Sat. Jun 15th, 2024

Verizon plots $100 million direct-to-smartphone satellite investment

Tyler Mitchell By Tyler Mitchell Jun5,2024

TAMPA, Fla. — Verizon plans to invest $100 million in AST SpaceMobile after joining its cellular rival AT&T to partner with the direct-to-smartphone satellite operator.

AST SpaceMobile founder, chair and CEO Abel Avellan hailed the deal as a “transformational commercial milestone” for the venture’s proposed constellation, paving the way to fully cover the continental United States with radio waves both telcos have in the 850 megahertz band.

Srini Kalapala, Verizon’s senior vice president of technology and product development, said the telco plans to use AST SpaceMobile’s satellites to provide “essential connectivity in remote corners of the U.S,” where its cellular signals do not reach customers via traditional land-based infrastructure.

The $100 million commitment comprises $65 million ​in commercial prepayments and $35 million in debt that pays interest to Verizon but could later be converted into AST SpaceMobile shares.

AST SpaceMobile chief strategy officer Scott Wisniewski said $45 million of the prepayment commitment is tied to conditions that include regulatory approvals and entry into a definitive commercial agreement.

“This is the beginning of what we see as a long relationship with Verizon,” Wisniewski told SpaceNews via email.

In January, AT&T agreed to make a $20 million prepayment tied to the successful operations of the first five commercial BlueBird satellites AST SpaceMobile is building in-house, collectively known as Block 1.

AT&T, Google and British telco Vodafone have also banded together to provide $110 million in funding to AST SpaceMobile via convertible debt.

The Texas-based satellite venture says it has agreements with over 45 mobile network operators worldwide, serving more than 2.8 billion subscribers.

Evolving partnerships

AT&T has worked closely with AST SpaceMobile for six years, and has helped lobby the Federal Communications Commission for the permission direct-to-smartphone satellite players still need to provide commercial services in the United States.

Earlier this month, AST SpaceMobile also announced a definitive revenue-sharing agreement with AT&T that extends to 2030.

Wisniewski said AST SpaceMobile plans to unveil its go-to-market strategies nearer commercial launch, including the benefit of pooling nearby terrestrial radio waves from AT&T and Verizon.

Following multiple production setbacks, the venture’s Block 1 satellites are slated to be delivered to Cape Canaveral by the end of August for a SpaceX Falcon 9 launch to low Earth orbit.

A Block 1 satellite would have 10 times the capacity of the company’s 1,500-kilogram BlueWalker-3 prototype — which achieved download rates of about 14 megabits per second during tests in September on AT&T spectrum — despite being roughly the same size.

The first Block 2 BlueBird satellite, which would be twice as big and have 10 times the capacity of a Block 1 BlueBird, has a launch window running from December to March.

According to AST SpaceMobile, between 45-60 BlueBirds are needed for continuous coverage in the United States.

The company said last month that it had received three non-binding letters of interest for export credit agency funding to help deploy up to 45 satellites by the end of 2026.

AST SpaceMobile raised $417 million in 2021 by listing on the stock market via a merger with a special purpose acquisition company (SPAC), a shell company that raises capital from public investors in search of an investment opportunity. However, production delays and cost overruns have been cutting into cash reserves.

Meanwhile, SpaceX plans to start limited texting services from modified Starlink broadband satellites later this year in the United States, using T-Mobile’s radio waves in the 1900 megahertz band.

Lynk Global has started providing intermittent direct-to-smartphone texting services in the Solomon Islands, Cook Islands, and Palau with a handful of operational satellites. The Falls Church, Virginia-based company, which has not detailed plans for the United States, is plotting its own SPAC merger to raise funds for expanding the constellation.

Tyler Mitchell

By Tyler Mitchell

Tyler is a renowned journalist with years of experience covering a wide range of topics including politics, entertainment, and technology. His insightful analysis and compelling storytelling have made him a trusted source for breaking news and expert commentary.

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