AST SpaceMobile lays foundations for further successful development

In the third quarter of 2024, AST SpaceMobile (NASDAQ: ASTS, WKN: A3CL8W) was able to achieve important milestones. Finances were put on a solid footing, the number of business partners was expanded and the course was set for the fastest possible commercialisation of the company’s own services. In technical terms, too, important goals were achieved with the launch of five new satellites and their early deployment in space.

The past quarter has been a dynamic one, with several important adjustments being successfully made. The third quarter thus offers AST SpaceMobile the opportunity to become a kind of starting block for the use and commercialisation of its own services.

Technically, the successful launch of the first five commercial BlueBird satellites and their early deployment at the end of October was the major highlight of the last few months. The satellites have commenced operations and AST SpaceMobile has applied to the FCC for a temporary special permit to launch the beta service with its partners AT&T and Verizon. While this application is being decided upon, the satellites will be integrated into the partner networks and prepared for continuous operation.

Further rocket launches are secured

However, launching the first five satellites is just the beginning of the process of building a comprehensive network of satellites. Securing future rocket launches is therefore an important component of AST SpaceMobile’s business strategy. In this area, too, important progress was made in the last quarter, with the necessary launch capacity secured. The agreements concluded enable the launch of up to 60 Block 2 BlueBird satellites.

An important innovation here was the selection of launch providers, because in addition to the previously selected providers ISRO and SpaceX, AST SpaceMobile can now also use Blue Origin’s launch facilities. The ability to replace one launch provider with another at short notice if necessary gives the company more flexibility on the one hand, and at the same time more security, because delays that could arise with one provider can be mitigated by using another launch provider.

In addition to the rocket launches, the focus in the last quarter was also on the construction of the satellites. AST SpaceMobile is seeking to provide continuous space-based mobile broadband coverage in the key markets of North America, Europe and Japan. This will require a large number of satellites to be manufactured and launched in 2025 and 2026.

Another milestone is the first validation of the AST5000 ASIC chip. It is scheduled to go into operation next year and is currently undergoing intensive testing. AST has high expectations for the chip, which, when combined with the larger Block 2 array, will be able to support mobile signals with a capacity of up to 40 MHz. This enables data transfer speeds of up to 120 Mbps, supporting voice and video applications as well as full data applications.

The customer base is constantly expanding

Three new contracts with the US government and the continuation of ongoing talks with several commercial partners ensure that the customer base is becoming ever broader and more stable. Participation in the Space Development Agency’s HALO programme means that AST SpaceMobile can bid for lucrative US Department of Defense contracts.

Further opportunities for supporting the US government show that the strategy chosen by AST of designing its own satellites for both commercial and government requirements was a wise decision. In the future, it is therefore to be expected that the individual US government departments and their agencies will handle an ever-increasing proportion of their global communications via satellites. This could result in very lucrative and, above all, constant revenues for AST SpaceMobile.

Strong balance sheet with $518.9 million in cash reserves

AST SpaceMobile also succeeded in strengthening its balance sheet in the last quarter. The exercise of publicly traded warrants generated $153.3 million in revenue for the company. As a result, a $48.5 million senior secured loan will be repaid in the fourth quarter. This will reduce future interest expenses.

At the same time, AST SpaceMobile has submitted an application for debt financing to the Export-Import Bank of the United States. This underscores management’s commitment to avoiding severe dilution of shareholders. The company continues to prioritise the procurement of strategic capital through non-dilutive approaches. These include commercial advance payments and commitments made by partner companies.

The company ended the third quarter with cash and cash equivalents of $518.9 million. This provides a solid financial footing for the tasks ahead, as AST SpaceMobile recorded a total operating cost of $66.6 million in the third quarter. This was $2.7 million higher than in the second quarter because research and development expenses increased by $10.3 million. At the same time, general and administrative costs were reduced by $2.3 million.

The task for AST SpaceMobile now is to push ahead with commercialisation. This means testing the Block 1 satellites and ramping up their production. The necessary approvals must be obtained from the authorities and relationships with mobile network operators must be formalised into definitive commercial service agreements. If AST SpaceMobile can continue to move forward with the same momentum in the current quarter as it did in the third quarter, investors will be able to look back on a very successful 2024 at the end of December.