AT&T, Google join AST SpaceMobile funding round
- AST SpaceMobile’s mission to grow its direct-to-device satellite network gains pace
- The company adds AT&T and Google to its investor list
- Fresh funding of $155m from the two players, in addition to existing investor Vodafone, will be used to support further ambitions
- The company is also issuing new shares to raise additional cash and that has upset existing shareholders
AT&T and Google have joined Vodafone in a new $155m funding round for AST SpaceMobile, a financial injection that will boost the company’s potential in the increasingly competitive satellite-to-smartphone communications market.
In addition to the strategic investment by the trio, the company unveiled plans to access up to $51.5m from its existing senior-secured credit facility to allow it to press ahead with its goal to offer connectivity to today’s 5.5 billion cellular devices when they are out of coverage.
That draw from the credit line takes the total value of the new financing to $206.5m: The company, concerned that some shareholders were losing faith, had signalled at the beginning of the year that fresh investment was imminent, an announcement that reversed the company’s fast-falling stock price.
News of the fresh funding initially gave the company’s share price a lift, but hot on the heels of that came the announcement that the company is issuing $100m of new shares priced at just $3.10, a move that dilutes the holdings of existing shareholders. That news sent the company’s share price into the doldrums – it currently stands at just $3.18, down 23% in early trading on Friday and down 34% since the start of this calendar year.
That’s not a good look for any listed company, but AST SpaceMobile is doing its best to put on a positive front.
According to the company, the new financing underscores “confidence in the company’s technology and leadership position in the emerging space-based cellular direct-to-device market”.
Essentially, the funding will help to underpin the commercial rollout of the low-earth orbit (LEO) satellite company’s network. The funds comprise $110m of convertible notes (which can later be swapped for stock) from AT&T, Google and Vodafone; a $20m revenue commitment from AT&T, “predicated on the launch and successful initial operation” of the first five commercial satellites; and a $25m minimum revenue commitment from Vodafone, subject to a definitive agreement.
Along with the investment, the new investors are supporting the buildout of AST SpaceMobile’s network. Moves involve Vodafone and AT&T placing purchase orders (value undisclosed) for network equipment from AST SpaceMobile to support planned commercial services, as well as Google and AST SpaceMobile working together on product development, testing and implementation plans for satellite network connectivity capabilities on Android and “related devices”.
AST SpaceMobile claims to operate “the largest-ever commercial communications array in low-earth orbit”, dubbed the BlueWalker 3 satellite (pictured above), and to own more than 3,100 patent and patent-pending claims for its technology. Its partner portfolio exceeds 40 mobile network operators with more than 2 billion subscribers in total.
“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. With this strategic investment, we are gaining capital, invaluable expertise, and strategic partnership,” said Abel Avellan, chairman and CEO of AST SpaceMobile. He added that these new partnerships also demonstrate “tremendous confidence in our vision and ability to ensure that the future of cellular broadband is borderless.”
Aside from Vodafone, Rakuten, American Tower and Bell Canada are other existing investors in the company.
News of AST SpaceMobile’s new fundraising efforts come in the wake of major news announcements from some its fiercest satellite-to-smartphone rivals: Lynk Global recently announced plans to become a listed company via a reverse takeover process; and Starlink, the LEO operating unit of Elon Musk’s SpaceX, launched its first direct-to-cell satellites at the start of the year and is now undergoing service tests with T-Mobile US.
- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV
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