AST SpaceMobile, Inc. ASTS recently inked an agreement with Ligado Networks for spectrum usage rights for more than 80 years. The deal will enable ASTS to get access to up to 40 MHz of Ligado’s L-band mobile satellite spectrum (MSS) in the United States and Canada and an additional 5 MHz in the 1670-1675 MHz band in the United States.   

The transaction, subject to customary closing conditions and regulatory approvals for the proposed use of the spectrum, is likely to help AST SpaceMobile eliminate connectivity gaps for ubiquitous space-based network connectivity. This, in turn, will enable ASTS to support up to 10,000 MHz of processing bandwidth per satellite in the future, with data transmission speeds of up to 120 Mbps across a space-based cellular broadband network accessible to everyday smartphones.

Ligado, which has filed for Chapter 11 bankruptcy proceedings, will receive about 4.7 million penny warrants convertible into AST SpaceMobile Class A shares upon execution of the definitive documentation and an additional $550 million on closing. AST SpaceMobile will also pay Ligado approximately $80 million annually for spectrum usage rights while providing long-term net revenue-sharing rights.

Institutional Financing to Fund ASTS-Ligado Deal

AST SpaceMobile largely depends on carrier investments and institutional financing to fuel its expansion plans. For the Ligado transaction, ASTS has received a $550 million institutional financing commitment to finance a wholly owned special-purpose vehicle in the form of a non-recourse senior-secured delayed-draw term loan facility. 

AST SpaceMobile has partnered with leading carriers such as AT&T Inc. T and Verizon Communications Inc. VZ to tap into a pre-existing pool of cell customers and to avail funds to help build a worldwide satellite network. With AT&T, ASTS has entered into a definitive commercial agreement, extending until 2030, to provide a space-based direct-to-mobile technology to complement and integrate with the former’s mobile network. This approach aims to provide customers with connectivity in locations previously deemed unreachable, enhancing AT&T’s industry leadership in utilizing emerging satellite technologies.

ASTS also collaborated with Verizon, wherein the latter made a $100 million commitment for satellite direct-to-cellular service for its customers. The two back-to-back deals sent the ASTS stock price soaring. It further enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.

Price Performance of ASTS

ASTS has gained 388.7% over the past year compared with the industry’s growth of 29.5%.

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End Note

The SpaceMobile service is compatible with all major brands available in the market and connects directly to everyday mobile phones. It is based on a novel technology that delivers broadband connectivity from space to unmodified mobile devices, providing a service to fill cellular coverage gaps in a differentiated approach compared to other space-based communication services.

The collaboration with leading carriers is seen as a pathway to unlocking the potential of space-based cellular broadband, promising seamless, reliable service across the continental United States. Access to premium mid-band spectrum assets with the consummation of the Ligado deal is likely to help bridge the digital divide more effectively, expanding its global presence and enhancing AST SpaceMobile’s capabilities in providing ubiquitous connectivity.

ASTS currently carries Zaks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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