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AST SpaceMobile gets major cash injections

January 22, 2024

Texas-based AST SpaceMobile, which wants to provide a global satellite-to-smartphone services, has received some major investments from major telcos and Google. But there’s also bad news.

The cash, totalling some $263 million (€241.4m), comes from AT&T, Vodafone and Google. The finance, according to consultant Dr Tim Farrar (of TMF Association) suggests that the extra cash should get the company about halfway to paying for its next 20 satellites.

The “strategic investments” comes in the form of cash and aggregates new financing of up to $206.5 million. In addition to the $155 million strategic investment, the company also plans to draw down a declared $51.5 million from the company’s existing senior-secured credit facility.

However, the bad news is that AST also raised $100 million and announced after the AT&T, etc, news confirmed on January 18th and 19th. This extra $100 million was raised at $3.10 per share and a 25.5 per cent discount over the company’s share price the day previous. AST’s share price fell off a cliff on January 19th by 26.61 per cent to $3.19 per share.

There was much criticism from shareholders at how the news was announced, with the downbeat news coming 24 hours after the upbeat cash injections.

The financing is complex:

· $110 million comes in the form of 10-year convertible notes which carry an interest rate of 5.5 per cent and allow conversion to take place on January 16th 2025 at $5.75 per share.

· $45 million comes in the form of an advance payment by SAT&T and Vodafone against future business with AST.

· As mentioned, $51.5 million comes from AST’s existing senior secured lenders. AST will actually get only $43.80 million once fees and other obligations are paid.

AST says that the fresh money will keep things going for the next year and fund the build of another five near copies of its BlueWalker 3 existing satellite. These five will launch later than planned in Q2 this year by SpaceX.

Farrar also cautioned that while AST would be welcoming the new financing, he asked: “Do any of these companies want to be on the hook for the billions needed to compete with SpaceX? And what are the prospects for the next funding round when SpaceX will already have hundreds of D2D satellites in orbit at that point?”

“New investors AT&T and Google, joined by existing investor Vodafone, are at the forefront of wireless innovation, with products and services serving billions of people daily. This significant investment in AST SpaceMobile underscores confidence in the company’s technology and leadership position in the emerging space-based cellular direct-to-device market, with the potential to offer connectivity to today’s 5.5 billion cellular devices when they are out of coverage,” stated the company in a formal filing.

“AST SpaceMobile currently operates the largest-ever commercial communications array in low Earth orbit, the BlueWalker 3 satellite. The company invented the space-based direct-to-device market, and its patented design facilitates broadband connectivity directly to standard, unmodified cellular devices, adhering to today’s cellular standards. In 2023, the company solidified its status as the industry’s leading innovator, working alongside partners AT&T, Vodafone, Rakuten and Nokia, to achieve multiple historic technical first-evers in space-based cellular communications – including the demonstration of 2G, 4G LTE and 5G calls, and 14 Mbps download speeds per 5 Mhz channels – directly from space to everyday smartphones. For the company’s planned operational satellites, beams are designed to support capacity of up to 40 Mhz, potentially enabling data transmission speeds of up to 120 Mbps. With over 40 agreements and understandings with mobile network operators globally, who collectively service over 2 billion subscribers, AST SpaceMobile’s pioneering in-orbit technology is poised to be the solution for eliminating cellular connectivity gaps around the world,” the company’s statement continued.

Chris Sambar, EVP/Head of Network, AT&T, said: “Through our work with AST SpaceMobile, we’ve already proven the possibilities that satellite has to offer in helping connect more people via text, voice and video. We’re excited to deepen our relationship with this investment as we continue to drive a first-of-its-kind innovation forward and work together to achieve this shared vision of space-based connectivity for consumers, businesses and first responders all around the globe.”

Vodafone Group says it will introduce AST service in Europe and Africa. Vodafone’s CEO Margherita Della Valle said in a statement: “Customers in remove rural areas, on land or out at sea, will be able to benefit from fast and reliable 5G broadband directly to their existing smartphones without the need for specialist equipment.”

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