AST SpaceMobile (NASDAQ:ASTS) is known for its unique approach to telecom and satellite space. ASTS stock listed on the Nasdaq on april 7th after merging with a SPAC named New Providence, and received $462 million from the proceeds. The company is building the first and only global broadband cellular network in space to operate directly with mobile devices. This will provide connectivity at 5G speeds everywhere on the planet. The company plans to eliminate coverage gaps and enable billions of people globally to stay connected through their mobile phones. This would be a first in the world which is quite impressive.
The company is working to provide a global broadband solution that integrates satellite communication with an existing carrier’s basic cellular service. Also, it is important to note that 51% of the global population does not have mobile broadband, there are 5 billion mobile phones moving in and out of coverage, and the mobile services market is around $1 trillion dollars. Needless to say, there is a massive opportunity in the market for ASTS. To resolve this gap issue on connectivity, ASTS recently announced that they have 750 and more patents to address this issue and more importantly have the first mover advantage. Essentially what they are trying to solve here is broadband connectivity to existing mobile phones when out of range of cell towers , and providing affordable broadband services to those living in more remote and rural areas without cellular coverage. And what makes this company even more interesting is that they are the world’s first and only space-based cellular broadband network as I mentioned previously.
Looking more particularly in their proprietary technology, they have a long term goal in launching 168 satellites. The company believes however that 110 satellites can achieve global coverage. The first launch phase is expected to commence by the end of 2022 and all launches are expected to be completed by the end of 2024. They also have important strategic partners such as Vodafone, Rakuten and AT&T.
ASTS is expected to offer commercial service in the beginning of 2023 across 49 equatorial countries, with phase 1 providing coverage for 1.6 million people. They also have an experienced management team which always helps.
Looking now at financials, before I even begin, it's important to note that ASTS is a pre revenue company meaning simply they have not commenced operations to generate revenue yet. As I just mentioned, operations are beginning in 2023. However, EBITDA margins are estimated to be in the 90% and over once operations begin. This would be due to the super-wholesale model requiring minimal expenses. With revenue forecasts of a potential 10 billion and a market cap of 2.25 billion, things could get interesting.
