AST SpaceMobile will use the financing the help further secure their position in the emerging direct-to-device satellite communications market
This week, AST SpaceMobile has announced a combined $155 million strategic investment from AT&T, Google and Vodafone.
This funding is roughly divided into three portions: $110 million in 10-year subordinated convertible notes with 5.5% interest, with a conversion price of $5.75 per share, divided between all three parties; a $20 million revenue commitment from AT&T based on the successful activation of services delivered by AST’s first five satellites; and a $20 million minimum commitment from Vodafone still subject to definitive agreement.
Vodafone was already an existing investor in AST SpaceMobile, while Google and AT&T are first-time investors.
Alongside this external investment, AST SpaceMobile is also planning to draw up to $51.5 million from the company’s existing senior-secured credit facility.
The gross proceeds from both activities will total $206.5 million.
In addition to their investment, both Vodafone and AT&T have purchased network equipment (for an undisclosed amount) from AST to support their planned commercial services, while Google has agreed to collaborate with AST SpaceMobile on product development related to their Android handsets.
In the press release, AST SpaceMobile claim that they invented the space-based direct-to-device market and are the first and only global cellular broadband network in space to connect with regular, unmodified mobile phones.
In partnership with Vodafone, AT&T, Rakuten, and Nokia, AST SpaceMobile has already achieved various connectivity milestones with their technology, including 2G, 4G LTE, and 5G calls, and 14 Mbps download speeds per 5 MHz channels, delivered directly to standard smartphones.
It is hoped that this technology will ultimately enable customers to access high quality connectivity anywhere where they have an unobstructed view of the sky.
“Our vision at AST SpaceMobile has always been to chart a course of collaborative innovation and integration with the world’s leading wireless companies, which is why we are so thrilled to be welcoming this new strategic investment from AT&T, Google and Vodafone,” explained AST SpaceMobile CEO Abel Avellan.
“With this strategic investment, we are gaining capital, invaluable expertise, and strategic partnership. 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. 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.”
It is worth noting here that AST SpaceMobile is not alone when it comes to developing direc-to-device satellite communications for unmodified devices. Elon Musk’s Starlink constellation is working on a similar project, having made their first direct-to-device text from space just last week. The company hopes to expand these capabilities to voice and internet services next year. If this does come to pass, then AST SpaceMobile will find themselves in direct conflict with a company many times their own size against whom it may be hard to compete effectively.
In this sense, this investment from Google, Vodafone, and AT&T serves as an important vote of confidence in AST’s technology and the company’s vision for the direct-to-device sector more broadly.
Keep up to date with the latest international telecoms news by subscribing to the Total Telecom daily newsletter