AST SpaceMobile gets big investments from AT&T, Vodafone and Google

AST SpaceMobile has announced key strategic investments from AT&T, Vodafone and Google that helped the satellite-direct-to-phone broadband provider generate more than $300 million in capital needed to finance significant deployment of its planned low-Earth-orbit (LEO) satellite constellation.

“Being able to announce investment by AT&T, Google and Vodafone is humbling and a true testament to the company’s achievements, and the opportunity ahead of us,” AST SpaceMobile Chairman and CEO Abel Avellan wrote in a letter to shareholders released today. The trio of corporate giants invested $110 million in AST SpaceMobile convertible notes.

In addition, commercial wireless carrier giants AT&T and Vodafone provided $45 million in revenue commitments to AST SpaceMobile. AT&T’s $20 million revenue commitment is “predicated on the launch and successful initial operation of the first five commercial satellites,” while the $25 million revenue commitment from Vodafone is “subject to a definitive agreement,” according to an AST SpaceMobile press release issued last week.

Google has agreed to “collaborate on product development, testing and implementation plans for SpaceMobile network connectivity on Android and related devices,” according to last week’s press release.

In today’s letter to shareholders, Avellan stated that these strategic investments–combined with other new financing—have allowed AST SpaceMobile to generate total financing “of up to $306.5 million in gross proceeds. This figure is significant, because company officials previously decided that $300 million was the right amount of capital to bring together all at once,” according to Avellan’s letter to shareholders.

AT&T and Google join existing AST SpaceMobile strategic investors Vodafone, Rakuten, American Tower and Bell Canada, Avellan states in his letter to shareholders. These investors combine to own more than 20% of AST SpaceMobile, according to the letter.

Chris Sambar, AT&T’s executive vice president and head of network, expressed enthusiasm about the carrier’s investment in AST SpaceMobile.

“Through our work with AST SpaceMobile, we’ve already proven the possibilities that satellite has to offer in helping connect more people via text, voice and video,” Sambar said in a prepared statement. “We’re excited to deepen our relationship with this investment as we continue to drive a first-of-its-kind innovation forward and work together to achieve this shared vision of space-based connectivity for consumers, businesses and first responders all around the globe.”

Vodafone Group CEO Margherita Della Valle echoed this sentiment.

“Vodafone’s investment and collaboration with AST SpaceMobile will help make our mobile connectivity services available everywhere for our customers across Europe and Africa,” Della Valle said in a prepared statement. “Customers in remote rural areas—on land or out at sea—will be able to benefit from fast and reliable 5G broadband directly to their existing smartphones without the need for specialist equipment.”

Indeed, this ability to use unmodified smart devices to connect to LEO satellites that act as “cellular towers in space” has made advances by AST SpaceMobile, Lynk and other players in the satellite-direct-to-phone arena some of the most closely monitored news in the communications industry. Not only does satellite-direct-to-phone technology promise to provide outdoor coverage beyond a terrestrial-network footprint, but it could greatly increase the reliability and resiliency associated with 4G and 5G—key characteristics to the critical-communications sector.

In addition, the business model employed by AST SpaceMobile, Lynk and SpaceX—partnering with commercial wireless carriers, instead of competing against them—has many industry analysts believing that the economics associated with the LEO-based services could be more economically sustainable than previous satellite services.

Avellan noted the importance of AST SpaceMobile investors AT&T, Google, Vodafone, Rakuten, American Tower and Bell Canada to realize the companies vision as “the solution for eliminating cellular-connectivity gaps around the world.”

“The support from these leaders, alongside the 40-plus mobile network operators with whom we have agreements and understandings and who have over 2 billion subscribers around the world, is necessary for us to achieve our mission,” according to Avellan’s letter to shareholders.

Leveraging its BlueWalker 3 test satellite, AST SpaceMobile has conducted multiple tests with AT&T, Vodafone, Rakuten and Nokia that demonstrate the viability of satellite-direct-to-phone technology delivering download speeds of 14 Mbps per 5 MHz channel directly to unmodified smartphone.

AST SpaceMobile plans to deploy its first five commercial satellites—known as BlueBirds—during the first half of this year. Avellan said the next-generation BlueBird satellites “are designed for 10x improvement in throughput” compared to the BlueWalker 3.

Ultimately, AST SpaceMobile expects to provide global broadband coverage when its planned constellation of 170 commercial LEO satellites has been deployed, company officials have said in the past.

Of course, AST SpaceMobile is the only company working to provide satellite-direct-to-phone connectivity. Lynk also has conducted successful text and voice tests with carriers, and the Lynk’s technology is expected to be offered commercially by Canadian carrier Rogers Communications later this year.

Lynk has a similar business model as AST SpaceMobile—partnering with carriers to provide LEO-based supplemental coverage to users located outside a terrestrial-network footprint—but it plans to use a very different network architecture. Lynk eventually plans to have a constellation of 5,000 small LEO satellites, compared to the AST SpaceMobile planned constellation of 170 LEO satellites that are significantly larger.

Lynk already is providing commercial text services to carriers, particularly those that operate in island environments. Lynk initially plans to provide text services, but it expects to support voice and broadband communications as its LEO satellite constellation is deployed more fully.

In August 2022, T-Mobile and SpaceX announced plans to partner to deliver satellite-direct-to-phone connectivity to T-Mobile customers leveraging 1.9 GHz airwave—significantly higher-frequency spectrum than the sub-1 GHz swaths that AST SpaceMobile and Lynk plan to use with the permission of their carrier partners.

SpaceX and T-Mobile have been quieter about their satellite-direct-to-phone progress than Lynk and AST SpaceMobile, but the companies this month announced the launch of their first set of LEO satellites to support this service.