Google and AT&T join $155 million AST SpaceMobile investment

Google and AT&T have joined a $155 million strategic investment in AST SpaceMobile, which is set to raise double that to help fund its direct-to-smartphone connectivity constellation. The strategic investment also includes funds from existing shareholder Vodafone, one of Europe’s largest telcos with a significant presence across Africa. It comes alongside AST SpaceMobile’s plans to draw up to $51.5 million from an existing debt facility and raise at least $100 million by selling discounted shares. The capital injection will support AST SpaceMobile’s ambitions to deploy commercial services this year as the venture prepares to start producing spacecraft that would be twice as big as its first five 1,500-kilogram operational BlueBird satellites, known as Block 1 and slated to launch on a dedicated SpaceX Falcon 9 before the end of March. AST SpaceMobile has said each follow-on Block 2 BlueBird would have 10 times more capacity than a Block 1 satellite to deliver more performance for the low Earth orbit constellation, designed to enable AT&T, Vodafone, and other terrestrial mobile network partners to keep subscribers connected outside cell tower coverage. BlueWalker-3, the Texas-based venture’s 1,500-kilogram prototype, achieved download rates of around 14 megabits per second during tests in September. Those tests also saw BlueWalker-3 relay a brief 5G phone call to an ordinary smartphone in a cellular dead zone for the first time.

BlueWalker 3 has a 64-square-meter antenna, the largest deployed commercially in low Earth orbit. Credit: AST SpaceMobile

AST SpaceMobile said in August that the five Block 1 BlueBirds were fully funded after taking out $115 million in debt.

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

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

The equity offering is due to close next week, AST SpaceMobile said, and $15 million more could be raised if its underwriter opts to buy all shares on the table.

Strategic partnerships

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

AT&T and Vodafone also agreed to make $20 million and $25 million in prepayments, respectively, for a 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 U.S.-based telco was behind a recent decision to launch them to an inclination better suited to serving North America.

The telecoms giant has also been supporting AST SpaceMobile’s push for regulatory approvals in the United States, where direct-to-smartphone competitors such as SpaceX and Lynk Global are also waiting for permission to provide commercial services.

The revenue commitment from U.K.-based Vodafone is subject to a definitive agreement that remains undisclosed.

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 a 5G broadband service that ultimately includes voice and data capabilities.

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

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.

Competitor Lynk Global is also in the middle of raising a significant 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 on the public market by merging with Slam Corp., a SPAC led by former professional baseball player Alex Rodriguez.

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