TAMPA, Fla. — AST SpaceMobile stock closed more than 68% higher after announcing a revenue-sharing agreement with AT&T. AT&T plans to use its proposed direct-to-device communication satellites to keep smartphones connected in cell phone dead zones.
Shares closed at $4.03 on May 16, the day after AST SpaceMobile disclosed a definitive agreement with carriers that extends through 2030 as part of its financial results.
AST SpaceMobile also recorded $500,000 in revenue in the three months to the end of March, marking the first commercial revenue from the constellation following a government contract for the BlueWalker-3 prototype launched two years ago .
The agreement with AT&T upgrades a memorandum of understanding between the two companies, which have been working together for six years, and establishes terms for the carrier to deploy satellite connectivity in the United States after AST SpaceMobile deployed its first commercial satellite this year.
AST Space Mobile executives did not provide details of the deal during an earnings call with analysts on May 15.
Scott Wisniewski, AST SpaceMobile's chief strategy officer, said the deal included no additional upfront revenue on top of the $20 million AT&T agreed to in January.
Abel Abellan, CEO of AST Space Mobile, said the first five commercial satellites will be sent to low-Earth orbit by SpaceX after the company's recent failures caused a second launch to be postponed. He said it is expected to be delivered to Cape Canaveral in July or August for the Falcon 9 launch. Quarter of 2024.
Shortly after closing at $11.81 on the first day of Nasdaq trading in 2021 after merging with a special purpose acquisition company (SPAC), the company's stock has been on a downward trend due to satellite manufacturing issues and cost overruns.
“These first five satellites will enable us to use premium low-band spectrum to provide discontinuous service across the United States with more than 5,600 individual cells,” Abellan said.
AT&T will provide these waves to AST SpaceMobile in the US, but along with rivals SpaceX and Lynk Global, which can connect directly to smartphones, it will need regulatory approval before offering commercial services.
Abellan said early commercial satellites will be able to deliver 5G voice and broadband services during overhead, pointing to successful testing with BlueWalker 3, which achieved download speeds of 14 megabits per second last year.
The five satellites' coverage spans up to 59 degrees latitude in both the northern and southern hemispheres, from Canada to Argentina, from South Africa to Europe and Japan.
“These first five satellites have real revenue potential,” Wisniewski said. “That's not our focus…We believe there's a huge opportunity as we scale the system.”
government opportunities
Abellan said the company's government contracts represent a framework that can be used for future government contracts.
“At the same time, we continue to have discussions with our first government customers,” he said. “We are negotiating additional services that we can provide to expand our existing relationship.
“While the core of our strategy is in consumer cellular broadband, we believe government opportunities are a natural extension of our capabilities and could become very meaningful to us over time. ”
The need for scale
AST SpaceMobile says it will need 45 to 60 satellites for continued service in the U.S., and 90 satellites for the complete 5G network it envisions.
However, since the company raised $417 million in 2021 by merging with a SPAC, a shell company listed on the stock exchange, with funds from general investors seeking investment opportunities, production stagnation has caused the company's cash reserves to decline. It's putting pressure on you.
AST SpaceMobile has since raised further funding, including $155 million in strategic investments in January from AT&T, Vodafone, Google and other investors, but will need even more money to expand its constellation. is necessary.
In April, the company announced it had received three non-binding letters requesting export credit agency funding to support the deployment of up to 45 satellites by the end of 2026.
As of March 31, AST SpaceMobile said it had cash reserves of $212.4 million and $51.5 million available under its debt facility.
The company recorded $31.1 million in adjusted operating expenses in the first quarter of 2024. Capital expenditures required for the remaining quarterly periods of this year are expected to range from $25 million to $40 million.
AT&T stock closed 0.17% lower at $17.30 after market close on May 16th.
