2 min read

$ASTS

3/13/25

AST SpaceMobile

What they (are attempting to) do: Broadband satellite (LEO) to Cell service.

  • American company out of Midland, TX. Manufacturing expanding in Texas, Spain, and Florida.
  • Currently have 5 "Block 1 Bluebird" satellites in space. They have tested and proven working video calls based on these satellites. Working on "Block 2 Bluebird" satellites. Ramping to 6 satellites produced per month by H2 2025.
  • Securing launches for first 60 satellites by 2026.
  • Goal is continuous coverage in US, EU, and Japan by 2026.
  • SpaceMob meme stock following.
  • 50 MNOs have signed partnerships (including Verizon, AT&T, Vodafone, Rakuten, etc) providing 3 billion potential subscribers. Vodafone has created a conglomerate to cover all of the EU to solve fragmentation.
  • Government contract potential. 43M contract award from Space Development Agency.
  • Spectrum: 45 MHz of lower mid-band (up to 120 Mbs service) secured on long term contract.
  • Will compete with Starlink using TMobile spectrum, with FCC allowance to boost outside of their spectrum.

Financials:

  • MC 8.72 B, EV 8.3 B. 560M cash + $460M convertible notes issued bringing pro forma cash balance to >$1B with 3% possible dilution (effectively at $44.98 share price). No other debt.
    • Great balance sheet. All warrants have been called.
    • Pre-revenue. OCF -126M TTM.
      • Guidance: Cash burn of 30M quarter in G&A. Break even once they have 25 satellites in orbit. Each satellite cost is ~20M. They believe self funding after 25. This would be around 500M. The company estimated around 650M, which is now on hand to get them past 25.
      • Re: Further cash needs: Ideally not, unless they cannot bring in revenue with 25 satellites as expected.
  • Nearly 100% increase in diluted shares over last year. No dividend. Should require minimal dilution going forward.
  • P/E, EV/FCF do not apply yet given no significant revenue.
  • Management: Run by founder Abel Avellan. Board includes Vodafone, Rakuten (CEO/founder), ATT, AMT, Cisneros, and KKR executives.
    • KKR indirectly owns very large shares of cell tower companies in many countries (Hivory, Telxius, and Jio Indian telecom)
  • Thesis:
    • Bull case:
      • Fills a significant technological need. Continuous coverage for broadband to cell phones. They will also make money on non-comm opportunities like IoT, DoD contracting for war, etc.
      • For cell service revenue sharing is a brilliant model ensuring significant partnerships to bring billions of customers.
      • Probability: Increasing with success of initial satellites, but still pre-revenue so based on DD I'm assigning 75% chance of success.
      • Magnitude: Imagine similar cost to Starlink of $15 per user (TMobile), with 3 billion users. Capturing 10% would be 300M * $15 = 4.5 B. Split this in half between carrier and ASTS gives us 2.25 B in revenue. A successful space satellite company in potential duopology with Starlink should command 15x multiple. Middle ground 8x would put value at ~33B (at 10% of customers signing up). There will be additional IoT and DoD contracts that drive it higher. This would be ~400% upside.
    • Bear case:
      • Technology doesn't scale.
      • Unable to provide continuous coverage with 60 satellites and need to raise money.
      • SpaceX competition ramps up, have shown 17 Mbps download speeds. Concern for radio interference from Starlink satellites. Plans to launch 800+ satellites to help support this. Starlink granted out of band emissions by FCC. Starlink has more capital, 1st mover (500 sats currently w direct to phone, and has SpaceX rockets.
      • FCC deregulation; unsure how this will effect either ASTS or SpaceX/Starlink.
      • Dependence on Bezos and New Glenn rockets to work, as SpaceX has only agreed to 2 more launches.
    • Base case:
      • 2 player market, that is split.
      • Starlink is only 1 year ahead introducing coverage with TMobile; given they didn't focus on direct to phone until recently. Each ASTS satellite has 20x the capacity of Starlink.
  • Fundamental Drivers: Launch timing, getting to break even (25 satellites).
  • Expectation: Reasonably high, given they have been executing.
  • Write ups:

Paul Weaver

Charlotte, NC