AST SpaceMobile (NPA): Set to disrupt wireless mobile industry

The first and only space-based wireless broadband network that can offer coverage around the globe has been developed by SpaceMobile (Ticker: NPA).

This new technology has been patented protected. The space-based cellular broad network can be used to provide wireless connectivity anywhere in the world. It’s compatible with +5bil mobile phones in service and also supports 4G/5G data speeds with low latency.

Carriers that work with Space Mobile will have absolute and unparalleled cellular coverage. SpaceMobile is set to disrupt the whole wireless industry and set the landscape to a new game changing technology.

SpaceMobile’s validated test run

SpaceMobile has successfully tested and launched their service with BlueWalker-1 satellite in 2019. +$100M initial capital has been raised from strategic investors including Vodafone, Rakuten, American Tower and Samsung Next. SpaceMobile collected another $230M in a new private funding round led by the same investors at $10 per share. In addition, +$232M in SPAC (Special Purpose Acquisition Company) funding gives SpaceMobile nearly $420 net cash to fully fund Phase 1 launch in 2022. SpaceMobile also validated binding mutually exclusive commercial agreements covering +1.3Bil subscribers in place with Vodafone, AT&T, Telefonica, Indosat, Telecom Agrentina, Telstra, Tigo, and Liberty LatAm.

SpaceMobile’s Competitive Advantage

Space Mobile has built an insurmountable competitive advantage. They currently have +750 patent claims that support their underlying technology. 161 space scientist and engineers with 40 prior satellite builds and launches. They have industry leading strategic partners and investors with deep technology moat and customer base. In 2022 they will launch 20 satellites and gain commercial service in 2023. Phase 1 cash flow will support Phase 2, Phase 3 and Phase 4 launches.

  • SpaceMobile will have 0 competition in the wireless industry, creating clear winners (its partners) and losers amongst wireless carriers.
  • AT&T, Vodafone and Telefonica representing +1.1Bil wireless customers recognized this opportunity and decided to partner with SpaceMobile.
  • SpaceMobile has signed marquee Wireless Carriers to mutually exclusive contracts in key regions to get scale and demonstrate its business model, starting with the Equatorial region.
  • For the remaining regions, SpaceMobile could auction off partnerships to a single Wireless Carrier which could generate substantial economics.
  • Wireless Carriers that SpaceMobile chooses to work with will drive substantial capex savings over time.
  • Partnering with SpaceMobile will reduce the need to utilize spectrum and buildout expensive towers/backhaul to expand coverage of existing networks.

The competitive landscape in the US Wireless market may be forever changed by SpaceMobile.

  • If AT&T offers customers 100% 5G Global Coverage, how can Verizon and T-Mobile compete?
  • How will Verizon keep its premium pricing and advertise “America’s 2nd best network for coverage”?

Verizon and T-Mobile already feel the pressure and are actively voicing concern and opposition to the FCC claiming that SpaceMobile’s satellites may interfere with their networks. (Enterprise value of $381B for Verizon and $260B for T-Mobile could be up for grabs.)

American Tower, the largest cell tower company in the world ($129B EV), is increasing its investment by participating in the $230M PIPE at $10/share. This is a big hedge for the company because SpaceMobile’s technology could be an existential threat to the cell tower industry.

SpaceMobile’s Financials

Partnering with Wireless Carriers through a 50/50 revenue share model provides immediate access to customers and removes need for marketing, customer acquisition or backhaul costs

  • Project 9M subs in 2023 growing to 373M subs in 2027 (153% CAGR)
  • 2027 projections represent under 30% of current potential customer base

Revenue to grow rapidly from $181M in 2023 to $9.6B in 2027 (170% CAGR)

  • Modest global ARPU assumption of $2.15 by 2027

Significant operating leverage will accelerate profitability once satellite constellation is launched and operational

  • Sufficient capital to fund upfront capital investments, with +$420M in net cash
  • +$1B in EBITDA by 2024, only 1 year into commercial service
  • EBITDA margins to expand rapidly and reach +90% in steady state
  • $16.3B of unlevered free cash flow by 2030, leaving capital for reinvestments and R&D to expand service and extend market leadership
  • SpaceMobile could institute a sizeable dividend comfortably beginning in 2024E or 2025E

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Jake Page
Investor of 4 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.
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