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AST SpaceMobile has added a couple of big names to its list of investors, announcing a new funding injection of up to $206.5 million from AT&T, Google and Vodafone.
January 22, 2024
Vodafone is an existing investor in the LEO satellite firm, but AT&T and Google are just joining the party. That said, AT&T is a long-time operator partner for the company, which is working on launching a direct-to-device mobile satellite service.
The new funding comprises $155 million in strategic investment, plus a plan to draw up to $51.5 million from AST SpaceMobile'e existing debt facility. The $155 million includes $110 million worth of convertible bonds, which all three backers will invest in, as well as a $20 million revenue commitment from AT&T that hinges on the launch and successful operation of the first five commercial satellites, and a $25 million minimum revenue commitment from Vodafone, subject to "a definitive agreement" of undisclosed terms.
AST SpaceMobile has not spelled out what it will use the funding for, other than to support the commercial rollout of its network, but it's likely pretty simple: putting satellites into space is a costly business.
To make a return from those satellites, the company will also need partners and customers, something its new investors can help with. AT&T and Vodafone are already working with AST SpaceMobile, the former providing spectrum for testing of 5G voice and data connections between satellites and unmodified mobile phones last year. Vodafone was also involved in the tests. As part of the funding arrangement, the pair have also placed purchase orders for network equipment from AST SpaceMobile to support planned commercial service, although naturally sums of money were not disclosed.
Google, meanwhile, has agreed to collaborate with AST SpaceMobile on product development, testing and implementation plans for connectivity on Android and related devices. That sounds like a pretty important step, given the whole premise of the AST SpaceMobile service is that it uses regular smartphones. And, according to data shared by Counterpoint Research late last year, Android's share of the global smartphone OS market stands at 81%.
"With this strategic investment, we are gaining capital, invaluable expertise, and strategic partnership," said AST SpaceMobile chief executive Abel Avellan.
"This investment comes alongside prior investments by other leaders in the wireless ecosystem, including Rakuten, American Tower, and Bell Canada, all of whom are not only part owners of AST SpaceMobile but also serve as our technology partners and customers," said Avellan. "Each new partnership signifies that market leaders worldwide have tremendous confidence in our vision and ability to ensure that the future of cellular broadband is borderless."
AST SpaceMobile is pretty convinced that it invented the idea of using LEO satellites to connect directly to smartphones to plug coverage gaps. And it still likes to refer to itself as "the first and only" in this context, despite the fact that there are others working on very similar systems, Elon Musk's SpaceX and Lynk being the highest-profile examples.
It's a land-grab – space-grab? – essentially, that will play out over the coming months and years.
AST SpaceMobile does seem to be on top in terms of operator partnerships though. It claims to have 40 deals in place with mobile network operators worldwide together serving more than 2 billion subscribers. In addition to those already namechecked, the list also includes Orange, Telefonica, TIM, Etisalat, Telkomsel, Telecom Argentina, and Telstra. It's worth noting though that AST SpaceMobile's terminology is a little woolly; it describes its operator partnerships as "agreements and understandings," and as such we can't really judge the level of those cooperation arrangements.
Nonetheless, getting the operators on board is an important step in bring satellite-to-cellular services to market. SpaceX's Starlink has been touting for operator partners of late, having signed up just a handful so far, its headline signing being T-Mobile US, a major rival of AT&T.
AST SpaceMobile is still on the hunt for willing operators too, noting that the non-dilutive commercial payments by the likes of AT&T and Vodafone, which are creditable against future service revenue, "provide a model for other wireless companies around the world to participate in the initial rollout of commercial SpaceMobile service."
The space-grab is fast turning into an operator-grab.
Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.
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