AST SpaceMobile stock soars following Verizon partnership announcement

AST SpaceMobile, a provider of satellite-to-phone services, saw its stock soar recently after announcing a partnership with Verizon. This deal follows the company’s recent agreement with AT&T to provide remote coverage across the United States.

AST SpaceMobile is constructing satellites to deliver broadband service directly to unmodified smartphones, tapping into the emerging “direct-to-device” communications market. The company’s chairman and CEO, Abel Avellan, hailed the Verizon and AT&T agreements as “essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.”

The news sent AST SpaceMobile’s stock surging 69% in trading, closing at $9.02 per share. According to FactSet, this marked the largest single-day rise for the company’s stock since going public via a SPAC in 2021, with shares quadrupling over the past month.

Verizon’s deal includes a $100 million capital injection for AST SpaceMobile, comprising $65 million in commercial service prepayments and $35 million in debt via convertible notes. However, $45 million of the prepayments are contingent on factors like regulatory approvals and signing a definitive commercial agreement.

This partnership with Verizon follows a similar pattern to AST SpaceMobile’s collaboration with AT&T. Back in January, AT&T co-invested debt in the company alongside Google and Vodafone. CNBC reported that AST’s CSO Scott Wisniewski explained that the companies established a detailed commercial agreement earlier this month, outlining how they will “ultimately offer service together.”

AT&T has worked hand-in-hand with AST SpaceMobile for six years, even lobbying the FCC for the necessary approvals to provide direct-to-smartphone satellite services in the U.S. Earlier this month, the two firms solidified a definitive revenue-sharing deal extending to 2030.

Wisniewski noted that AST SpaceMobile plans to unveil its go-to-market strategies closer to commercial launch, including leveraging the benefits of pooling nearby terrestrial radio waves from AT&T and Verizon.

After production setbacks, AST’s Block 1 satellites are scheduled for delivery to Cape Canaveral by late August for a SpaceX Falcon 9 launch into low Earth orbit. A single Block 1 satellite will have 10 times the capacity of the company’s 1,500-kilogram BlueWalker-3 prototype which achieved 14 Mbps download speeds last September on AT&T’s spectrum.

The first Block 2 BlueBird satellite, twice as large with 10 times a Block 1’s capacity, has a launch window from December to March. AST estimates 45-60 BlueBirds are needed for continuous U.S. coverage.

Last month, the company received three non-binding letters of interest for export credit agency funding to deploy up to 45 satellites by end-2026.

While AST raised $417 million via a 2021 SPAC merger, production delays and cost overruns have drained cash reserves. Competitors like SpaceX’s Starlink and Lynk Global are also vying for the direct-to-device opportunity.

Major industry players see a chance to expand mobile communications globally by bypassing traditional land-based infrastructure constraints, as Verizon’s Srini Kalapala described, providing “space-based broadband direct to everyday cell phones.”

Smartphone makers, service providers and satellite firms are partnering on direct-to-device projects. Rivaling AST’s deals, SpaceX’s Starlink has teamed with T-Mobile, while Apple invested heavily in its Globalstar-enabled “Emergency SOS via Satellite” for iPhone 14.

AST expects its first five commercial satellites to launch later this year. SpaceX, boasting over 3 million Starlink subscribers, aims to roll out T-Mobile-supported phone service integration this year, even completing what it claims was the “first video call” via satellite to an unmodified phone.

With major industry players jockeying for position, the direct-to-device satellite communications market is heating up rapidly, aiming to bring seamless connectivity to the remotest corners of the planet.