Google and AT&T join AST SpaceMobile's $155 million investment

TAMPA, Fla. – Google and AT&T have joined in a $155 million strategic investment in AST SpaceMobile, which is set to raise twice that amount to help fund its smartphone direct connectivity portfolio.

The strategic investment also includes funds from existing shareholder Vodafone, one of Europe's largest telecommunications companies with a significant presence across Africa. This comes alongside AST SpaceMobile's plans to draw down up to $51.5 million of its existing debt facility and raise at least $100 million via a diluted equity sale.

The capital injection will support AST SpaceMobile's ambitions to deploy commercial services this year as the project prepares to begin production of a spacecraft that will be twice the size of the first five operational 1,500-kilogram BlueBird satellites, known as Block 1 and scheduled for launch on a dedicated site. SpaceX Falcon 9 before the end of March.

AST SpaceMobile said each follow-on Block 2 BlueBird will have 10 times more capacity than the Block 1 satellite to deliver more performance to the low-Earth orbit constellation, designed to enable AT&T, Vodafone and other terrestrial mobile network partners to keep subscribers connected with external cell tower coverage. .

BlueWalker-3, the Texas-based project's 1,500-kilogram prototype, achieved download rates of about 14 megabits per second during tests in September. These tests also saw BlueWalker-3 send a short phone call over the 5G network to a regular smartphone in a cell dead zone for the first time.

AST SpaceMobile said in August that the five aircraft are Block 1 BlueBirds It is fully funded After paying off debts worth $115 million.

AST SpaceMobile raised $417 million in 2021 through a merger with a special purpose acquisition company (SPAC), a deal that brought the seven-year-old company to the Nasdaq. The group has raised more capital since then, but has quickly exhausted cash amid production delays and cost overruns that have weighed on its share price.

The venture priced its $100 million stock sale at $3.10 per share on January 18, a 25.5% discount to where the shares traded the previous day — and far from the $11.81 price reached at the end of the first day of trading on April 7, 2021.

The stock offering is scheduled to close next week, and another $15 million could be raised if the underwriter chooses to buy all the shares on the table, AST SpaceMobile said.

Strategic partnerships

Most of the $110 million strategic investment announced on January 18 comes in the form of a debt instrument that pays interest to Google, AT&T and Vodafone, but can also later be converted into shares in AST SpaceMobile.

AT&T and Vodafone also agreed to pay $20 million and $25 million, respectively, in advance payments for future AST SpaceMobile commercial service as part of their investment.

AT&T's revenue commitment is tied to the successful operations of the first five BlueBirds, suggesting the US-based telco was behind the recent decision to launch them in a direction more suited to North American service.

The telecommunications giant is also backing AST SpaceMobile's push for regulatory approvals in the US, where direct smartphone competitors such as SpaceX and Lynk Global are also waiting for permission to offer commercial services.

The revenue commitment from UK-based Vodafone is subject to a final agreement that has not yet been disclosed.

According to AST SpaceMobile, five BlueBirds are enough for intermittent connectivity services, suitable for government and commercial device monitoring applications, but 90 are needed for 5G broadband services that eventually include voice and data capabilities.

Vodafone and AT&T have also placed orders for network equipment for an undisclosed amount to support future commercial services, the satellite operator said.

The investment from Google, which is behind the Android operating system used in more than two-thirds of mobile devices worldwide, comes with an agreement to collaborate with AST SpaceMoblie on product development, testing and implementation plans.

Rival Lynk Global is also in the middle of raising a major chunk of capital after launching partial commercial services with three satellites in parts of the Solomon Islands, Cook Islands and Palau.

The Falls Church, Virginia-based venture is considering joining AST SpaceMobile in the public market by merging with Slam Corp., a SPAC led by former professional baseball player Alex Rodriguez.

SpaceX said last week that it had successfully transmitted text messages to and from unmodified smartphones for the first time after launching an initial batch of satellites to test the capability.

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