$ASTS: Q2 Thoughts - Engage Warp Drive

to work out something with T-Mobile, Deutsche Telekom. There's also the joint venture that I think we learned today. I'll talk a bit more about it, but the joint venture, you know, AST is not only dealing directly with AT&T and Verizon and then and definitely T-Mobile. And it will also be working with this joint venture, which maybe is the fourth party that they're talking about. And so the joint venture, by the way, so what could that mean? Now I'm kind of getting into the lead of everything. But you could work with M&O directly. And then the joint venture is something separate, right? The joint venture is where they've put in additional spectrum resources. Maybe it's the entity that holds on the infrastructure, but there's other things that the joint venture could do, right? AST could contribute with the Gato spectrum. And then maybe they create some type of IoT business. I mean, there's a whole host of ways that this joint venture could go just beyond just the typical connectivity side, right? So, I'll be interested in you to see, but we are at this time for AST where there's a lot of strategic transactions that are going on. And so obviously global star traded, and radium traded. By the way, for those that don't know, I did a tweet. We was Friday just looking at the merger background. And so whenever a deal is announced, it's part of the merger proxy, you will have a summation of the strategic interaction between the buyer and the seller. And then also in that is disclosed other parties that may have been part of the process to potentially buy the company. And of course, the other parties aren't named, but when you read through that background, you can kind of figure out who's who, right? And so for global star, it was very clear that SpaceX was there, and it was clear that Rocket Lab was there because they used similar type of structures for their offers. But both of those parties cannot get Apple to agree to work with them. And it was only Amazon that was able to do that. And so Amazon ended up winning with global star. And then of course, Rocket Lab had to move on and pursue the next best thing, which was a radium. But yeah, so there's obviously a lot of strategic activity going on. And there's assets that are out there, but assets that have spectrum. I mean, one logical conclusion you could make is that AST should work with Biasat and some capacity, whether that's leasing spectrum outside of the US, or maybe there's some kind of M&A that could happen, which I don't believe it will. I don't think the company is interested in buying Biasat, because there's obviously the dying fixed wireless business that they serve commercial jetliners with. But they do have valuable spectrum assets. And perhaps you could work out some type of leasing deal. The issue for Biasat, of course, is that if they don't utilize their spectrum assets, then they can lose them just like in Europe. They're probably going to lose their two gigahertz allocation. So there might be something there to do. But this guy, I think importantly, has significant experience. Yeah, it's relationships. He can do M&A. He can do structuring. He can, you know, work whether it's a joint venture. I mean, obviously we're now dealing with satellite connect Europe. We're dealing with the Rakuten JV and the US JV, right? And so there's a lot of things for this particular individual to do. But I think it is important to highlight that he is a very senior executive. When I was in banking, you work with all the red companies and you get opportunities left and right because people at these companies want to hire you, just given your experience. And so, you know, this guy is going to have a tremendous amount of opportunities in front of him. And yet he chose to work at AST, which I think is a big vote of components. Like he, the question after I asked myself is what is this guy seeing at AST versus working somewhere else, right? And so he's voting with his feet. He's joining the company. He left a vice chair position at UBS and he's joining AST, which some people affectionately are like, oh, AST is a shitt go. No, it's not. You don't have a vice chair of a massive banking join a shitt go. And so I would challenge people to look across the universe of companies, whether in the space sector or any sector and find someone at this level who has been hired recently. And by the way, this guy is in the older one. They did hire a senior, a Bell hired senior partner from Abri who sat on the board of EMC when he was there. And Abri, of course, is a PE firm that had bought EMC from a Bell. So anyway, yeah, very interesting hire. I was going to talk about him at the end, but I think we should talk about him getting because when I go through the quarter, there's a lot of stuff going on. And I think having someone with this tremendous amount of experience, relationships, it's going to be very useful, right? I mean, the company could be contemplating M&A or if the company, I mean, just throwing these out there, if the company is responding to strategic interest, you know, if Google is like, Hey, I want to buy you guys. It doesn't hurt to have someone who's unbiased who comes in and is working on your behalf outside of your own, you know, obviously strategic advisors that you advise or to hire, you know, bankers. But yeah, so let's talk about the quarter. And this is in no particular order. I just was taking notes as I was reading the transcript and listening to it again. But first, let's talk about Spectrum. So one big thing that came out today and we had discussed it before, you know, I had learned from a Bell that he had C band Spectrum in his roadmap back in 2021. Well, he talked about it today. So he highlighted that the C band actions are happening in X-Hier and of course, you know, AT&T Verizon and T-Mobile already have C band. But he talked about the idea of C band being incorporated into blubbered satellites. And so in my mind, I thought that C band satellites would be the next thing after midband blubberts because midband blubberts can address 1.5 gigahertz to 2.5 or 2.6. And then C band is 3.5 to 4 gigahertz, right? And so I thought, okay, we've got block 1, we've got block 2, those 2 are for low band spectrum, and then we've got block 3, which is going to be midband. And then there'll be a block 4 for C band. However, today on the call, which I need to actually, you know, do a follow-up and ask the company about this. But it seems like the C band capability is actually going to get built into the midband satellites, right? And so this is a part where Katzi probably has to offer up some of his technical insight, but perhaps the way that the microns for midband, the spacing of the elements, the way that they do that, perhaps because of the wave links, you know, C band is, you know, it's, you've got 1.5 to 2.6 and then 3.5 to 4, maybe you can use the same microns, right? You just change the, which of the elements that you're using in order to adjust for to tune for moving from L band and S band to C band. And so we'll see what Katzi says about that, but what was interesting is that a bell referred to the fact that C band would be built into the midband blubers or the third generation. So their generation, at least as of today, based off of this call, the block 3 satellites will be able to tune to L band, S band and C band, which is crazy because I thought, again, I thought C band is probably going to be generation 4, but it's not. The other thing that was highlighted, I think Quilty asked the question, he asked specifically, which by the way, the A6 are in production, which is a good news, and it sounds like we have all the low band, the initial batch of low band satellites that are in production, which is through Lubirds 46. So that's the 45 you need for coverage. And the reason why it's 46 and not 45, obviously we lost BB six. And so, or sorry, we lost BB seven. So you got to make up for that. So however, Lubirds 47 and I guess over the next few will be midband Lubirds covering midband spectrum. And so that was disclosed today. And those are going to enter into construction later this year. And we'll be launching in early 2027. Right. So that's good news. Obviously, you know, we own L band spectrum from Mugato, and we've been paying interest on that. And so we want to put it to use. And so rolling out, BB and Lubirds make sense. We have enough production capacity, which I'll talk about in a bit, but to run these things in parallel. So we're going to continue to build low band Lubirds and we'll incorporate the A6 into those. And then of course, the midband, you definitely want to use the A6. The other thing that I was referring to, Quilti asking, Quilti had asked specifically, do you need to spin up a new A6 in order to incorporate CBAN spectrum? And the answer was no. So for what it's, you know, these guys have been planning from beginning, that A6 can actually do signal processing in low band, in midband, and CBAN spectrum, which is pretty crazy. And as everyone, you know, everyone knows that A6 already incorporated Ligato spectrum, which you know, that was disclosed when they did announce the Ligato transaction. And people asked, well, do you need to recast the A6 or does it already incorporate L band spectrum in Lombi Hall? The company already incorporated it. My guess is that the company has incorporated all spectrum, all low band, they've been and CBAN spectrum because of the idea that at some point, they were probably going to be able to work with some, you know, some combination of all the spectrum, or maybe all of it, right? So that was a pretty big piece of news. And so yeah, as the carriers think about, and I've talked about this, you know, when you deploy CBAN spectrum, it requires a lot more towers to do that. And so I made this post, I guess it was two weeks ago where I believe the vast majority of CBAN will be deployed over satellite because it's just the most cost effective way to do that. I think it's an order of magnitude of three to four times more expensive to deploy nationally versus low band spectrum. And so it's on orders of magnitude in order to deploy that, it just makes economical sense to do that by satellite versus, you know, in urban areas, you're going to use towers, of course, but for everyone else, you'll just use satellites. Let's see. So the next point, which I thought was quite interesting and I tweeted about it, the company did refer to having the ability to use 100 megahertz of spectrum in the US, which is pretty huge, right? I think as we all know, SpaceX is using AWS 3 and that's about 65 megahertz of spectrum. And so 400, you know, my key question was, where is that coming from? And so I kind of did back of Mac and math envelope back the envelope math, and so that inverse order. And so to get to 100, you take 45 megahertz from legato, 20 megahertz from first net, and then 20 megahertz of 18 teen Verizon around call it 850 megahertz. And so that gets you to, you know, approximately 85 megahertz. And then the plug figure, I think, maybe is grain management. So they've got like 14 or you could also put in other parts of low band spectrum that 18 teen Verizon and of course, team mobile, you throw them in there. But that all adds up to about 100, right? And so let's see just over half of that is low band spectrum, which is great for coverage and going through walls. And then 45 of that will be the company's own spectrum, which is they said, you know, we're going to bring to bear legato and partner M&O spectrum. And so that's how you get that's how you get to 100. And that's when you look at that that's a very robust, you know, spectrum portfolio that you can deploy across the US. And so you're going to have coverage and capacity across that 100. And so the service is going to be really good. And the company referred, you know, one of the key questions I've had for a while is, okay, well, legato is an over, you know, it's a layer on top of the what the carriers offer. And this is what AST is going to bring to bear. My guess is that legato gets contributed, you know, of course, you know, AST owns it, but it probably gets contributed to the JV. And then they talked specifically about, for example, IOT utilizing that spectrum. So my guess is that perhaps the JV with the carriers in partnership will sell, you know, broadband access to IOT devices. And you know, you can throw robotics, cars, whatever it is into that. And so it's not going to, it's not going to be a burden on the carriers networks, but it'll be something separate, right? And it's going to offer a great quality of service because it's dedicated. It's not going to have, you know, mobile traffic on it, it's just going to be for that use. But you know, that's just a point of speculation, you know, we'll see if that actually comes fruition. But yeah, 100 megahertz across the US is a big deal, right? Because the service is going to be very robust. And it's going to have great characteristics where, you know, you're going to have true broadband. And I know SpaceX talked about delivering a great service over 65 megahertz. Well, we've got 100, right? And of course, they've got more satellites, but, you know, quality has a quality as a quality all its own, right? It's not necessarily a quantity, but the other comment that was made is that they are seeing more and more S-band allocations outside the US. And so they specifically referred to Brazil, which we know, Anitel gave them a 10 by 10 spectrum allocation. I think they're also referring to the EU. So they feel pretty good about getting an allocation of two-gigarette spectrum, which will likely be a 10 by 10 band. But then there's also other