timing is right, uh, I'll be able to make it down there and You know, we can all hang out.
[00:10:26] Speaker B: Nice, uh, Christmas launch, a little Christmas party. Hopefully you'll go for that. Um, hey, so, uh, you, uh, you mentioned this in your— in both your Spaces last night and this morning, although the one last night was— has been disappeared from the internet. Um, but, uh, you mentioned that the, uh, they were looking— this is just because I'm Uh, a rocket, Jared, you were— they were mentioned, uh, looking at other— or they had other launch providers further down the line post-2026. And yeah, the Mitsubishi rocket, the new one that they'd come out with. I don't know what the name of it is, but the big solid rocket booster one that they, uh, they just launched. Yeah, used on—
[00:11:03] Speaker C: Yeah, so that, that was a, a new disclosure. I, I remember, I, you know, talking with, with, um, Scott Wozniewski at the Block 1 launch, just asking about, you know, launch capacity and constraints. And you had mentioned that, you know, there were, there were more options than, than people, I guess, people like us are generally aware of. And so, I, I yesterday, Abel talked and, and the company, you know, oops, the company has discussed about, you know, has discussed the launch market being constrained in 2025 and then getting slightly better in 2026. And then supposedly 2027 is when the floodgates kind of open up. And, you know, that timing makes sense if you think about like Rocket Lab, for example, you know, perhaps Neutron by then will be pretty robust, hopefully knock on wood, and will have a few launches under its belt. But I think Abel also discussed or mentioned very specifically, he said MHI, which is the acronym for Mitsubishi Heavy Industries. And so doing a Japanese launch would make some sense just given that Rakuten is an important investor and strategic partner. And so launching a satellite from Japan would be, I think, you know, from a political standpoint and then also commercial standpoint would make a lot of sense. But the H3, which is the rocket that he's probably referring to, is their medium-lift rocket, or I guess it's their heavy-lift rocket because that's the most powerful one that they have. But it comes in configurations of 2 solid rocket boosters or 4, and then there were some design plans for 6, but I haven't I think that might've got scrapped, but the 4 SRB actually has similar lift capacity of 16,000 kilograms to low Earth orbit as Falcon 9. And then I think a reusable Falcon 9 is somewhere on the order of $60 to $70 million, whereas I think the Mitsubishi, and this is where I don't really know what the information, if it's correct or not, but—
[00:13:23] Speaker A: Yeah.
[00:13:23] Speaker C: Based off of some research that I did, it looked like that rocket is like $50 million, although that doesn't, you know, I'm kind of questioning how it can be cheaper than a Falcon 9. But anyway, at least that's an alternative out there that, you know, it has similar capacity. And they did launch a satellite back in October. And so I think that was like October 26th. So for anyone interested, you can go on YouTube and see that rocket's performance, which was pretty cool. As we all know, like the rockets, like ISRO LVM-3 also has solid rocket boosters, but for these rockets that have SRBs, like they jump off the launch pad pretty quickly. So they're fun to watch. But yeah, the company mentioned that. And so I assume they must be talking to Mitsubishi and perhaps that could be another alternative to add to this table.
[00:14:16] Speaker B: Sweet. I love rockets. I know, that's cool. I mean, it's good. It's cool to see that. I mean, this is what we all hope for is that the launch industry is starting to like start to pick up so that all these other satellites that are going to, that are all, all wait. I mean, launch is still the constraining factor across the whole industry. So it's cool to see more participation from other companies and then even seeing something like ASTS looking at alternatives to the ones that already had stated. No, no, it's good. It's good that they're being agile with it. Sorry, it was a bunch of ad-lib because I was reading this question. So I got a question from something out of Jacob in there, and it says, will each constellation be separate constellation or will it be part of the 100+ satellites? I think he's referring to the Iridium 2 possibly thing.
[00:15:06] Speaker C: Well, he must be asking a question which was also asked by a research analyst. And so when AST made the announcement around the SatCo JV last week. It talked about having dedicated satellites for the European market only, but then the company did clarify yesterday during Q&A that it's not going to be a separate constellation, but it will be a dedicated portion of the constellation. So I assume that means that when those satellites are flying over Europe, they'll be, you know, solely under the control of the SatCo JV. There's going to be an operations center based out of Germany, and then the HQ will be in Luxembourg, and they'll have a kill switch, and they'll be controlling satellites from Europe, and the data that originates from Europe will also land in Europe. And so for all intents and purposes, that will be a European satellite.
[00:16:04] Speaker A: Yeah.
[00:16:05] Speaker C: solution, but then the constellation overall will continue to serve the rest of the globe. And, but within, I think, and this is just my speculation, but when it's over Europe, it's going to be fully controlled by Europeans. And so I think that's what the question is being asked, but then also around IRIS-2, which is the, you know, that was awarded, I think, in 2024. It's the equivalent of Starlink, but for Europe, and there's 3 European players, SES, Eutelsat, and Hispasat, that are part of that consortium. And they're currently working on that. Who knows how far they'll get and how successful it'll be. But there are 2 distinct parts of that award, which is one is fixed broadband, which is what Starlink does today and what Kuiper's planning to do eventually. But then the other part is direct-to-device where I think that one's a little more open-ended. And even though the award for the contract was given already, you know, that concession, the directed device specifically says that it will be led by MNOs. And so interestingly, if you look at how AST SpaceMobile does business and how the SATCO JV is structured and how there's MNOs from 21 of 27 member states that have already signed up, Yesterday when Scott was asked about if they could get some of that award, uh, or if they won, won some of it, um, he kind of deflected and said, we're not going to talk about things that they've won or something. Or he says it was like some weird, the way he responded was a little odd. And so it led me to believe that perhaps they're in a good position. I wouldn't say like they've necessarily won it, but, um, but they're doing all the right things to get that contract. And then just as importantly, When the 2 GHz MSS spectrum comes up for reallocation in May of 2027, I think, I think AST is going to be very well positioned with Vodafone to get an allocation of what's likely. And we've started to do some research around how that's going to be allocated. There's 30 by 30 MHz to be allocated, and I think my guess is AC and Vodafone Europe are going to get 10 by 10, and then they'll probably give out 10 by 10 to somebody else. And then the other, the last 10 by 10, they'll probably allocate that to a shared IoT type of usage. But one interesting thing to note is that Globalstar this past week, they did say that the previous license holders, That they're probably, and I don't think they're talking about Viasat, they're talking very specifically about EchoStar. They were hinting that there's a high chance that EchoStar won't get that license again because they basically sat on it for 18 years and did nothing with it. And so yeah, I think SpaceX, when they bought EchoStar, they're obviously getting the spectrum in the US, but then all the other stuff is kind of in question just given their stewardship of the spectrum, the S-band spectrum that they were allocated in various parts around the world. And so another thing that I was thinking about today, which I didn't mention in the other Spaces because I candidly didn't think about it, but that SpaceX EchoStar transaction, they've given a timeline because the regulatory review, for whatever reason, is going to be really long. They don't expect that deal to close until late 2027. And so For SpaceX and EchoStar to go to EU regulators while the US is still reviewing that transaction, it's going to be a little weird, right? Because EchoStar is going to say, hey, I want this spectrum allocation. It's actually for me. Because at that point, EchoStar won't know if the deal is fully closed or not. And so they're going to have to go back as themselves to go get the reallocation. And then the EU is going to say, well, you guys didn't do anything with it, so why should we give it to you again? And then SpaceX is going to say, hey, we're buying them. We're in the middle of this regulatory review, but we promise we're going to deploy it properly. And then the EU's going to say, well, who owns SpaceX or Starlink? And then, oh, there's this guy Elon Musk. And then that kind of muddies the water a bit. So anyway, yeah, I think the company's quite well positioned to get an allocation of 2 GHz spectrum. I think another 10 by 10 probably goes to this IRIS you know, consortium, but who knows, like, if they're gonna be able to pull it off. And so I think as Katzi says, um, spectrum over time typically finds its way to the best use. And I think that in and of itself is, is going to be, you know, with the Vodafone, AST, SpaceMobile JV. Did I answer your questions?
[00:21:01] Speaker B: I hope so. It wasn't mine. It was from somebody in the, uh, another Jacob, right? Yeah, with a K. Jakob. Um, sorry, I'm not making fun of your name. Sorry. Um, I'm looking. Okay, there's this other thing that I saw pop up recently, but I can't find it. And you probably remember if I tell you. Oh, here it is. All right. Iridium and, um, Vodafone IoT. There was, this was just over a week ago. You made, did you see something about this? Oh yeah. I know this is not earnings related, but I was curious if you, uh, if you saw that and I was going to ask last week, but I think we were Yeah, yeah, yeah.
[00:21:34] Speaker C: Vodafone, they announced a partnership with Iridium for their narrowband IoT service because that's something that Iridium runs today. And so I think as a kind of fill-in-the-gap measure, they're utilizing Iridium's network for initial IoT services until they're able to get the constellation up with AST.
[00:22:00] Speaker A: Yeah.
[00:22:00] Speaker C: You know, the good thing about Iridium is that it does have global L-band spectrum. It is limited. It's like 8 megahertz of up and down combined. But yeah, that's, I mean, if you're going to run a global IoT network and you're tracking assets that are not over land or areas of terrestrial spectrum coverage, then that's a good way to go. But yeah, that was announced, I think it was like the I would say you're Friday, but yeah.
[00:22:29] Speaker B: Sweet. Um, there was another, okay. So one other thing that I heard, and that this is my just pure lack of knowledge on this stuff. When he said, when you're saying $1 billion of committed revenue, is that based off of like usage? Like, however they define usage, I don't think it'll be a per megabyte, whatever usage, but however they decide, like how many customers signed up. Like, is that money based on the service going into like, you know, beta and then actual service? And then that money is lined up saying, hey, we're going to at least pay you, the MNO is saying we're going to at least pay you this much. Is that what it, like, what it's signifying? Or what is that $1 billion number? What does actually, what do those payments actually reflect?
[00:23:13] Speaker C: So I think they're, my guess, and they didn't give, you know, full, they didn't give details, but it includes all the revenue prepayments. And so. Vodafone, I think, is at 20 and AT&T is at 25, or I might have those switched. Verizon's at 65 and then, and then, you know, Saudi Telecom's at 175. And so those are prepaid revenues and those are creditable against future service. And so they pay the company and there's some milestones associated with it too, but they give them company money today. And then once the service is turned on and your users use it and based off of however they're calculating those metrics, then they'll just get a credit against that revenue they already paid until all of it's used up. And then they'll obviously start paying the company directly for whatever's used. And I don't know if it's going to be, I think because it's a 50/50 revenue share, it's going to, it would depend on how they charge the user for the service.
[00:24:17] Speaker B: Yeah.
[00:24:19] Speaker C: But, you know, as we all know, like for direct-to-device, it's going to be a service that people use periodically. It's not going to be something that someone's using all the time. And so the capacity, the amount that you'll be able to sell to multiple users is going to be pretty high. But in that, that 1 billion number, I think it also includes any contract minimums. And so I think the, I don't know if those exist, that exists in some of the other contracts, but then For Saudi Telecom, they specifically, and we're fortunate to get this information because it's required to be disclosed by the Saudi Stock Exchange, but they talked about how there's minimum revenue commitments and then they talk about the contract value being worth, you know, at a minimum $1.8 billion and that's over 10 years, right? So I guess we could just simplistically say $180 million for Every year of that contract is a minimum. And so Saudi Telecom, whether they use it or not, they're going to pay that amount of money to the company. But then if they go over, then they'll pay in excess of that, but then there's at least that minimum commitment. And so I think that's how to think about it. If they use more, then the revenue's going to be higher. If they use less, then you're you at least have to have that minimum, right? That gets paid in. Sounds to me like Boost Mobile, like prepaid wireless in space.
[00:25:48] Speaker B: Yeah.
[00:25:50] Speaker A: Yeah.
[00:25:51] Speaker C: The CHRT Mobile. Uh, but, but I think the, um, the, the, the interesting comment from, from the company was that when I mentioned the $1.8 billion, I was like, oh, that's, that seems, is that, should I be thinking about, like, I was asking, is that, was that an annual number or is that like the total And, and from what I was understanding, it's, it's, you have to provide some minimum number to the exchange, but then, you know, the expectation is that that's that number. They would be surprised if that's the number. It's going to be supposedly higher.
[00:26:22] Speaker B: So, so, and I mean, I guess in more, in a less, in a more crude way, it's almost like backlog, right? I mean, there, there's future commitments and they have to meet Meet on their side, but then it's like, there's a, but then it's backlogged with a built-in, like, minimum level that they're going to be utilization. So once the constellation's up and they have continuous service, then they're going to be paying out a certain amount a year, regardless if that many—
[00:26:48] Speaker C: Yeah, that's right.
[00:26:50] Speaker B: Are on it.
[00:26:51] Speaker C: And the company specifically said, you know, when we, when we negotiate these commercial agreements with carriers, we're going to prioritize carriers who pay money upfront, who give us the most, right? Because then If you pay, then we'll focus on deploying service to you first. And there's going to be an order of doing this, right? And so I think that's why, for example, the company did raise $1 billion because Saudi Arabia was like, hey, we're going to upfront $175 million and we're going to give you a contract minimum. We want you to cover the Kingdom of Saudi Arabia. And then, you know, these other countries that we service, we want priority. And then the company, you know, because the capital markets were Are open. Oh, there we go. But but that's I think that's why they they raised the money because you had a big customer come in and say we're going to commit all this money, and so so yeah, they're they're getting priority.
[00:27:44] Speaker B: Nice. Was that your timer?
[00:27:46] Speaker C: I think so. I'm done.
[00:27:55] Speaker D: Thanks for listening to the AST. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time. We're doing something very, very big, and I think with this technology we can really affect KFT SpaceMobile is the only company that has proven technology to deliver cellular broadband connectivity directly from space to the everyday smartphone. People will just basically turn on their phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Our role is to bring this into reality, always in partnership with the NMO.
[00:28:55] Speaker A: Listen.
[00:28:55] Speaker D: Mmm, waffles.