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On 18th January 2024, Tech Giants such as Google, AT&T, and Vodafone invested over $155 million in Texas-based AST SpaceMobile. The company plans to raise more funds, up to $51.5 million, to develop its unique space-based cellular broadband network, which allows direct smartphone access.
The growth and investments in companies such as AST SpaceMobile are driven by the need for improved connectivity in remote areas and the increasing reliance on high-speed, secure wireless communication, especially with the amplified proliferation of smartphones, tablets, and Internet of Things (IoT) devices.
The initiative taken by AST SpaceMobile supports the development and adoption of hybrid-satellite cellular terminal space. According to BIS Research, the global hybrid-satellite cellular terminal market is projected to reach $696.4 million by 2031, with a robust CAGR of 22.81% from 2021 to 2031.
The capital investment is intended to support AST SpaceMobile's aspirations to launch commercial services in 2024. The company is gearing up to manufacture spacecraft twice the size of its initial five 1,500-kilogram operational BlueBird satellites, known as Block 1, scheduled for launch on a dedicated SpaceX Falcon 9 before the end of March 2024.
AST SpaceMobile has indicated that each subsequent Block 2 BlueBird will have ten times the capacity of a Block 1 satellite, enhancing performance for the low Earth orbit constellation. This constellation facilitates connectivity for subscribers outside traditional cell tower coverage, catering to partners such as AT&T, Vodafone, and other terrestrial mobile networks.
In September, BlueWalker-3, the 1,500-kilogram prototype, achieved download speeds of approximately 14 megabits per second during tests. These tests marked a milestone as BlueWalker-3 successfully relayed a brief 5G phone call to an ordinary smartphone in a cellular dead zone.
AST SpaceMobile stated in August that the five Block 1 BlueBirds funding was fully secured after obtaining $115 million in debt. The company, which merged with a special purpose acquisition company (SPAC) in 2021, raised $417 million, bringing it to the Nasdaq stock exchange. Despite securing additional capital, AST SpaceMobile has faced challenges, including production delays and cost overruns, impacting its share price.
The recent $100 million stock sale, priced at $3.10 per share on 18th January, represents a 25.5% discount from the previous day's trading and a substantial decrease from the $11.81 price at the end of its first day of trading in April 2021. The equity offering is set to conclude next week, with a potential additional $15 million if the underwriter chooses to purchase all available shares.
Most of the announced strategic investment, totaling $110 million, comprises a debt instrument paying interest to Google, AT&T, and Vodafone. This instrument may later be convertible into shares in AST SpaceMobile.
AT&T and Vodafone committed $20 million and $25 million in prepayments for a future AST SpaceMobile commercial service as part of their investment. AT&T's revenue commitment is linked to the successful operations of the first five BlueBirds, suggesting a focus on serving North America.
Vodafone's revenue commitment is contingent upon an undisclosed definitive agreement. According to AST SpaceMobile, while five BlueBirds are adequate for intermittent connectivity services suitable for government and commercial device monitoring applications, 90 are required for a comprehensive 5G broadband service, encompassing voice and data capabilities.
Vodafone and AT&T have also placed orders for network equipment, an undisclosed amount, to support forthcoming commercial services. Google's investment, accompanied by collaboration on product development, testing, and implementation plans, aligns with its role as the creator of the Android operating system used in over two-thirds of global mobile devices.
As companies such as AST SpaceMobile and Lynk Global seek significant capital for their commercial ventures, the landscape of satellite-based communication services continues to evolve. In a parallel development, SpaceX achieved a notable milestone by successfully relaying text messages to and from unmodified smartphones after launching an initial batch of satellites to test this capability. These collective endeavors underscore the dynamic nature of the space industry and the pursuit of innovative solutions in satellite-based communications.
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