$ASTS: Existing T-Mobile Agreements, Strategic Advisor, Paper Constellations for M&A

or type of situation. But anyway, in the future that will be gone, hopefully. But yeah, just a reminder. But anyway, but yeah, thanks everyone for joining. I did want to talk about a few topics. There were a number of news items last week, which I tweeted about, but then didn't have a chance to actually go through them. And so I just wanted to cover them briefly here. So the first one is that we just learned via LinkedIn that Chris Ambar, who was the former head of a network and president AT&T, he has now officially joined T-Mobile. And so he is now the chief enterprise officer there. And this is an important hire because for those that know Chris Ambar is an important advocate for AST Space Mobile, he was essentially the port of contact and made the decision for AT&T to work with AST Space Mobile. And so this gentleman also joined the board of AST. And then he was also on the network planning and spectrum committee. And so someone who intimately knows the company well and was friends, you know, friends with the bell called the bell one of the greatest inventors of modern times, but you know, given his interactions with him. And so this guy is now at T-Mobile. And he's in a very senior position. And from what I understand, discussions between AST and T-Mobile have been going well. And so for this guy to end up there is just going to solidify that relationship. And you know, it gives T-Mobile someone who has a tremendous amount of experience in the direct advice market. Obviously someone who has warm relations with the bell Avalon and Scott was new ski and understands AST the product, what the roadmap is, knows all that intimately. And so having someone who's friendly on the other side is just a very helpful thing. And so he joined, officially started last week. And so that's a big piece of news. Additionally, I think it was on Thursday was when the FCC granted an STA, a special temporary authority for AST Space Mobile to start testing on grain management's 800 megahertz spectrum. And so this was a big piece of news. That spectrum in particular is seven megahertz by seven megahertz of 800 megahertz band spectrum. So this is nationwide low band cellular spectrum. This is the stuff that can you know, go through walls, provides you with great propagation and coverage. And the key thing about this spectrum is that it is nationwide. And so for AST with the block one and block two satellites for cellular coverage, most of that spectrum that will be used is primarily in use. Right. So whether that's first met around seven megahertz or 18T and Ryzen 850 megahertz in areas where there's threshold coverage where there's towers, that spectrum is actually already being used by either first met or 18T and Ryzen. However, in the areas where there's limited coverage where there's you know, zero bars or one bar, that is the opportunity for AST in particular for that spectrum, the 700 and 850 megahertz. In this case though, with grain management, this is 800 megahertz of continuous nationwide spectrum. And so it's not being used. And so it can be deployed for coverage. Right. And so I think you know, there's been various, you know, speculation on how this spectrum might be deployed. My guess is that this could be put into the joint venture, the telco joint venture and grain management will you know, get a significant amount of economics. But then AST as a partner will light it up and it will be used. And it will also potentially augment the wireless network of those three carriers. That's one use. Another use could be that grain decides to build out its own IOT network. And as a result, work with AST and perhaps you know, this that capacity could be used by the wireless carriers is a dedicated IOT network. I mean, there's a whole host of ways to cut this thing. But yeah, this is this is something that you know, it's a very valuable asset where it's not being used. And it's it's seven by seven megahertz. Most of I would say most of the wireless networks for the big three for voice and you know, some decent amount of broadband coverage is typically on five by five megahertz of bandwidth for on the low end of you know, cellular spectrum. And so seven by seven is great, right. And so three, one of the reasons why grain is interested in working with AST is that they do have this FCC build out requirement. So there's two different requirements. One is if they decide to deploy it rushurally, you know, typical hanging radios on towers and building that out, which is a very expensive and you know, it takes a lot quite a long time, but it's inexpensive. It's never, never or they have the alternative of meeting their build out requirements by just deploying a directed device network, right. And so what does that mean? So when the FCC granted, they approved the sale of this used to be T-Mobile spectrum, but they they approved the sale of 800 megahertz to grain and in exchange, you know, grain, grain paid T-Mobile some cash. They also gave them, I think it was like some 600 megahertz spectrum that they own, which T-Mobile has, you know, they have an existing network and that's going to help them. But also T-Mobile retained some economic upside, depending on how this spectrum is used and monetized or monetized. And so T-Mobile has an ongoing interest in this spectrum. And, you know, in this filing, I'll talk a bit more about it later, but there are hints that T-Mobile and AST had some type of agreement already in place regarding this spectrum and or other, you know, working relationships. So, but in particular, using a directed device, you know, a satellite network to deploy spectrum is the most cost-efficient way to meet build out requirements. And so the FCC has lined up the various milestones. So within three years, grain has to deploy a network that is over 100 kilobytes per second per megahertz, right. So that is, let me just look here. So if you take seven, let's say seven on one, one, yeah, one one seven megahertz of downlink, that's, you know, multiply that by 100 kilobytes per megahertz, and that's a minimum speed of 700 kilobytes per second, which AST can more than, you know, meet that that requirement. But they need to have that at, for 70% of the time, across 90% of the coverage area. And so that's the first build out requirement within three years. There's another one in five years where that's be doubles to 200 kilobytes per second or for seven megahertz, that's 1.4 megahertz per second, over 80% of across the 90% of area that they need coverage. And then there's a 10-year requirement, which is over 300 megabits, 300 times, seven megahertz is 2.1 megahertz per second, over 90% of the time across 90 percent of the area. So as long as AST can build out the network, they should easily meet these requirements. And then grains, particular case, you know, these build out requirements are a legal, there's a legal framework there where if you don't meet the build out requirements, then the FCC can actually take this spectrum back from you. And so you have every economic incentive to get that spectrum deployed. And according to, you know, it's kind of the back and forth, which we had been speculating that grain was working closely with AST, but it didn't become explicit until when grain was looking to get FCC approval for the spectrum transfer. This was on, you know, the FCC given approval, I think was on July 1st. AST did file a letter in support of that, right? And they specifically laid out the fact that they were working together. And so that was a big piece of news back then. And then of course, you know, AST filed the NSTA on July 2nd. And then of course, you know, fast forward to today. Or last week, the deal closed between grain and T-mobile. And then the FCC granted AST the authority to test on this spectrum later in the week, which is Thursday. And so all this stuff is tied together. I think my base case is that it seems that grain, you know, after speaking with AST and agreeing to work with them, they felt comfortable in acquiring the spectrum of T-mobile. And they viewed AST as a key monetization slash deployment you know, path for them. And so then, you know, you take an account, the fact that T-mobile is still involved economically and through coordination, they're all working together, right? And so as part of that STA that was granted last week, we did learn that that testing had to has to comply with existing agreements between AST and T-mobile. And so that's not, you know, that's not referring necessarily to a commercial agreement. If there was a commercial agreement, that would be pretty material. We probably learned about it. But it implies that they do have a direct working relationship. And so there's some type of contractual slash technical relationship between AST and T-mobile regarding the spectrum. And so, so yeah, that's that was a big piece of news. And so I think when you kind of piece everything together, it's clear that AST has been talked or they, I mean, they are talking to T-mobile. They have been talked in T-mobile. When you look at how things have developed between T-mobile and Starlink over the last few months, there was a, I think one of the first cracks we saw, which I had posted about me just pulled this up. One of the first cracks that we saw between Starlink and T-mobile was T-mobile CFO, Peter Osvaldick. This is back in, I guess it was early June, June 2nd, where he was speaking at Evercore T-mT conference. And I can repost that. But if for anyone interested, you can go to my profile and just search for T-mobile CFO. And you'll be able to find it. But, you know, there, he specifically dressed down Starlink. And so it's probably worth rereading. He had the CFO of T-mobile had very detailed knowledge of Starlink orbital mechanics, RF limitations, and all these different things where you know, typically I'd point it out that whenever T-mobile would talk about Starlink, there is, there is referred to the service in a very positive light. Whereas in particular during that investor conference, it was quite negative, right, where the CFO of T-mobile, with all his technical knowledge of Starlink's network, which I found quite bizarre that he knew everything. But he, yeah, he referred to the services being limited. It would never replace, it would replace terrestrial and that. Yeah, I mean, that was kind of the first hint that things were not going well. And then of course later, you know, we had SpaceX come out and specifically say that they were targeting T-mobile AT&T and Verizon customers. And so, so yeah, I mean, we've got the first this STA, I think is the first confirmation of some type of existing agreements between AT&T mobile, maybe it's an MOU and you know, some people have a question, well, what about Starlink? Like isn't there an exclusivity? And I think T-mobile on their last earnings call confirmed that there is some exclusivity that extends beyond 2026. And so I would just say that exclusivity could mean a lot of different things, right? So there is of course, you know, Starlink operates on T-mobiles, 5x5 megahertz, 1.9 gigahertz G block spectrum, so mid-dan spectrum. And that's the only spectrum that they're working on in the US. And it's not going to be until late 2027 that they'll, they'll, you know, they'll be able to get Echo Star spectrum in hand and they'll, you know, I guess devices aren't going to adopt that spectrum until sometime in 2028. And then of course, they've got a launch satellites. And so there is some economic benefit of course for Starlink to, or T-mobile's work, continue to work with Starlink on that spectrum because that's, that is the backbone of the T-satellite system, which we saw by the way in Kauaii. The most recent, you know, natural disasters there, it looks like T-mobile has been rolling out T-satellite for all of its customers who have a compatible device, which is a small subset of phones. But, but you know, I think it could be tougher T-mobile to stop that service cold, right, until ASD comes up, you know, once the constellation has more satellites and services at a point where they feel comfortable about it. But in regards to exclusivity, we did learn of course in the SpaceX IPO perspective that they talk specifically about their M&O partners having multi-year agreements, but can terminate unilaterally at any time, right. So I think there is probably a good possibility that ASD and T-mobile will have some type of agreement in place before the year end, if I had to guess. And so, and you know, that probably comes after the joint venture between AT&T Verizon and T-Mobile gets inked. But but yeah, I do think that there is a line of sight before the end of the year that we will see something. And especially with these nuggets that are coming out from the FCC filings and other regulators, I think you're going to there's going to be increasing pressure for, you know, a cell site in Los investors for the companies to disclose something, right. And so, as Cook mentioned over this weekend, when that becomes public and the market learns that ASD is working with T-mobile as well and that we've got, you know, 100% of the incumbent M&Os and the company is referred to a fourth player as well. What does this talk do?