Startup SpaceMobile said Wednesday it inked commercial agreements with Vodafone and AT&T to deliver 4G and 5G connections from its satellites to the operators' existing mobile customers via their regular, unmodified cell phones. The startup, which also announced it will go public through a "special purpose acquisition" transaction, said it expects to begin delivering commercial services to Vodafone's customers in Africa starting in 2023.
Vodafone's customers across the Democratic Republic of Congo, Ghana, Mozambique, Kenya and Tanzania will be able to sign on for SpaceMobile's services in 2023 with a simple text message:
Doing so will allow those customers to connect their existing cell phones directly to the 100 or so low-Earth orbit (LEO) satellites SpaceMobile expects to operate around the Earth's equator in the next two years. The technology essentially promises to eliminate all cellular dead zones in Northern Africa without requiring Vodafone customers to purchase a new device.
SpaceMobile said its agreement with Vodafone is based on a 50/50 revenue share business model. SpaceMobile will operate as a wholesaler of its service, selling it to network operators like Vodafone and others.
SpaceMobile said it expects to sign up 9 million customers to its service by the end of 2023, and that each of those customers will generate average monthly revenues for SpaceMobile of around $1.
Thus, the company said it expects total revenues of around $181 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of around $130 million in 2023.
But the company expects those figures to blossom in the next few years as it expands its service to other customers such as AT&T. SpaceMobile said it expects total revenues of $9.7 billion and EBITDA of $9.6 billion by 2027.
"AST SpaceMobile represents a unique opportunity to invest in a pioneering company with revolutionary technology, access to a built-in customer base, and a flexible and scalable business model that addresses one of the largest challenges to global connectivity," said Alex Coleman, chairman of New Providence, in a release. New Providence is the "special purpose acquisition company" (SPAC) that will merge with SpaceMobile in order to take the company public under the Nasdaq symbol "ASTS." SpaceMobile is the commercial brand of startup AST & Science LLC, which is now branding itself as "AST SpaceMobile."
Added Coleman: "Facing an extraordinary market opportunity, we believe AST SpaceMobile is poised for sustained growth as it executes its commercialization plan and ultimate expansion across the globe."
An eventful Wednesday
SpaceMobile's announcement with Vodafone capped an eventful week for the company.
SpaceMobile emerged earlier this year with the announcement of a $110 million Series B round of funding from Japan's Rakuten, Europe's Vodafone, cell tower giant American Tower, real estate company Cisneros and Samsung's venture capital arm, Samsung Next.
And, as reported by Light Reading, the company hinted at the possibility of a commercial agreement with AT&T in an FCC filing this summer.
According to SpaceMobile's new investor presentation, the company finalized that commercial agreement with AT&T in the August timeframe. However, SpaceMobile doesn't expect to cover much of AT&T's North American footprint with its "Phase 1" efforts, nor did it provide any details on the type of revenue share it might have with AT&T. An AT&T representative did not immediately respond to questions from Light Reading Wednesday.
SpaceMobile said it expects to begin covering most of AT&T's North American footprint as part of its "Phase 2" satellite launch. The company said its "Phase 1" satellite launch expenses ought to total around $500 million, and the company said it has so far managed to raise those funds in part through its financing efforts and in part through its transaction with New Providence.
Assembling the puzzle
SpaceMobile said it has also signed memorandums of understanding (MOUs) with operators including Tigo, Telstra, Liberty Latin America, Indosat (Ooredo) and Telefonica.
As for the logistics of getting its satellites into space, the company said it will use equipment from suppliers such as NEC, Safran and Dialog Semiconductors, and that it could work with satellite launch companies like SpaceX and Blue Origin.
The company said it expects to operate roughly 233 commercial satellites by 2027, offering services targeted to both enterprises and consumers around the world.
However, SpaceMobile still faces regulatory obstacles. For example, NASA officials recently worried that SpaceMobile's proposed satellites could collide with existing objects in orbit, though those NASA officials subsequently said they're now working with the company and expect SpaceMobile's satellites eventually "will enable safe operations in space." T-Mobile and Verizon – two other potential SpaceMobile customers – have also registered their opposition to the company's efforts.
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