AST SpaceMobile, Inc. Q1 FY2022 Earnings Call

Good day and thank you for standing by. Welcome to the AST SpaceMobile First Quarter 2022 Business Update Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Wisniewski, Chief Strategy Officer of AST SpaceMobile. Please go ahead. Thank you and good afternoon, everyone. Let me refer you to Slide 2 of the presentation, which contains our Safe Harbor disclaimer. During today’s call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements on this call. For more information about these risks and uncertainties, please refer to the Risk Factors section of AST SpaceMobile’s Annual Report on Form 10-K for the year that ended December 31, 2021, with the Securities and Exchange Commission and other documents filed by AST SpaceMobile with the SEC from time to time. Readers are cautioned not to put undue reliance on forward-looking statements and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed on this call. Also, after our initial remarks, we will be starting our Q&A section with questions submitted in advance by our shareholders. With that, I would like to introduce Chairman and CEO, Abel Avellan, and our new Chief Financial Officer, Sean Wallace, to the call as well. Abel, over to you.

Thank you, Scott. For those of you who may be new to our company, I want to take a few minutes to explain our mission and what we are actually doing. AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with standard unmodified mobile devices based on our extensive IP and patent portfolio. Our engineers and space scientists are on a mission to eliminate the connectivity gaps faced by today’s 5 billion mobile subscribers and finally bring broadband to the billions who remain unconnected. We believe this to be a very large opportunity and allows us to participate in the $1 trillion annual wireless service market. While it has been only a short 6 weeks since our last public update, we have made strong progress, and I would like to take you through that now. Turning to Slide 4, technology and industrialization update. We’re on target for our planned BlueWalker 3 summer launch. In preparation for this milestone, we have completed over 700 BlueWalker 3 tests to date. Once in orbit, we’re expected to test cellular broadband globally with participating cellular operators in the U.S., Japan, Europe, Africa, South America, and Asia. This effort will be supported by ground control centers in Maryland, Colorado, and Australia that have been ready to support BlueWalker 3 post-launch operations. We are also putting in space ground stations and approvals to support the planned BlueWalker 3 summer launch, including the FCC experimental license, which was recently granted by the FCC. We are on target for the completion during 2022 of our extension production facility, Site 2 in Texas, to support our target of up to 6 satellites per month. We have increased to more than 2,300 patent and patent pending claims supporting a strong and expanding competitive advantage. Turning to Slide 5, business update. We have successfully added a new memorandum of understanding (MOU) with Globe Telecom, an operator in the Philippines with 86.8 million subscribers. We now have more than 1.8 billion subscribers represented by mobile network operators with whom we have agreements and MOUs. We recently received an FCC experimental license for BlueWalker 3, space-to-ground testing in the United States using 3GPP low-band cellular spectrum and Q/V-band frequencies. We also recently added a $75 million committed equity facility with B. Riley that provides AST with the right, but not the obligation, to raise equity capital over the next 24 months. Before I hand it off, I wanted to thank our retiring CFO, Tom Severson, for all his time and for building AST SpaceMobile over the last 5 years. We have worked over the last 6 months to find the best partner for the next phase of growth for the company. And I am now happy to introduce Sean Wallace, our incoming Chief Financial Officer. He brings to the team deep telecom, financial, and capital market experience to support our future growth. With that, let me transfer to Sean now.

Thanks, Abel. Sorry about that. Good afternoon, everyone, and I wanted to share my excitement about joining the AST team. As an experienced telecom CFO and banker, the work I did to understand the AST story continued to lead me to conclude that this project, given its global ambitions, has the potential of making a large and profound impact on the world’s connectivity ecosystem by solving what is probably the most critical problem faced in the mobile industry today, providing global cellular broadband coverage directly to standard unmodified mobile phones. In support of this ambitious plan, I met a strong and innovative management team that has attracted a deep bench of talent. I was comforted by the significant strategic sponsorship of leading telecom companies such as Vodafone, American Tower, and Rakuten. I was impressed by how quickly this team has developed relationships with leading mobile network operators (MNOs) across the globe that have more than 1.8 billion subscribers in total. And as we discussed today on this call, I have to congratulate the team on its continued progress towards meeting important milestones, which indicates a strong execution capability. I want to provide an update on a series of activities that the company has been focused on and highlight some of the liquidity and financial metrics for the first quarter. As we have stated before, a key innovation proposed by AST is the development of an industrialized procurement and manufacturing process for our planned satellite fleet. Historically, satellites have been manufactured one at a time in job shop facilities. AST is developing a state-of-the-art assembly line process designed to enable AST to scale the procurement of parts, lower assembly costs, and materially speed up the volume of production. These efforts are expected to enable AST to lower the cost of its satellites and enable the company to meet its goal of ultimately building up to 6 satellites per month. As part of this goal, I would like to highlight some of the activities the team has accomplished during the first quarter. First, AST has made progress in reconfiguring its new Texas AIT facility designed to house the satellite assembly and test line. The company has retrofitted and remodeled the facility, built a clean room for critical assembly processes, and the facility is now ready to house and support inventory from manufacturing as well as the assembly and testing line. Our efforts to integrate an ERP system to support our inventory management and manufacturing process continue at pace, and we believe that the entire system will go live during the second half of this year. Just as importantly, we continue to hire experienced leadership and make human capital investments across all functions and offices. Let me discuss some of the highlights regarding our liquidity and expenditures. We ended the first quarter with $255.1 million in cash. We believe this cash is sufficient to support our cash expenditures for more than the next 12 months. As you saw from our recent announcement regarding our B. Riley committed equity facility, we continue to evaluate a variety of capital raising efforts to extend the runway of our liquidity. We are focused on exploring a wide range of options and remain confident that we have a broad set of funding opportunities. For the first quarter, we had GAAP operating expenses of $32.7 million versus $31.3 million in the fourth quarter of 2021, including non-cash operating expenses of $3.4 million and $2.7 million, respectively. We expect to continue to expand that level for the next several quarters. The $1.4 million increase in costs during the first quarter was related to increased employee costs and other research and development and engineering expenses as we ramp up the development and infrastructure investments to support the BlueBird 1 program. For the first quarter, we made capital expenditures of $21.6 million, which includes a payment to SpaceX for BlueWalker 3 technical adjustments in connection with the previously disclosed SpaceX multi-launch services agreement. As mentioned earlier, we have substantially completed assembly and testing for BlueWalker 3 and are turning our investments towards the production of our BlueBird satellites. And with that, I will turn it back to Scott.

Thanks, Sean. Before we go to the queue of analyst questions, I would like to address a few of the questions submitted ahead of the call by our investors. Operator, could you please start us off with the first question?

Thank you. Brian from Toronto asked when will you know definitively that the technology actually works from space?

Thank you, Brian, for the question. After we launch, we expect to know within an hour or two to determine if we had a successful launch and placed it into the orbit that we are expecting. After that, we will wait for the right timing to deploy the satellite, which involves opening the satellite into its final configuration. That would be within a week or two after the launch. That’s obviously a major phase, and it’s something that we will know within a week or two of the launch. After that, we go through a 6-month process of testing with the operators. We have selected locations around the globe in the U.S., Europe, Africa, South America, and Asia, including Japan. We will be doing testing with the selected telecom partners.

Thank you. Christopher from Florida asked if BW3 fails, will BB1 serve as the next test satellite to continue optimizing the new system? If not, then how long would you expect it to take to build and launch another test satellite?

Thank you, Chris, for the question. Well, first of all, we have built redundancy into BlueWalker 3, satellite across many of these systems, and we have conducted extensive testing to position the spacecraft for success in orbit. Our BlueBird program had been advancing alongside the build and test of BlueWalker 3. We anticipate that our next launch after BlueWalker 3 will be a BlueBird satellite, incorporating the many lessons and advancements that we learned during the build of BlueWalker 3. Our plan is that our production satellite phase will continue to advance with the launch of BlueBird satellites, which are currently planned even in the event of any complications with BlueWalker 3, which we don’t anticipate, but the next satellite will be a BlueWalker 3 followed by a BlueBird 1.

Thank you. Rick from the Netherlands asked, what is the desired situation to exercise the financing option? Is there a minimum stock price to exercise the deal? Can you elaborate more about the deals terms?

Abel, why don’t I take this?

Yes, go ahead.

Thanks. The agreement with B. Riley provides us with access of up to $75 million of additional liquidity through our committed equity facility. It’s accessible over 24 months, and it gives us the right, but not the obligation to sell and issue shares of our Class A common stock to B. Riley at a 3% discount to what’s known as the volume weighted average trading price for the performance measurement period. This is a tried-and-true and extremely efficient way of raising incremental capital. And it’s really a function of our line of maintaining regular and diverse access to various capital markets while preserving our existing cash for building our BlueBird production satellites. It’s highly flexible, but also, as I said earlier, we will continue to look at a variety of sources of capital, whether it’s credit or equity from governmental financial institutions, commercial partners, as well as the equity debt and hybrid capital markets to continue to fund our plans going into the future.

Thank you. Terry from Georgia asked, do you have any plans to potentially transport multiple BlueBird satellites on a single launch?

Yes, we have carefully planned our launch strategy together with the development of our satellites. For us, it’s critical to be able to launch multiple satellites on a single launch. We have looked at multiple launch vehicles to be launch agnostic, which allows us to have access to multiple providers to ensure flexibility. We ramp up production, and we expect that we will be using large launch vehicles that can support multiple BlueBird satellites. We are very encouraged by the many large launch vehicles that are coming into service from SpaceX and other launch providers.

Thank you. Steve from Arizona asked, supply chain problems have been creating havoc since the pandemic began. How resilient is your supply chain? How many critical components have only a single vendor available? Have you been stockpiling these components?

Yes. Well, supply chain is obviously very important. We are actively engaged with third-party vendors to secure our supply components and materials for BlueWalker satellites. We have agreements for all the major subsystems for the constellations. We have invested in all the long lead items that we require for the system. We have also mitigated recent supply chain issues by using FPGAs and systems that are configurable and available now. We feel that we can continue to execute on our plan despite any potential supply chain issues.

Thank you. Steve from Arizona asked, are neon gas shortages caused by the Russian invasion of Ukraine causing any concerns about semiconductor availability needed for the BlueBird builds?

Yes. I have said before, we’re basing our satellites on FPGAs, which are basically configurable and flexible. So we are not exposed to potential market shortages of semiconductors. Delaying the BlueBird ones, which we’re looking at our own chips, will be based on using TSMC technology for our ASICs. So the first BlueBird ones will be based on FPGAs, the second will be based on our own ASIC, which is part of our own development.

Great. And with that, I’d like to thank our shareholders for submitting these questions. Operator, let’s open the call to analyst questions now.

Our first question comes from Bryan Kraft with Deutsche Bank. You may proceed.

Hi, good afternoon. I had a few. I guess, first, in light of the deal with B. Riley. Can you talk about the relative attractiveness of issuing equity versus the other capital raising alternatives you have? And how you’re thinking about the timing for raising capital given the rising rate environment? And then, I guess, a little bit separately, if you could share any additional specificity around timing for the BlueWalker 3 launch? I know you said this summer. I was wondering if you could narrow that at all. And then finally, what does the timing look like at this point for the BlueBird commercial satellite launches? Thank you.

Thanks, Bryan. I’ll take that. You want to take that?

Go ahead, Scott.

Bryan, I guess I’ll take the first question on the use of equity and the use of equity versus other capital. I think for us, as we said, we have a diverse set of available sources of capital. And I think at this stage, we’re eager to put a few of those in place, small pieces of equity. As Sean alluded to, other sources of capital are also available to us. So for us, this is a flexible tool. It’s something we can use at our election, and it’s something that we want to use to make sure we can preserve our capital, $255 million at quarter’s end for BlueBird’s. So I think this is a good thing to have in our back pocket, and we’ll use it as we see fit, and other small pieces of capital this year are also available to us. The second question, I think, was on BlueWalker 3 timing specificity. I’ll give a little bit of clarity on that. The way to think about our timing, Bryan, is the satellite needs to leave for the launch pad, call it, up to 4 weeks before we launch. You can go a little tighter, but that’s how we think about our internal planning. As we work towards that, the satellite is going through final testing and we felt comfortable reaffirming our summer timeline. We’re not waiting on any parts or subsystems at this point. As we’ve talked about before, we have contractual commitments with SpaceX on timing within a range, but final timing is always subject to various steps and considerations, and changes can occur. So for us, the process of managing that timeline is a very detailed, very technical launch checklist and we are doing that as a highest priority to the company right now. So for us, we look forward to updating everybody in due course, but we reaffirm the summer timeline. The last question was on BlueBird timing. I’ll jump in there. No change from our last call. We’re very focused on building and investing in our infrastructure. Abel mentioned, Site 2, and we’re working towards the goal of getting those two facilities and our supply chain to deliver up to six satellites a month, and that’s a goal that we have to achieve for 2023. So for us, we’re raising towards that goal. Our intent will be to ramp up to that level during 2023, and thereafter, 2024 is a very important year to scale the constellation and achieve global coverage.

Thanks, Scott. When would we expect the first BlueBirds to be launched actually?

So we’re starting construction of those this year on top of the investment that we’re making now, and we haven’t announced yet in 2023 when we plan to launch our first one.

Thank you. Our next question comes from Chris Quilty with Quilty Analytics. You may proceed.

Thanks, guys. Just wanted to clarify, I did not ask the Christopher from Florida question before. First question, as you roll out the testing on the BlueBird satellite, what do you have to invest in terms of CapEx? And what is the staging to build out the sort of gateway infrastructure for testing?

Chris, are you referring to gateways for BlueWalker 3 or gateway for the constellation?

Just for BlueWalker.

Okay. So for BlueWalker, basically, we have three ground control centers, Maryland, Colorado, and Australia. We have approximately 20 gateway stations that are getting online as we speak to basically get access to the spacecraft for telemetry control purposes. We recently received the SEC approval for our testing, so we have gateways here in Midland and in Hawaii for access in the United States using our Q/V gateways. We have also been assigned spectrum for testing directly to the cell phones through the experimental license we just received. All of that is on time for our planned launch this summer. It will be designed to take broadband capability directly to the handsets using our next satellite launch.

Got it. Can you remind us, as you move to the BlueBirds, who handles that ground station CapEx? Is that fronted by your partners? Or is AST responsible for that spending?

Yes, we have an agreement with American Tower to have carrier-neutral locations where we place the gateways. Typically, the gateways' CapEx, the NOVs, the court, and interconnection of all that is part of the agreement to be fulfilled by the operator. We do install the actual gateways and antennas typically in a carrier-neutral location either owned by American Tower or owned by the operator itself.

Great. Can you remind us how do you eventually migrate, once you go through the experimental testing on both the gateway feeder links and, obviously, the user links to fully operational FCC, ITU approved usage of the spectrum?

Yes. We have our filings with the ITU, and as you know, every country provides their own approvals for the use of our spectrum or the use of the mobile operator’s spectrum. In the case of the United States, we have the gateways that will be co-located in American Tower locations. Those gateways are subject to their own license. They are using satellite spectrum, V-band, Q/V-band in order to connect from the gateways up to the satellite. Then we will work with our operator partners to use their spectrum in areas where they don’t have the resources to deploy. That’s the basic setup. We have been doing a lot of work very actively in many countries, starting with the country that will be first in operations. That seems to be a process—a regulatory process that is working for us. We’re very encouraged by the experimental license we got from the FCC, and we are continuing country by country, getting these grants for operations of our system.

Specific to the Q/V-band gateway feeder links, that’s a relatively new deployment. I think EchoStar is also using that on their Jupiter 3. What have you done in terms of testing, either ground testing or ultimately the satellite testing to ensure the strength of those feeder links?

Yes. Just to put it in context, these feeder links are for the gateways. You get— in the United States, you need two or three for redundancy, to add redundancy. The coverage area of these links is very small, within a few kilometers. They are designed based on where you place your gateways, and then you achieve universal coverage through the cellular spectrum. V-band is very attractive because of the capacity that allows us to group a significant amount of cellular spectrum into the gateways where we interconnect to the cellular operators. We have done installations of these types of gateways already. We have procured the equipment to access this spectrum. We will continue testing them with the launch of BlueWalker 3 and with the experimental license that we got from the FCC.

Thank you. Just one final question, due to the Ukraine war, there’s been a bit of a shortage of access on Antonov aircraft, which are typically used to transport satellites. Were you planning on using air transport? Or given your location in Texas, are you already planning on using ground transport for the satellites?

No, we’re planning to use ground transportation. The container for BlueWalker 3 is already built. We will be traveling from Midland to Cape Canaveral. It will be a 1-day, 1.5 day trip. We are also in contact to bring train rails into the facility, and we plan to connect it to the train system so that we have a capability towards our goal of six satellites per month. But initially, our baseline launches are based on U.S. launches, and we plan to use ground transportation for that.

Great. Thank you.

Thank you. Our next question comes from Andres Coello with Scotiabank. You may proceed.

Yes. Thank you very much. I’m wondering if you could comment on how your MOUs with wireless carriers all over the world will actually translate into a business opportunity once all the testing is over if everything goes well. How did you translate the MOUs, for example, in Latin America with Millicom, Telefónica, and other players? How do you translate them into a business opportunity? Or put it differently, if those MOUs imply an obligation by the wireless carrier to actually start working with you? Just any comment around the MOUs. Thanks.

Yes. Okay. Well, the terms of the MOUs vary partner by partner, and participating MNO by participating MNO. By and large, they are basically based on a revenue share, where we share the revenue generated by our service inside the operator’s network. The operator retains the retail capability; they market and they sell the service. The advertising service is through sending a text message to the user when the user goes out of coverage or by other means in the retail capability. They provide the spectrum, we provide the network, and based on that, there is a split on the revenue generated. When we count the number of subscribers that we can access through the MOUs, we refer to the agreements we have, which include operators that have a total of approximately 1.8 billion subscribers. Those subscribers become accessible to us through this revenue share agreement. Pricing is agreed upon between us and the operators, depending on the type of service provided, locations, etc. The fundamental aspect is that 90% of the air surface does not have cellular broadband. Within that 90%, around 3/4 billion people approximately do not have connectivity, and we are addressing that with our technology.

Thank you. But just to clarify, if the testing is successful, do the MOUs create an obligation for the carrier to start using your services? Or is your understanding just optional? I mean once you deliver successful testing and once you have your constellation ready, is there a clear commitment towards working with you, or can they still pull out?

Sure. I will take this one. Our commitments and our agreements, including MOUs, vary. Some are binding agreements, and others are not. The purpose of these agreements is, of course, to align interests. We have been signing these since 2018 to ensure participation in the technology and regulatory approvals while thinking through the business side as Abel mentioned. However, as we get closer to launching services in each country, there will be definitive commercial agreements put in place typical for the telecom industry. Those are not ones you saw years in advance, as they don’t generate good terms for the seller or the capacity. So we have some agreements that are binding and others that are MOUs. Those are agreements we want to turn into more definitive commercial agreements with clear pricing levels and SLAs among other terms before we launch commercial service in any given country.

Thank you very much. Very clear.

Thank you. Our next question comes from Landon Park with Morgan Stanley. You may proceed with your question.

Hi everyone. Thanks for taking the questions. I was wondering if we could start out just in terms of the opportunities that you guys see ahead. How are you thinking about the non-consumer market in terms of the opportunity there, whether it’s on the government military side or the enterprise side? What type of role do you think you can play in those markets? And do you also expect to be eligible to potentially receive any funding from the B program here in the U.S.?

Okay. Well, we obviously see a significant number of other opportunities besides the consumer opportunity. However, we believe the largest opportunity is the 5 billion people that lack connectivity every day and the 0.75 billion people that live and work in areas with no coverage. Having said that, there is IoT, defense, and other types of opportunities available to us, obviously, providing universal connectivity in countries, in whole continents, where there are no other means of connectivity directly to handsets is a very, very large opportunity that goes beyond the consumer market. To your question, yes, we plan to participate in the progress from the FCC, as it relates to extending 5G universally in the United States. We do believe that is important for the country, and there is political will to ensure that every citizen gets connectivity, regardless of their location, whether in fixed type connections or in wireless cellular connections. So, yes, we do have a plan to connect. All our models are primarily based on the retail consumer opportunity, but also, we see many other verticals that we will be able to tap as we develop our network.

Just a follow-up on that. Are there any particular use cases that would stand out to you as particularly attractive within the government and enterprise markets? And is there any—do you think that some of those markets would offer a higher yield on your capacity against the consumer market, or how are you thinking about that?

Yes. It’s Scott here. So, as Abel said, it’s a little unique for a satellite company to be going after this new market, right, the wireless market. It’s a very large market relative to legacy satellite opportunities, even if some of those opportunities are nice. So, we really like the mass market opportunity. It’s one that our MNO partners are very key towards. Many of our MNO partners are also very good at those other verticals you mentioned. They are developing IoT government and enterprise capabilities depending on the company and the region. So, there are strong opportunities. We have intentionally not highlighted which might be best because we want to focus on the mass market opportunity, but the interest is strong there. We get inquiries about resiliency, including emergency backup. The fact that our network functions without a terminal remains a cornerstone of the interest we receive, even outside of the mass market opportunity.

Great. Thanks for that color. Moving on to just some follow-ups on the questions regarding the feeder links. How many feeder links will each satellite have? And what is the channel sort of size in terms of gigahertz for those feeder links?

Yes. We have, per satellite, up to four feeder links. Each feeder link is around 10 gigahertz per polarization. We have two polarizations per antenna on the spacecraft and then they connect down to the gateways in the country. Typically, depending on the size of the country, we have between two or three gateways or locations to bring down those feeder links into the core network of the operators.

Okay. So, it’s up to four links of 10 gigahertz and two polarizations. What type of modulation level do you think you can do in your feeder links?

Well, the system is designed to be a transparent transformer, so basically the same modulations that we have coming from the phone to the spacecraft and then translated into frequency to bring it down to the gateway. The classical modulation you will see on the downlink from the spacecraft to the phone and from the phone to the spacecraft will be very similar to what is expected.

Yes. I am just wondering what—so the feeder links will have the same—and what are you expecting?

Yes. Right. It depends on many factors, but it’s somewhere in the downlink between 3 bits per hertz to 6 bits per hertz and between 1.5 bits per hertz and 2 bits per hertz on the uplink.

Great. The uplink being the feeder link, you are saying?

The uplink is from the phone into the spacecraft.

Okay. Great. Thank you. On the BlueBird program, I can’t—I don’t know if you reiterated the expense guidance up top. But given the expense issues we have seen in other parts of the industry, what gives you the confidence that you are not going to see some amount of inflation come through over time? Do you think that there is any reasonable risk of that occurring over the next 12 months, 24 months?

Well, first of all, I mean for our technology, we are highly vertically integrated. We control nearly every component that is in the spacecraft from reaction wheels, torques, flight computers, the micron in cells, which is a self-contained system, solar panels. We are as vertically integrated as necessary to keep costs and maintain control. Our costs at this point are very well known, based on both the build of BlueWalker 3 and the substantial agreements we have in place for the provisioning of parts for our constellation. So, on the last call, we reiterated our cost basis for BlueWalker and the BlueBird satellites. We see no change in those at this point.

So, do you see that—is there any significant risk in your mind to the upside over the next year, or do you feel quite confident in those expense numbers?

We feel quite confident given where we are in the procurement phase of those parts.

Great. And Sean, just one last question for you. Can you just go more into what attracted you to the company and perhaps any sort of diligence that you did on your side to get comfortable with the opportunity that the company has discussed?

I think I gave you an overview. I mean it’s tough to convey this over a call, but I have extensive contacts in the industry as a banker for quite a long time. I did a lot of industry checks and was able to talk with industry experts who had either been in the industry or analyzed it. I spent time with a number of wireless operators who knew about the project. It involved a variety of market, technology, and regulatory diligence while getting to know the team. I have seen almost 10 or 15 different projects attempt to do something similar but always faced challenges regarding customer equipment costs to take the downlink from the satellite. This is an incredibly exciting opportunity to do something that will target the entire cellular market and continue to help the 3 billion people globally who don’t have connectivity. A lot of work and discussions with industry people, regulatory bodies, and finance made me very comfortable; it’s an exciting opportunity.

Great. Thanks very much for that color. Thanks for taking the questions.

Our next question comes from Griffin Boss with B. Riley Securities. Please go ahead.

Hey. Thanks for taking my question. So, staying in on competition, Lynk is really the only player out there at the moment, at least that I know of. I understand it’s a very large market, but are you seeing them in the market at all, or have they come up in your conversations with MNOs? Just any color you could provide on that front? And then similarly, on the MNO front, I believe you have said your partnership with Vodafone includes 5-year exclusivity. I was just curious, could you remind me, does that exclusivity timeline begin when commercial service starts?

Sure. Hi, Griffin. I’ll take that. So, the second one first. With Vodafone, you are correct, the 5-year mutual exclusivity in their 24 different markets around the world starts at service initiation. So, it was signed years ago, but that 5-year period starts with service initiation. In terms of other players that we run into, we don’t really run into other players at this time. I think we have had success building relationships with the mobile network operators from the early stages of the company. It’s an opportunity, like Sean highlighted, that is really differentiated, and many of our MNO partners who have experienced poor services from satellites in the past see this as solving problems they have faced. Thus, it resonates well, and you can see that in the successes we have had adding more and more mobile network operators over the last few months, some of whom have multiple hundreds of subscribers under their care today. Our opportunity resonates very well. As we approach our summer launch and plan for our constellation next year and the year after, the volume with the mobile network operators is growing, and that’s exciting.

Got it. Thanks, Scott. That’s really helpful. Sort of sticking to the MNOs and jumping back a little bit in time here, but I know Verizon and T-Mobile had both filed petitions back at the end of 2020, I think it was November 2020. Did the FCC deny the AST service? And to what extent can you speak about ongoing conversations or anything else? Have you had any progress with either of those two MNOs since then? I mean, obviously, you guys have come to numerous agreements with other MNOs since then; didn’t know if that validated your service to them and if you have struck up conversations again at all?

Sure. I think the filings around the FCC docket were not unexpected more than a year ago, where companies typically lay out their market positions. We think the U.S. market supports multiple providers, and that’s something we want to pursue. However, we have not announced any conversations with any of those U.S. providers. Our solution fits really well, and the U.S. market, in particular, is very interesting for our solution, given the nature of the country and the distribution of coverage today. The big three will certainly have a need for our services.

Got it. Okay. That’s great. Thanks a lot. Just one more quick one for me. Sean mentioned earlier that you were substantially completed with the BW3 investment. I know on the last business update call, you said we should assume a little more than $80 million of overall investment in that. I just wanted to clarify. When you say you are substantially completed with that investment, does that mean as of right now or at the end of Q1? I am just trying to get a better sense of whether we should assume any additional investments for BW3 in Q2 at all?

That was referring to as of today.

Understood. Okay. Thanks a lot, guys.

Thank you. At this time, I am showing no further questions. I would now like to turn the call back over to management for closing remarks.

Great. Thank you, operator. Our company is building a space-based cellular broadband network designed for use with the phone in your pocket today. I want to thank everyone for joining, both the shareholders and the research analysts for their questions. I hope everyone has a great rest of the week.

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.