AST SpaceMobile hit by delays
April 3, 2024
By Chris Forrester
AST SpaceMobile is being rebranded to AST Networks. That was the one positive slice of news to emerge from its end-of-year results. The company’s overall news didn’t help confidence with investors and its share price crashed 13.6 per cent on April 1st and another 24 per cent on April 2nd.
AST undoubtedly has a great idea, and already has a massive prototype satellite in orbit which offers the “only space-based cellular broadband network accessible directly by everyday smart-phones”. It has some major telco as partners, not least Vodafone.
Nevertheless, the banks have mixed views. For example, Deutsche Bank (DB) holds onto its ‘BUY’ rating, but has trimmed its expectations as to AST’s share price target. DB suggests $19 (€17.54) per share, which is down from the bank’s previous $23 as a target. When the current price is $2.01 anyone can see the gap from today’s reality to tomorrow’s hopes and prayers. A smaller boutique bank, Scotiabank, has lowered its AST share price expectations by a few cents (from $7.50 to $7.40). Scotiabank say it sees AST’s current position as “moderately negative”.
The existing craft, BlueWalker-3 (BW3), was launched on a SpaceX rocket in September 2022. It has 64 sq. metres of phased array antenna. It was many months late in being launched.
But the latest batch of problems is that AST needs far more than one satellite in low Earth orbit. It is in production of its next five BlueBird Block 1 satellites (each of 700 sq. ft/64 sq. m in area) and SpaceX is contracted to launch them, but they are “[available to launch] between July and August 2024”, which is the third delay for the batch of five craft.
AST SpaceMobile CEO Abel Avellan told analysts: “Unfortunately, production was negatively impacted primarily by two suppliers, leading to delays in integration and testing”.
Its follow-on satellites, BlueBird Block 2, craft are much larger, with 2400 sq. ft (223 sq. m) of phased array antennas. AST says these will start launching in December 2024 and to March 2025. These ‘Block 2’ craft will – says the company – allow a “ten-fold” improvement in processing bandwidth over Block 1.
AST’s financials say that as at December 31st 2023 it had cash, cash equivalents and restricted cash on hand of $88.1 million. It ended the first quarter of 2024 with cash and cash equivalents and restricted cash of approximately $210.8 million. It had additional liquidity of $51.5 million in gross proceeds available to draw under its Senior Secured Credit Facility. To date AST has raised more than $1 billion and has in place agreements and understandings with 40 mobile network operators including AT&T, Google and others.
Total operating expenses increased by $69.5 million to $222.4 million for the year ended December 31st, 2023, as compared to $152.9 million for the year ended December 31st, 2022.
Critics suggest that these delays and cost-overruns are damaging the company, and its losses are greater than anticipated ($75 million vs expectations of $57 million). Analysts are concerned that only a few weeks ago the company was anticipating an earlier launch of its Block 1 craft. AST cites changes in its core supplier and that estimated further funding required has increased to $350 million to $400 million to build and get the satellites aloft including the design, assembly and launch of the follow-on 20 Block 2 satellites.
If that happens then AST will cover “the most commercially attractive markets”. But first AST has to overcome the threatened cash shortfall in both Operating Expenses as well as Capital Expenses.
Meanwhile, there are other ‘direct-to-phone’ threats emerging from the likes of SpaceX, Globalstar/Apple and others all seeking space-based connectivity.