An Update on AST SpaceMobile

July 2025 

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AST Space Mobile

Second quarter results were good, driven by the significant appreciation of AST SpaceMobile¹, which more than doubled during the period. We believe this recent price movement reflects the many favorable developments that have come to light over the last several months. Some of the more notable items include funding of Golden Dome, approval of the Ligado spectrum arrangement, continued progress with the FCC, and a falling out between President Trump and Elon Musk (diminishing/eliminating potential government or regulatory favoritism toward competitor SpaceX/Starlink).

Despite this move in the share price, we believe AST continues to offer excellent opportunity. Not only does the business continue to de-risk on technological, financial, and regulatory fronts, but our estimate of the market opportunity has grown materially. We have always thought that government could be an important customer, but recent disclosures and developments, such as Golden Dome, reveal a breadth and magnitude of opportunity that we did not fully appreciate. We now believe that AST will generate billions of annual revenue from government services, as discussed further below.

Government Opportunity

AST has an opportunity to provide services to the military, intelligence agencies, and first responders. While the U.S. opportunity is the largest, there is significant potential with other nations as well.

U.S. Department of Defense (DOD) – Communications Services

The most obvious use case for AST is enabling secure voice, video, and data communications to military personnel on nearly every square mile of the planet. To this end, a June 2025 demonstration in Hawaii with AST and its partner, Fairwinds Technologies, showcased key defense-related use cases for USINDOPACOM forces (including representation from the U.S. Navy, Marine Corps, Army, and Space Command), including real-time connectivity to the Tactical Assault Kit (TAK) over a VPN, multimedia streaming via TAK, and secure multi-party video calls, all executed on standard, unmodified smartphones.

These use cases are closely related to AST’s commercial services, so this demonstration provides additional evidence of the core technology working well in a real-world setting.

U.S. Department of Defense (DOD) – Non-Communications Services

The new Trump administration, recognizing that we are inadequately prepared to defend ourselves against novel weapon systems such as drones, hypersonic missiles, and advanced ICBMs, has accelerated modernization efforts across the U.S. military. Obsolete programs are being discontinued, and resources are being poured into capabilities to counter these new threats. Central to this effort is advancing U.S. capabilities in space, headlined by the Golden Dome program.

Legacy missile defense systems—often composed of ground radar, GEO satellites, and terrestrial interceptor batteries—are designed to neutralize traditional short- and long-range missiles. The trajectory of these missiles is predictable from shortly after launch, making them relatively easy to intercept. We saw an example of this in June, when Israel’s Iron Dome intercepted 80-90% of the more than 500 ballistic missiles fired at it by Iran.

However, newer long-range missiles, such as hypersonic and advanced ICBMs, can change trajectory during travel, and sometimes include decoys and multiple warheads made to fool existing missile defense systems. This makes these missiles much more challenging to neutralize. The U.S. and its allies are vulnerable to these advanced weapons and need a faster, more accurate, and more distributed missile defense system in response.

The unprecedented size and power of AST’s LEO satellites makes them especially well-suited to assist in tracking modern missiles, along with a variety of other high value functions. Research reveals excellent effective isotropic radiated power (output power of a signal when it is concentrated into a smaller area by the antenna) and gain-to-noise temperature (how well the system can detect weak signals amidst noise), enabling a variety of novel capabilities. Possible DOD uses include:

•    Radar – Supporting high-value military radar applications such as synthetic aperture radar (high-resolution imaging using radar signal reflections), ground-moving target indication, and missile tracking.

•    Assured and Alternative PNT (Position, Navigation, and Timing) – Providing a stronger, jam-resistant signal compared to existing GPS, improving indoor reception and cybersecurity through authentication and encryption.

•    Blue Force Tracking (BFT) & Identify Friend or Foe (IFF) – Improving situational awareness of troop and asset locations, reducing friendly fire incidents.

•    UAS/drone control – Enabling remote control of unmanned aerial systems (UAS) in areas lacking terrestrial infrastructure.

•    Signal Intelligence – Detecting and reading electromagnetic emissions of the enemy.

•    Signal Jamming – Jamming enemy signals over large geographical areas, such as maritime zones and remote areas, where terrestrial jammers are impractical.

Growing Momentum with the U.S. DOD

While early, the DOD opportunity is beginning to take shape. We know that AST now has at least six U.S. defense contracts and we believe that there are multiple classified applications running on AST’s satellites today. The evidence is mounting that AST is going to play an important role in national security. Consider:

•    On April 23, during a visit to AST’s Texas manufacturing facility, FCC Chairman Brendan Carr and Senator Ted Cruz highlighted the national security benefits from the company’s technology, with Carr stating “Importantly, it’s going to help us secure our national defense, including by making sure we stay ahead of China.”

•    On June 6, AST’s CFO, Andy Johnson, commented at AST’s annual meeting that the company is positioned to be a “very important contributor…to the U.S.’s Golden Dome program” while noting that the services it already provides to the government have overlap with the capabilities Golden Dome seeks to achieve.

•    Meeting minutes from the June 26 Miami-Dade County Board meeting revealed AST’s plans for a $25-$30 million manufacturing facility on the highly secure Homestead Air Force Base to increase production and “establish (a) satellite operations center and gateways for government projects”

•    President Trump has set an aggressive three-year timeline to complete Golden Dome. AST’s announced launch cadence aligns well with this timeline. Our most recent tour of AST’s Midland, Texas facility in early July demonstrated that satellite production is ramping nicely, and the company is on a path to meet the pace needed to fulfill the launch schedule.

•    And there have been multiple successful field tests with the DOD, with more testing to come.

Funding & Revenue Potential

Initial Golden Dome funding of $25 billion was secured with the July 4 signing of the Big Beautiful Bill.  This should be a watershed event for the space defense industry, with spending ramping quickly. We estimate the DOD will spend $14.5 billion on satellites and related services in 2025. Golden Dome and new funding for the Proliferated Low Earth Orbit (PLEO) Satellite-Based Services program are forecast to more than double this spending—to $34 to $37 billion—over the next three years.

AST is positioned to be a major beneficiary with its LEO satellites. We think AST’s unique technology will enable a number of Golden Dome capabilities, and we know the company is one of twenty approved vendors eligible to compete for task orders under the PLEO contract. In addition, we think several of AST’s current defense contracts are likely to develop into “programs of record”, each with multi-hundred-million dollars of annual revenue. We believe AST will generate $1.0 to $2.5 billion of annual DOD revenue (mostly from recurring services) in the intermediate term. While these are large numbers, they equate to just a mid-single-digit share of DOD satellite spending.

First Responder Opportunity

AST is also poised to enable supplemental coverage for U.S. first responders (law enforcement, fire/rescue, EMS, emergency management) who require full geographic coverage and 100% uptime, including during natural disasters, in order to provide mission-critical services.

AST is already partnered with both AT&T and Verizon. AT&T, through FirstNet, and Verizon, through Frontline, provide communications solutions to more than 12 million first responders. FirstNet officials have confirmed they are in the “final stages” of investing in AST’s direct-to-device technology. We expect high adoption rates of AST’s service from both FirstNet and Frontline users.

If we assume pricing of $20 per user per month (a premium compared to regular commercial pricing, reflecting enhanced features for first responders such as push-to-talk and priority/preemption), a ramp to a 50% adoption rate, and a 50% revenue share with AT&T and Verizon, U.S. first responders would generate $720 million in annual revenue for AST in the intermediate term.

International Opportunity

We believe that most developed nations will want defense and emergency services capabilities similar to the U.S. For example, we understand that NATO’s future SATCOM program is actively exploring using AST for 5G direct-to-device service. And Vodafone, AST’s joint venture partner in Europe, offers mission critical emergency services to first responders. They plan to add direct-to-device mobile broadband satellite services to this offering when it is available.

To estimate AST’s non-U.S. defense opportunity, we begin with our U.S. DOD revenue estimate of $1.0 to $2.5 billion per annum. We haircut this by half to reflect smaller NATO and non-NATO allied nation defense budgets (cumulatively $0.5 trillion vs. $1.0 trillion at DOD), and adjust further because these nations will likely spend a lower percentage of their budgets on satellite capabilities, leveraging the U.S. Golden Dome where permitted. In total, we estimate that AST will generate $300 to $750 million in annual revenue from non-U.S. defense spending in the intermediate term.

To estimate AST’s non-U.S. first responder opportunity, we begin with our U.S. first responder revenue estimate of $720 million per annum. We adjust our U.S. number to account for differences in population and GDP (across all developed nations, ex-China) and further adjust for the likelihood that AST will have lower first responder market share internationally.  In total, we estimate that AST will generate $400 million in annual revenue from non-U.S. first responders in the intermediate term.

Total Military, Intelligence, and First Responder Opportunity

In total, as itemized above, we expect AST will generate $2.4 to $4.4 billion in annual revenue from worldwide military and first responder opportunities in the intermediate term.

Beyond this, the U.S. National Intelligence Program has a budget of about $80 billion (vs. about $1 trillion at the DOD), which we do not specifically account for in this exercise. That said, it seems clear that many of the capabilities that AST is potentially providing to the DOD would also be valuable to intelligence agencies both here and abroad.

Position Sizing

AST has appreciated to become a much larger than normal position for us. Even so, we have not trimmed our AST position, and we do not anticipate doing so in the short term given the information we have in front of us today.

We have consistently described AST as a “special situation” investment. It does not fit our typical profile of a well-established business with a history of mid-teens earnings per share compounding. AST is an early stage business with little revenue and difficult-to-understand technology. It became public via a SPAC, needs capital to fund its business plan, and competes with Elon Musk’s formidable SpaceX/Starlink. That is not the profile of a business that screens well. Even today, as the stock has moved up to a mid-cap size, it remains relatively unknown to most of Wall Street.

Against this backdrop, we have conducted more proprietary research on AST than any other business we have ever owned. And that research—combined with the perspective that comes from investing in the wireless telecommunications industry for nearly three decades—has informed our view that AST has a high probability of achieving its business objectives and delivering outstanding returns for equity holders from here.

In the long term, markets—and investment portfolios—are driven by right tail outcomes. As shown by Hendrik Bessembinder’s research, just 3.4% of U.S. public companies have driven nearly all the net wealth creation in the equity market above one-month Treasury bills over the last nearly 100 years.² In AST, we believe we have the makings of a right tail outcome. It is rare to find such opportunities, and once found, they should be assiduously managed. We were flexible in identifying and investing in AST, and we believe that similar flexibility of thinking is called for in managing this position size.

Our Framework for Sizing AST

We are looking at three inputs to inform the sizing of our AST position.

1.    Price-to-value relationship: In our base case, we believe AST will be worth 5x to 10x its current price in five to ten years’ time (a 30% to 40% IRR over a 7.5-year horizon). On a probability weighted basis, incorporating a range of potential outcomes, expected returns are similarly compelling; significantly better than anything else in our opportunity set.

2.    Absolute size/value at risk: We consider absolute position size, but also the magnitude of loss that might occur (value at risk) if one of our primary negative business scenarios were to come to pass. As we have written previously, we believe AST has a much lower risk profile than it did a year ago and has an estimable floor value. With the emergence of significant government opportunities, and gaining control of Ligado L-band spectrum, we believe this floor has been raised. On balance, we are comfortable with the current position size and value at risk. If we are wrong about the business, and the stock performs poorly (in the long term, not short term mark-to-market), it will be an unpleasant setback, but one that we can accept in the context of the overall portfolio.

3.    Information advantage: AST is a complex and fast-evolving business. The information flow is an order of magnitude greater than any other investment we have in our portfolio. Staying on top of this information, and synthesizing it, has required enormous effort—probably the equivalent of a full-time job. We have made this commitment, but suspect few others have. As a result, we believe we are in a position to see the image in the mosaic while others are still looking at bits and pieces of tile. This has felt particularly true over the last 18 months or so. We continue to see a host of positive developments on the horizon; other investors do not seem to be aware of them, or do not sufficiently appreciate their significance. It is rare in investing to have an information advantage; we will stay attuned to its continued presence and magnitude.

If we use a stoplight analogy, two of these three factors—price-to-value and information advantage—would be “green”, with one—absolute size/value at risk—“yellow”. At the moment, this leads us to hold our AST position rather than trimming. We will continue to update our thinking as we receive new information.

Upcoming Milestones

AST continues to be a rapidly developing business. In the coming quarters we will be watching for the following milestones as measures of progress toward our thesis.

1.    FM-1 shipment and launch

2.    FM-2 + Block 2 launches every 1-2 months

3.    Verizon definitive commercial agreement

4.    FirstNet investment and commercial agreement

5.    Further military demos/testing, demonstrating 120 Mbps when using 40MHz of spectrum

6.    Golden Dome awards

7.    AT&T, Verizon, Vodafone, and Rakuten beta test results in late 2025

8.    Execution of additional definitive commercial agreements with prepaid revenue from Bell Canada, Telefonica, Saudi Telecom and more than 50 other global MNOs

9.    Securing $500+ million of EXIM/IFC non-dilutive financing

10.    FCC 5G Fund grant

11.    Expansion of existing DOD contacts and new contract wins

12.    Potential strategic partnership with Apple and/or Blue Origin/Amazon/Bezos

13.    Additional spectrum unlocks/SiriusXM strategic partnership/EchoStar spectrum sharing deal

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