AST Science or AST is soon to become public through a SPAC merger with New Providence Acquisition (NPA). AST & Science is a company building the first and only space-based cellular broadband network to be accessible by standard smartphones. The product their developing is SpaceMobile, an ultra-powerful network that will provide connectivity at 4G/5G speeds everywhere on the planet – on land, at sea and in flight.
By developing a space based cellular network it could possibly remove the coverage gaps in rural places. For the first time ever, mobile subscribers will be able to automatically roam from land networks to a space network.
Whether in the most remote location, on rural farmland or in the midst of a crisis or natural disaster, people will remain connected no matter what – without having to invest in expensive, specialized hardware.
Down to business
AST works with existing mobile networks to extend their reach by lowering the cost of obtaining new customers and providing extra services for premium ones. This expands telecom market share by allowing businesses to reach customers it is not economical to serve with existing infrastructure as well as lets companies differentiate their product. AST wants to partner with existing mobile phone providers to offer coverage in hard to reach places while requiring no proprietary hardware on the ground or with the customer, just the mobile phone they already own. This technology was successfully tested last year when a satellite was able to successfully deliver signals to phones on the ground.
AST will sell space-based signals wholesale to existing providers rather than trying to compete with them. Its constellation will initially provide 4G signals but expects to move to 5G as its satellite network grows.
The investor presentation claims binding, mutually exclusive commercial agreements with large, global wireless companies. Existing customers include Vodafone and AT&T. Memorandum of understanding with Telstra and several others.
There’s no identified competition. SpaceX, OneWeb, and Amazon are building constellations to provide broadband internet directly to customers. Their target market is premium customers, taking advantage of the lower lag times provided by satellites to entice users away from broadband internet providers such as Comcast or AT&T. Other similar companies also require additional hardware/infrastructure beside satellites.
AST isn’t competing with existing internet service providers, they are partnering to provide better, cheaper, more reliable coverage to mobile phone providers. AST currently holds 750+ patent claims which provide a robust technological barrier to entry
- NASA is opposed to internet satellite constellations because they get in the way of their operations and could potentially be involved in collisions
- “Super-wholesale model requires minimal operating expenses and expected to result in 90%+ EBITDA margins” seems quite aggressive and unachievable
- Risk the underlying asset falls to NAV or that the merge is voted against