Starlink Mobile Just Made AST SpaceMobile the Winner

[00:00:02] Speaker A: Everyone, thanks for joining. Hope everyone had a great weekend. Happy Monday. We have AST SpaceMobile earnings after the close, and so that should be pretty exciting. I think there's a number of big developments that the company could cover, and, um, yeah, it should be, should be a very insightful and, as they always say, the most Important quarterly update in the history of the company. I don't know if it's that it's going to be that important, but but but you know there's clearly a lot of things that are going on positives, and so I think we'll be chock full of great information. I do want to before I start, I do want to give a special shout out to Redrum. He's been doing a tremendous amount of work putting together all these spaces. and converting them into podcasts and then distributing them over Apple, Spotify, a number of different platforms. And so I just want to give him thanks on my behalf and also for Cook as well, because he puts Cook Spaces out there, which I listen to as a podcast because it's easier to fast forward or speed up. And so if I miss Cook Space live on Sundays, I usually you use Apple to listen to that on replay. But Redrum did tell me that I should do a little plug in the beginning. So I do want to— well, first, plugging for Redrum. If you haven't, on major platforms, you should subscribe to his podcast, and that's where you can catch me and also Kook. And then I think Redrum does some of his own original content as well. So Definitely worth subscribing. And if you ever miss a space, if it's AST-related for me and for Kook, you can find it there. And then also you can go back and listen to older spaces, which is helpful because X, I believe, for the most part, after 30 days, typically spaces are deleted. I didn't learn about this until a few months ago, which was unfortunate because there was a few spaces I would have liked to have saved, but there is a period of time where you can listen to old Spaces, but then they forever are removed from the platform. Funny enough, the one Space that I did with Hamid, where he talked about— he had posited that perhaps the company should put satellites on top of mountains. Unfortunately, that went past the the hold period for X, and so it was deleted. And so I think some people had poked fun at him and he denied ever making those comments. And then I actually went back and tried to dig it up. And I also went through the— on X, you can download all of your content, but if you decide to deactivate your account or back it up, but unfortunately it does not save historic X Spaces. So I couldn't find that for entertainment. But anyway, But yeah, for those that listen to the podcast and don't know, I actually have an X account. That's where I typically post real-time information, thoughts, views. And so you can follow me @SPACandPanman. That's @SPACandPanman on X. And that's where, if you want to follow me live and hear these live, feel free to follow me there. But anyway, moving on. So I did want to cover a few topics. First, Over the weekend, there was an onslaught of Starlink mobile information that was pushed by Musk supporters, supporters of SpaceX, and what have you. Clearly, the narrative is growing stronger. It's becoming a key focus for SpaceX, a driver of growth. In order to support the company's valuation, Starlink Mobile is going to become a much bigger part of the story as clearly Musk has been focused on that. And so I think in particular, Musk talked about how he believes that Starlink will get to 25% share of internet traffic, and so representing approximately $500 billion of revenue. And so he thinks that that's an obtainable goal in the next few years. And then over the long term, he believes that he could get 50% of all internet traffic or $1 trillion in revenue. So why this is important is that I think for most of the Street, this is something new. People are just learning about it. And as part of that education process, whether it's institutional shareholders, retail, sell-side analysts, industry analysts, of course, all these folks are going to be focused on the M&Os. What's your strategic response? What are you going to do? Are you going to allow Starlink to take market share. And I think that's where the broader awareness about AST SpaceMobile will spread, because a lot of these folks on earnings calls, presentations will talk about their satellite solution. And inevitably, all these people who— and I think for anybody who's followed the sector for a number of years, it's hard to fathom, but you have to remember a lot of people are new to this. And so this idea that they would somehow know about AST SpaceMobile, it's not something that's out there and people have to dig pretty deep in order to really understand that, oh, there's this other company that invented the category and is putting up satellites. And so over time, that's going to change. But I thought it was pretty interesting this past weekend, were a number of supporters of Elon Musk who threw T-Mobile executives under the bus, in particular, the CEO of T-Mobile. Folks were making fun of him, and then Elon actually didn't dissuade them from doing that. He actually poked fun at him as well. Pretty much, I think that relationship is untenable. I think the cat's out of the bag. And so it's just a matter of time. I've actually, on a daily basis now, I check T-Mobile's website to see if the T-Satellite portion of the website is still up, if it still has the location on the website where it is. I mean, eventually, maybe I'll just get an AI bot to kind of follow it, but when that is removed, I think that's probably going to be the sign that things are really starting to cook. And so it's definitely worth following. But yeah, I think an important takeaway from this weekend, and just thinking about it more, is that there's been this debate, and it's a debate that's been ongoing for years. It's the question of user adoption uptake. And an AST space mobile bull would tell you, well, if uptake is, or adoption is 5% or 3% or 2%, then you spread that globally around 3 billion subscribers, that's a really big number. That was the conversation a few years ago of, on the bullish side, maybe uptake would be 15%, 10%, and then the numbers would get pretty enormous. I referred to this over the weekend, the fact that Starlink is now getting into the mobile business and looking to compete directly with MNOs, you couldn't write a better script for the company, because now you've got a— with Starlink expanding and looking to compete with threshold service, this creates an environment where the message of 100% connectivity, so being able to say you have connectivity no matter where you are, that becomes table stakes, which is what— this is the term that T-Mobile refer to that satellite coverage, while a complement and it's not a replacement, it's going to become table stakes. So this idea of 100% connectivity over a hybrid network, which is terrestrial, the towers and cellular spectrum typically, and then satellite coverage, whether in AST's case, it's leveraging cellular spectrum and MSS spectrum, or other players like Starlink, that's going to use MSS spectrum. these services become table stakes, meaning when you go to the customer, the idea of a dead zone or an area with low connectivity is unacceptable. If a customer gets Verizon service or AT&T and they experience broadband across the entire footprint of America, then that's going to become kind of the expectation. This idea of a dead zone or going to the beach and having no coverage for connected people like you and me who have to be watching, checking news and research and seeing stock quotes, it's just unacceptable. If you're hiking somewhere or if you're in a 1-bar zone, like in AST's case where J.R. Wilson Ed Asti talked about this in a recent interview about actually the network being smart enough to switch to satellite when there's only 1 bar and essentially no connectivity from the terrestrial network. That becomes a very compelling solution. So when you think about it, this idea— so the uptake, the question of uptake, if it's 5% or 10%, I think that actually is now in the back of the rearview mirror. We're now talking about uptake being more like 100%, 90%, 80%, whatever, you pick the number. So what's the logic behind that? Well, MNOs, from a defensive standpoint, if Starlink comes into the market and it's questionable what kind of service they can provide in dense areas, because that really— I mean, forget about femtocells and these concepts that are being talked about, you need to build out towers. You need You need to hang towers and radios, and if that's on their AWS-3 spectrum, then so be it. That's going to happen, and it's going to be expensive. If someone wants to talk about, well, what would the Starlink— if Starlink uses mid-band spectrum, what would be the equivalent service when you're in the city? Well, it goes back to my example of using T-Mobile back in 19— no, not 19, 2000. Let's call it 2003, 2004. T-Mobile back then didn't have much low-band spectrum. It was all mid-band spectrum. So back in New York, I remember they had this really cool smartphone that had a keyboard that popped out. So I was like, hey, I'm going to try T-Mobile for a bit. So I tried it because just for that phone, this is back in the day when people would use a carrier because they offered a special phone. So I did that, and then I remember it was absolutely brutal because they only had mid-band spectrum. They didn't have low band. So when I would go into office buildings, there would be no service. This was before Wi-Fi was ubiquitous. Then when I would go in the subway, once you would walk halfway down the stairs, service would disappear. So after about 3 or 4 days of using T-Mobile, I went back and gave it back and went back to Verizon because it was unusable. So that's the experience you will have with AWS 3 Spectrum in dense areas, unless they put really— they hang towers everywhere, right? They put radios in the subway and they do all these different things in order for that spectrum— because remember, mid-band spectrum doesn't propagate as well. It doesn't have coverage and penetration that low-band spectrum does. So that's the type of experience you should expect to get. But in rural areas, you might have better service once they have a number of satellites up. So it's going to be a competent service, but it's going to have its drawbacks. So for people who are used to a cellular plan that works in most places, that's going to be unacceptable, but you're going to have supporters of SpaceX and Tesla. They're going to go use the service and they're going to get through going to deal with the issues in order to support the company, and that's fine. That's what you would expect. But for MNOs, in order to preserve your market share, and not just counter SpaceX, who's going to go on a market blitz and say, hey folks, you can have this satellite phone service that not only works in the US, but it's going to work globally. So that's a positive. Once they— and well, I guess I should preface it by saying EchoStar needs to hold on to those licenses, and it's unclear which licenses they will hold on to. For example, in Europe, they're going to get downshifted, and it could be a pretty bad downshift. But the premise for SpaceX and Starlink is that they are going to be able to say, we should be able to give you one bill, you can go around the world, or most of the world, and use this service. And so that's going to appeal to a decent amount of users. Yeah, they're going to have crappy service in the major cities, but then if you go to— if you're a rural customer, maybe you're okay with that. Starlink is going to be able to get some level of market share. So for MNOs though, in response, if Starlink says, we can give you 100% coverage powered by satellite, it's sufficient, and then you can do that Oh yeah. Someone in the comments said T-Mobile Sidekick. That's right. I had a Sidekick. But anyway, going back to what I was saying, Starlink is going to market that to customers. And the counter for AT&T and Verizon, and eventually T-Mobile when they're brought up to speed, is that they are going to make satellite coverage just a part of the standard package, because you can't afford to lose subs. So the value proposition is you're going to offer customers 100% coverage with full hybrid connectivity, the network and then satellite powered by AST SpaceMobile. So we're not talking about 5% to 10% uptake, we're talking about 80%, 90%. I mean, maybe there's some value plans where it's not offered, people don't want the bells and whistles, but a vast majority of mobile plans are going to include it. And it's not just for a response to Starlink. It's also in response to each other. So if AT&T says, hey, you know what? I believe in this. I'm going to put AST SpaceMobile satellite coverage in all my plans, then Verizon has to do it. It's the whole prisoner's dilemma. And then T-Mobile has to do it because if all your plans offer it, then Then it's a differentiation and people perceive value and then they're going to move services, right? Because I mean, for me, and I think this is true of most people because I think there's a bit of embellishment on X, but I'm very happy with Verizon service. There are a few times like when I'm skiing or in certain areas when I'm driving around where the service doesn't work and And it's super frustrating, by the way. Like, those times of frustration are real. Or on the beach, or on Long Island, there's places where it doesn't work, but overall, I'm pretty happy with it. That said, there are people out there who live in the suburbs and the service doesn't work at their house. Maybe they get half, they get a bar and there's not really service. But yeah, this is game-changing. Like, imagine all those areas you get broadband coverage. 7 megabits per second for an entire cell, we're talking 100 megabits going to 200 megabits. And then with C-band, you're looking maybe, I mean, just extrapolating, maybe a gigabit of data transport, peak speeds within the cell. And so this is game-changing stuff. And so going back to what I was saying before, this discussion of 5% to 10% uptake, irrelevant because if you're getting baked into plans, almost all the plans, because this is a strategic imperative where Starlink is forcing you to do so. Going back to the idea that Starlink moving into the mobile business is the best thing to ever happen to AST, it's absolutely true. Because like I said before, 2 years ago, we had AT&T, we thought we were on top of the world, and then Verizon joined, Then now, because Starlink is moving into the mobile business, Deutsche Telekom's like, okay, we're going to start working with AST, and T-Mobile will start doing so. So we are going to, in terms of market share, we're going to have 100% market share of the MNOs in the US, and you can copy and paste that throughout the entire world, unless there's some MNOs who don't feel strategically threatened by Starlink, but I think it's hard I think over the weekend, there are some folks who are wondering, well, T-Mobile said they don't really view it as a big issue. They don't feel a little threatened. Well, publicly, what else are you going to say? So if you're the CEO of T-Mobile and you're currently working with Starlink, and then people are like, hey, these guys are coming to eat your lunch. They're like, why are you working with them? What are you supposed to say? Yeah, we are the frog in the pot and the heat is getting turned up and we're not going to do anything, or, yeah, yeah, they're a big threat and we should be worried. No, publicly you're going to say, well, it's not that big of a— we don't really feel threatened. You talk about how there's not much traffic going over satellite. I mean, you try to downplay it. This goes back to the T-Mobile CFO. I think it was 2 months ago I posted about it, where he was at an investment conference and he just dressed down Starlink, which was the first time any executive at T-Mobile pretty much poo-pooed the service. I mean, talked about the limited speeds and because— I mean, this guy went into the minutia. He talked about where the satellites were orbiting, there's going to be some lag in terms of response time and that there's not much data capacity and that— Yeah. I mean, he went into a lot of technical stuff, which means This is the CFO of T-Mobile. He talked about how they have to keep replenishing satellites. It's like, where did this come from? How does this guy know this stuff? Well, clearly they feel pressured by it. There's some talking points of, if people ask you, here's why the service is not good, which is bizarre because they're partners. You wouldn't expect that. Going back to what I was saying before, in the US, which is the world's most profitable market, where people kind of view the US as the leaders in mobile connectivity, this is going to be copy and pasted, right? So when you go to other markets, AST is going to become part of the standard package, right? And so going back to what I was saying before, yeah, like there's there's a big case to be made where you get— before, when we talked about this idea of a duopoly where Starlink was going to be able to get, call it 30%, 40% of MNOs globally maybe, and that's generous, because I always had the issue of Starlink's core fixed wireless business being a competitor to home internet and fiber. So not all MNOs would be comfortable with that, but We've shifted now from a duopoly of, I mean, just whether it was 30/70 or 40/60 to now, it's going to be a winner-take-most, winner being AST because they are the partner of choice for MNOs. MNOs are the incumbents. They have the install base. AST has 60 MNOs working with it with over 3 billion subscribers. So Yeah, it's going to be winner take most because Starlink is now— it's gone from a partner to an antagonist looking to take share. And so yeah, I totally believe that Starlink, it's going to take time, but they could easily get to 5%, 10% of the market in the US if they really push hard. And that's huge. Those numbers are massive. But then AST gets the balance, and that's a really damn good position to be in. So I think that this is a point that's kind of lost on the market. Everyone's kind of focused on Starlink and what it can do to the MNOs, but there's no whole discussion because it doesn't fit the narrative. There's no discussion of what the MNOs have in hand and what they're going to do to respond. Everyone just extrapolates into the future and believes that Starlink will eventually deliver broadband over satellite. Starlink will somehow get low-band spectrum and roll out a competent service. They'll use some amalgamation of Teslas driving around as hotspots, and they'll develop a new type of dish that can also repeat signals and act as a cell tower. I mean, there's all these— which, by the way, if you have a cell tower, that thing draws a tremendous amount of power. Imagine going to a Starlink user and saying, hey, we want you to buy this new equipment and become essentially a terrestrial tower. I guess they could pay the consumer money for the electricity that draws. Obviously, a lot of people do not want cell towers on their house, but anyway, yeah, there's a lot of things to get through, but giving them credit for all these things over the long run, you still get to this point where it's like, okay, let's say they get to the same technical level, or let's say they surpass AST. Let's go beyond that. Let's say that they are able to deliver thousands of satellites, which they can, and it's going to deliver a really good broadband service. That doesn't change the dynamics. I mean, the MNOs are still going to be there. They're still going to use AST. And the uptake is going to be huge. And one of the things that Starlink bears say is, well, this V2 satellite's going to reach 150 megabits per second, and so it's going to surpass what AST has. And it's like, well, let's take a step back and look at that. I mean, AST Block 1 satellites, which were launched in 2025, those do 100 megabits per second. The Block 2 can do 200, and then they're looking to increase performance by a factor of over 10. The company's not sitting around. We're not sitting there on our hands. There's a roadmap for Block 3, Block 4, Block 5. But what I think is different is when you have the MNOs in your corner, then the capital and the drive to improve goes up significantly, right? Because it's not just this startup tech company that's trying to become a super wholesaler. The M&Os are actually incentivized, and this goes to the pricing point, they're incentivized to help you as a strategic counter, right? You become an integral strategic partner and the quality service that you're able to deliver becomes paramount, right? And so This idea, by the way, of people saying, well, maybe the M&Os will push back on the 50/50, which, okay, that's fine. Maybe the split is 70/30 or 60/40, but if you have 100% market share of the M&Os, those numbers are really compelling. But the last thing they want to do is create an economic model where it doesn't make sense for you to invest in the business and keep evolving and improving the satellites. But yeah, I think over the weekend, and yeah, it's going to take time for people to get their arms around what this means, but I think that the key point is that uptank is going to be much higher. It's certainly not going to be 5%, 10%. It's going to be a much bigger number, especially, and what gets you there is that the service becomes just part of the standard package. The other thing which folks should think about is when Starlink goes and tries to get customers, it costs about $400 to $500 to acquire a customer. That CAC, customer acquisition cost, that includes advertising, sales, and marketing. It includes incentives. So oftentimes when you switch, people will give you a phone or some discount. You might get some discount on service. It costs money to go acquire customers, whereas for AST, They don't need to acquire customers. The customers exist. The carrier will just— it'll be an option for you to pick. The most in-your-face way to get people to turn the service on, which is what the company is planning, is that when you are in a dead zone or when you're in an area when there's low coverage, you'll just get a text message and it'll say, Verizon satellite service powered by AST, or whatever it is. Maybe it won't even say AST. It'll say, do you want to turn this service on? And more people who are out there, whether it's a day pass or whatever, they will turn on the service and they'll get a taste for it. And then that's how adoption then ramps up, where people are like, oh, this is really good. And then Verizon will follow up with some type of text message or promotion and say, hey, add broadband satellite service to your monthly plan for $10 or whatever it is, $15. And that's where you'll get adoption. Or once awareness spreads, then if you pay for one of the premium plans, instead of throwing in all this stuff that people don't need, they'll say, oh, we'll throw in satellite for you. We're not gonna throw in free Netflix. I mean, everybody already pays for Netflix. We're gonna throw in an Apple iTunes subscription, all this stuff. It's like, no, just give me the satellite service 'cause I want that. And so that's, it's gonna become standard. But yeah, I think taking that model and then spreading it to Europe, spreading it to Asia, spreading it to the Middle East where Saudi Telecom is going to do that, then you're looking at penetration rates that are much higher, which I think people— and this is something that the sell side hasn't written about, and it's still an open-ended question of what's adoption going to be. Well, because of Starlink Mobile, adoption's going to be super high. And over time, that's going to approach 100% because of standardization. And so going back to what I was saying before, yeah, we're going from a duopoly to a winner takes most, and AST can get, I don't know, 70%, 80% of the market globally, and Starlink can get 10%, maybe 20%, which is super generous, right? Very, very generous. But Starlink today has 22 MNOs, I think, of course, the anchor MNO is T-Mobile, and clearly T-Mobile is about to jump ship. Parent Deutsche Telekom is about to jump ship as well. And so yeah, it's a very exciting time. It'll be interesting to see in the call today if analysts ask questions, I hope to God they do, around Starlink Mobile and what the competitive impact is. Although the company probably wants to be a bit cagey and they're not going to address it aggressively like I am because they've got to be sensitive to T-Mobile and various things that are going on, but over time, that narrative is going to shift. Another question is, well, what about competitors? What about Globalstar? Okay. Well, Globalstar, it's interesting. They've got good spectrum. I think it's like 8 megahertz of uplink and 15 megahertz of downlink. it's global. And so Amazon's going to be able to build something good, I think. For timelines, of course, Kuiper took forever to come to market. And so I'm not sure how long it'll take Amazon to develop their own direct-to-device satellites. And of course, this is mid-band as well. And they're taking the same approach as Starlink. They're building an entirely separate network that is proprietary. It's not bent pipe architecture like what AST is doing. So they're not looking to integrate into MNO cores. They're going to be offering a separate roaming network. So easily you could see Amazon getting a lot of value out of that for all their devices, whether it's— they eventually, I think, are probably going to come back with a phone. By the way, SpaceX, they're going to come out with a phone too. If Amazon's coming out with a phone, by the way, they're partnered with Apple, Apple's not going to like that. So I don't know how that relationship's going to unfold over time, but for Amazon, you can imagine that there's enough IoT devices and other Amazon devices that they'll like to have connected. And then for Amazon's internal use, whether it's robotics, autonomous delivery, whatever it is, there's plenty of uses for it. They have, in order to get FCC approval, they've talked about competing in direct device and working with MNOs, but The question is, if you're an MNO, would you work with Amazon? Because Amazon is— if you think Starlink is a worrisome competitor, Amazon is pretty close to that as well. Because Amazon, the LEO, the old Kuiper, which is LEO, they're going to be selling that internet service to homes. So again, this goes back to the compatibility of a partnership. Are you going to partner with someone who is offering home internet? No, you're not, because that's going to hurt your 5G home and your fiber-to-home business. So that's one big issue. Then the second is for Amazon, they want to own the customer, which by the way, I'm a very happy Amazon customer. I have Amazon Prime. So do the carriers want to get disintermediated and offer just— it's a similar thought exercise, do you offer Amazon the ability to become an MVNO and do you enable them? The answer is no, because Amazon will slowly take value away from you and they want to control the customer, which they already do today. The one way that Amazon could be aggressive in pushing their service is they could say, well, as part of Prime, you will get this satellite service. You can make it an eSIM and then it's not going to work everywhere, but in certain areas it can work. So that could be a way that they deliver extra value. But again, going back to the MNOs, you're not going to let that happen. You're going to want to offer satellite service yourself and monetize it and build customer lock-in and that value. So it's going to become— again, this goes back to the whole original idea, it's just going to become a standard part of every cell phone package. package for T-Mobile, for Verizon, for AT&T. And so not 5% uptake, not 10%. You're talking, at least if you're buying service from the carriers, 100% uptake. Let's see. So let's talk about Iridium. So Iridium, well, what about them? Iridium is a niche service, right? And so Iridium is known for resilient global communications and they're developing an interesting PNT business. Which, by the way, for PNT, PNT is truly not a winner-take-all. PNT is going to come in, and this is, for those that don't know, position, navigation, timing. This is an augment to GPS. It's going to come in multiple flavors, right? And you need that because of adversaries who are looking to jam GPS signals and alternative technologies, you're going to want to have multiple constellations delivering PNT services. And so if you have a drone, if you have an airline and you have planes, to protect consumers, you're going to want to have more than just GPS. You're going to want to have 3, 4, or 5 different sources that you can kind of— maybe you have a computer that switches between either ones if there's some signal issues, but you're going to want to have redundancy because as we know, GPS is super critical, whether it's in consumer applications or enterprises or defense. So that's going to be a good business for Iridium. But I think it's important to— Iridium serves a purpose. One of the biggest customers Iridium has is the military, and that's legacy and it will continue. I don't think that's ever going to go away, but it's important to understand what Iridium is now and then I guess what it could be. But right now, Iridium has 2.4 million subscribers, but 2 million of those are IoT devices. And so by the way, this highlights the IoT opportunity. So for Iridium, they've got 2 million IoT devices and then they've got 402,000 commercial voice data subscribers. So the IoT opportunity is way bigger than voice or consumer. So imagine for AT&T, Verizon, and T-Mobile, when they truly start ramping up IoT, which Iridium has been doing, we're not talking about 380 million, or sorry, 300 and call it 15 million mobile subscribers. We're talking numbers that could be— IoT today is like 84 million devices for the 3 carriers, but that's probably going to what, 3, 4, 5x in the next few years? So that's a massive opportunity. And when you talk about IoT, these are not applications that are drawing much data, right? So in Iridium's case, these are tracking devices, they're monitoring devices, which people pay a lot of money per month. I think is like $50 to $100 a month just to get data from these things. And so this just kind of goes to the enormity of the market, but yeah, Iridium is going to stay kind of niche and it's going to have its uses, but it's not going to be something— and by the way, this goes back to— this also includes Globalstar. Both Globalstar and Iridium are competitive with MNOs. They're not direct substitutes, but they sell directly to customers. They offer a phone service. And so that's always why you would never see an AT&T, Verizon, or T-Mobile resell Globalstar or Iridium services, at least for voice. And so for Iridium, one of their biggest constraining factors, yes, they have global spectrum, but they've only got 7.8 megahertz of usable spectrum in one channel. So for Iridium, there's no dedicated uplink or downlink. You actually have to use time division. There's a specific timing to send data up and there's specific timing to send data down. And so it's going to be limited to certain applications, but it's valuable, but it's not going to be something that's going to compete for commercial subscribers, users, like a Starlink will. So that's kind of at least the competitive— the 2 key competitors, and direct-to-device, by the way, is a massive market. So there's going to be different parts, segments of the market that carriers serve, but the 2 biggest players will be AST and of course Starlink. Another interesting thing that was tweeted over the weekend by Elon Musk is the fact that he made this claim that every automobile in the future will be connected by Starlink. And so This goes back to the same logic. Same logic meaning it increases the importance of MNO partners, which AT&T, by the way, partners with a lot of US auto manufacturers. But that statement by Elon Musk just increases the importance of MNOs and AST as an alternative to Starlink, because ultimately, if Starlink goes to Ford or GM or I mean, you pick it, Hyundai, Toyota, BMW, say, hey, you should install Starlink on every one of your cars, they're going to turn around and say, wait a second, aren't you my competitor? You sell Teslas. And it's like, yeah, yeah, but don't— hey, we're not Tesla, we're Starlink, so we're separate. But in fact, as we know, I mean, SpaceX is probably going to merge with Tesla. And so if you're an auto manufacturer, this move of wanting to integrate the two and of course trying to connect all the cards, that's going to push these players to work with MNOs and the partner AST SpaceMobile. This is going to go on and on because the fact— and I've talked about this idea of SpaceX, Tesla, this vertical stack. I know people always like to talk about the stack, but it's true. You've got this Tesla, SpaceX stack that has everything, soup to nuts. You've got AI with Grok, you've got X for social media and news and communications. They're making processors. They've got cars, they've got robots, they've got obviously rockets, satellites, you name it. data centers. And so there's this monolithic behemoth that's competing, and then who do the other players go for? Who do they work with? The OpenStack, who does that include? And when it comes to broadband satellite communications and also government communications and military applications, there is an alternative. It's AST SpaceMobile. And so if you go to a Robotics manufacturer, someone who's doing IoT devices, someone who's— I think the answer is pretty straightforward. Now, obviously, there are going to be situations where they have to work with SpaceX and Tesla, or they have to work with both companies. but people are going to be looking for an alternative. That's where the market does not value AST today, but that's going to change. I think my guess is when T-Mobile does join, that's going to be the switch that flips in people's head and it's like, wait a second, these guys have Verizon, AT&T, and T-Mobile. There's something going on there. I mean, it's like the aha moment when when the Department of War and Space Force and all these other acronyms, when Verizon started working with AST, they all called Michael Pollack back. They called the executives back and said, hey, you guys are doing something there because now that you've added Verizon, there's now this credibility. So I think similarly, you pick the vertical, if it's automobiles or drones, or robotics, there's way more customers that— and of course, it'll be AST working in partnership with M&Os, or in the Department of War's case, it will be directly with the company, or in other countries, it will be through some joint venture type structure. But that's the opportunity, right? And that's the thing that I think most people miss, but will become increasingly Folks will become increasingly aware. And when you see responses over the weekend of people who— yeah, it's going to take folks time to kind of get through that, right? And so, but when they do, that's when you'll have this hockey stick type of movement. where people are like, aha, I get it. If I want exposure to a trillion-dollar communications market and the player that's going to end up working with a vast majority of the MNOs, this is the way to go. Or if it's for military applications or sovereign constellations, I mean, there's just a whole laundry list. It just keeps growing, this litany of new use cases and things that the company can do. But anyway, yeah. So that's mostly what I wanted to cover. I did want to also just highlight that Rakuten This morning in their earnings call, they confirmed the J-LEO award, which is $1 billion. For those that don't know, Rakuten is working with AST SpaceMobile in putting up a sovereign constellation in Japan. And as part of that, the constellation will be able, or AST will be able to use the constellation outside of Japan for service. But that JV has to be formalized. So it's not formalized yet. It's probably gonna take some time. But that's $1 billion of capital that's going to be used to procure and develop the system. And so that's just more satellites, because those satellites can be used for AST service outside of Japan. And the other thing that was highlighted by Rakuten is that they are planning to start commercial service. I think it's beta service towards the end of this year. And so for those people that are wondering, are we going to launch more satellites this year? In order to achieve that, In order to achieve that goal, there needs to be more satellites launched, which by the way, on the earnings call today, I'm sure we'll get an update. I think Bluebirds 14, 15, and 16 are very close to shipping. Based off of our own due diligence, it looks like it's imminent. And so there's been some people who are talking or wondering which rocket that's going to go on. It's going to be a Falcon 9. And whether that happens in early part of— or actually, I guess not early part of September, but middle part of September or later. We'll see. But that's mostly what I had. I'll just do a quick scan of questions if there are any. What do you think are the top 3 questions analysts will ask during earnings this afternoon? Well, I think the one they should ask is, Are you working with T-Mobile and Deutsche Telekom? That'd be number one. Number 2, how does Starlink Mobile getting into the terrestrial business, how does that impact your strategic positioning? And have conversations with MNOs ramped up since then? And then maybe the third one I would be interested in, of course, is launch providers. Are you guys close in signing MLAs with additional launch providers? And then Where are we on Blue Origin getting back to launch? And I guess it's a multi-part question. Can you disclose how many more Falcon 9 launchers you've bought? Which they will say they can't, but that's obviously going to be at the top of people's mind. Someone's asking here, do you think AST will ever become a household name since they're more behind-the-scenes company than MNOs, or they brand it like Verizon Always Connected powered by AST SpaceMobile? I don't think we will become a household name, and that's good. good. I mean, we might be when people dig in and they realize what it is, but that's not the important thing. The important thing is that we deliver broadband service and the MNO customers and the end users are happy. And this was the big strategic blunder that T-Mobile did, is that they thought by working with Starlink and pushing the SpaceX brand, that that was going to give them some halo effect, but it actually gave SpaceX and Starlink free marketing dollars, and everyone associates satellite service with that company, not really T-Mobile. T-Mobile is just kind of an empty vessel delivering it. So I think the MNOs will avoid that mistake again, which is fine. You want people to not— in AST's case, you want them to be in the background. As long as the service works, who cares? Let's see. Does AST retain ownership of satellites subsidized by JALIO? I think they will, because AST is part of the joint venture. They're going to be a minority partner. They are going to have the ability to utilize this service outside of Japan. They certainly will have to be some type of minority owner. They're not going to be a majority owner, but they will get the economic benefit. They will build the satellites, get paid for that, and then they will derive revenues and share those probably for those specific satellites. There might be some kind of revenue cut that Rakuten will get from that service, which Miki Tani, the CEO of Rakuten, did kind of allude to that, where he said, we are planning to develop this JLEO service, and then we're gonna go provide service globally, which makes sense. Like if it becomes part of the federated AST SpaceMobile constellation, then Rakuten should have some economic benefit of those satellites being used elsewhere. Let's see. Can AST handle connectivity for a lot of MNOs? Imagine that more MNOs will cause user throttling, or is this easily solvable by more satellites? Yes, it is. You densify the constellation. The more satellites you add, the more capacity. Will there be a need to throttle it initially? Maybe, but Remember, at least the initial use cases for the low-band constellation will be kind of areas where there's not as much usage. So in essence, it's high-value usage, but there's not gonna be a ton of it. Where you start getting into the realm of, can the network handle it, is the mid-band constellation that's gonna be using Ligado spectrum, because that's gonna be deployed across the entire country, right? So it's not just areas where there's not good coverage, but it's gonna be even in dense areas. That's where the mid-band constellation, you'll want to get to really big numbers fast for that service to be really good. Let's see. I think that's it. So that's all I had. Yeah, an exciting weekend. There was some good discussion, and I think as people dig in, there's some logical conclusions to ultimately end up at, and And I think just in closing, the most important one is Starlink Mobile. It's a competitive threat, which will force MNOs to make ASD a standard part of the mobile package. So uptake goes from 5%, 10% to 90%, 100%. And so yeah, it becomes table stakes, like T-Mobile CEO said. And so that really changes the economics and the importance of AST to the MNOs. And so yeah, we're at very early beginnings of what is going to be a tremendous ride for AST. So anyway, that's all I had. Maybe we'll do a space later post-earnings, but it'll be interesting to see what the company discusses and especially the questions. Hopefully there are going good questions, and, and I would encourage folks to submit questions. The company always takes retail questions first. And yeah, that's all I had. So thanks everyone for joining, and we'll talk again soon. Take care.
[00:49:05] Speaker B: Thanks for Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time. Listen.
[00:49:37] Speaker A: Mmm, waffles.