Q1 2022 AST SpaceMobile Inc Earnings Call
[music].
Good day, and thank you for standing by and welcome to the ASC space Mobile 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 with New ski Chief strategy Officer of Asps space mobile.
Please go ahead.
Thank you and good afternoon, everyone. Let me refer you to slide two 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 could 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 <unk> 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 Ft space mobile 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 of Bell Avalon and our new Chief Financial Officer, Shawn Wallace the call as well.
Over to you.
Thank you Scott.
For those of you who may be new to our company I want to take two minutes.
To displaying our nation on what is actually what we're doing is to spend more we'll build in the first and only <unk>.
Cellular broadband network in this space to operate directly lead to standup modifying mobile devices.
Based on our extensive IP and patent portfolio.
Our engineers on a space scientists on our mission to eliminate the connectivity gaps.
Faced by today's 5 billion mobile subscribers and finally bring broadband to resilience.
He will remain connected.
We believe this to be a very large opportunity and allowed us to participate in the one 3 million.
Annual wireless service market.
While it has been only.
Six weeks since our last public update we have made strong progress on I would like to take you through that now.
Yes.
Turning to slide four technology and Industrialisation update.
We're on target for our planned Blue Orca three summer launch.
Preparation for these milestone we have complete completed over 700, we will complete test to date.
Once in orbit, whereas baked into their 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, Maryland, Colo and Australia.
Ready to support rural country post launch operations.
We're also put it in breakdown of stations on approvals to support the plan, we welcomed three soma launch, including the FCC experimental license, which was recently granted by the FCC.
We are on target for the completion during 2022 of our essential production facility side too in takes us to support our target of up to six satellites per month.
We had increased to more than 2300 patents and patent pending claims supporting strong and expanding competitive advantage.
Turning to slide five business update.
We have successfully added new Mou with globe Telecom, operator in Philippines, with $86 8 million subscribers.
We then we have now more than $1 8 billion subscribers represented by mobile network operators.
We who we have agreements on Mou's.
We recently received an FCC experimental license for global country space to ground testing in the United States using three DPP low band spectrum and <unk> band frequencies.
And also recently, we have added a 75 million committed equity facility with B Riley that provides safety 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 said worsen for all his time on a per billing as display mobile over the last five years.
We have work over the last six months to find the best partner for the next phase of growth to the company.
And I'm now happy to introduce Sean Wallis, our incoming Chief financial Officer.
He brings to the team.
Deep telecom financial and capital markets experience to.
To be added to the team to support our future growth.
With that let me turn to chart no.
Thanks, <unk> sorry about that.
Good afternoon, everyone.
And I wanted to share my excitement about joining the <unk> team.
As an experienced telecom CFO and banker the work I did understand the ASC story continue to lead me to conclude that this project.
It's global ambitions as.
Has the potential of making a large and profound impact on the world connectivity ecosystem by solving what is probably the most critical problem facing the mobile industry today, providing.
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.
I was comforted by the significant strategic sponsorship of leading telecom companies, such as Vodafone American tower in Rakuten.
He was impressed by how quickly. This team has developed relationships with leading msos across the globe that have more than $1 8 billion subscribers in total.
And as we have discussed today on this call I have to contract congratulate the team on its continued progress towards meeting important milestones, which indicates a strong execution capability.
I want to provide an update on our 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.
Key innovation proposed by ASD is the development of an industrialized procurement and manufacturing process for our planned satellite fleet.
Historically satellites have been manufactured one at a time and job shop facilities.
AFC is developing a state of the art Assembly line process designed to enable ASC to scale the procurement of parts lower assembly cost and materially speed up the volume of production. These efforts are expected to enable <unk> to lower the cost of a satellite and enable the company to meet its goal of <unk>.
Ultimately building up to six 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.
<unk> has made progress in Reconfiguring, its new Texas AIG facility designed to house, the satellite Assembly and test line.
The company has retrofitted and remodeled the facility built to clean room for critical assembly processes and the facility is now ready to house and support inventory from your manufacturing as well as the assembly and testing line.
Our efforts to integrate an ERP system to support our inventory management and manufacturing process continues 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 billion 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 noncash 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 cost and other research and development and engineering expenses as we ramp up the development and infrastructure investments to support the Bluebird one program.
For the first quarter, we made capital expenditures of $21 6 million, which includes a payment to Spacex for Bloom Walker three technical adjustments in connection with the previously disclosed Spacex multi launch services agreement.
As mentioned earlier, we have substantially completed assembly and testing for Blue Walker <unk> III and are turning our investments towards the production of our Bluebird satellites and with that I'll turn it back to Scott.
Thanks, Sean.
Before we go to the queue of analysts' questions, we'd like to address a few other questions submitted ahead of the call by our investors operator could you. Please start us off with the first question.
Thank you Brian from Turan. So ask when will you know definitively that the technology actually works or space.
Thank you Brian .
The question after we launch we expect to winning a week within an hour or two.
I don't know why we were successful launch.
Bought into the OIBDA, we are expecting ASP.
After that.
We will wait for the right timing.
Two basically deployed decide language to basically open the satellite into final configuration that would that would be within a week or two after the launch.
That's obviously a major issue.
Yes.
Face.
And it's something that we will know within a week or two.
The launch.
After that we go through a six months process of testing with the operators, we have selected locations around the globe.
In the U S Europe .
South America, and Asia, including Japan.
We'll be doing testing.
With the selected.
Telecom partners.
Thank you Christopher from Florida as is.
VW three sales will be one serve as the next test satellite to continue optimizing the 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 a bridge on the thing to look at three.
Satellite across many of resistance and we have conducted extensive testing to position the spacecraft.
Success in orbit.
Our Blue Square program had been advancing alongside the built in peso Walker three.
Anticipate that our next launch after we will cut it would be a blueberry satellite incorporating.
The many lessons on advancements that we learned during the debate will continue.
Our plan is that our production sadly face will continue to advance with the launch of <unk> satellites are currently planned.
Even in the event.
Any complication, Louisville, Kentucky, which we don't anticipate.
But the next satellite would be able to welcome three followed by a <unk> one.
Thank you Rick from another Linzess.
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 deal terms.
Bell why don't I take this.
Yes, the agreement, we will head to toe.
Thanks <unk>.
The agreement with B Riley provides us with access of up to $75 million of additional.
Quiddity through a committed equity facility.
It's accessible over 24 months.
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.
Period. This is a tried and true an extremely efficient way of raising incremental capital.
And it's really a function with our lineup of maintaining regular and diverse access to various capital markets.
While preserving our existing cash for building, our Bluebird Blue bird production satellites.
It's highly flexible, but I 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 launches throughout the year.
Together with the development of our satellite for.
For us it's critical to be able to launch multiple satellites on a single launch we have done so based on on on multiple launch vehicles. So in order to be launched agnostic.
Which allowed us to have access to multiple providers in order to give us flexibility.
Yes.
We can ramp up production, we expect that we would be using large loans.
Launch vehicles that can support multiple blueberry satellites.
Yes.
Sure.
We are very encouraged by the many large launch vehicles out on commenting too into service from a Spacex and other.
Another launch providers.
Okay.
Thank you Steve from Arizona.
Apply chain problems have been creating that big 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 the supply chain is obviously something very important.
We are actively engaged with third party vendors to secure our supply components and materials for glu.
Satellites.
We had we had agreements for all the major subsystems for the constellations.
Have I will continue to invest in all the long lead items that we that we require for the system. We have also.
Or mitigate the risk of supply change by using using Sba's and see some that are configurable and available now.
We will we feel that we can continue to execute on our plan despite any potential supply chain issues.
Thank you Steve from Arizona asked our neon gas shortages caused by the Russian invasion of the Ukraine.
Using any concerns about semiconductor availability needed for the Bluebird builds.
Yes.
<unk> said before were basing our satellite based on on FBA, which are basically configurable and flexible.
So we are not exposed to a potential market of semiconductors delayed.
<unk> ones, which are widely available in our own chips will be based on using TSMC technology.
For our Asics. So the first bluebird ones would be based on SBA recycling 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 analysts questions now.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question of course the pound key.
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 youre thinking about the timing for raising capital given the rising rate environment and then.
Yes, a little bit separately, if you could share any additional specificity around timing for the Blue Walker relaunch 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, Brian .
Jonathan.
Got it.
Brian I guess I'll take the first question on the use of equity in the use of equity versus other capital I think for us and 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 small pieces.
<unk> and <unk>.
Sean alluded to other other sources of capital to so for US. This is a flexible tool. It's something we can use at our election and thats something that we want to we want to use to make sure. We can preserve our capital $255 million.
At quarters end for Bluebirds. So I think this is a good thing to have in our back pocket and we'll use that as we see fit and other small pieces of capital. This year are also available to us.
The second question I think was on Blue Walker III timing specificity, all I'll give a little bit of clarity on that.
Way to think about our timing Brian .
The satellite needs to leave for the launch pad call. It after four.
Four weeks before we before we launch you can go a little tighter, but thats, how we how we think about our internal planning.
Work towards that.
Satellite is going through final testing.
And felt comfortable reaffirming our summer timeline, we're not waiting on any parts of sub systems at this point.
And 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 very detailed very technical launch check Westin and we're doing that.
Our highest priority of the company right now so for US we look forward to updating everybody in due course, but we will.
We reaffirm our summer timeline.
And then 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 Bill mentioned side too.
We're working towards the goal of getting those two facilities and our supply chain to deliver up to six satellites of month end and Thats. The goal that we have to achieve for 2023, so for US we're racing towards that goal.
Our intent will be to ramp up to that level during 2023, and thereafter 'twenty 'twenty four is a very important here and the scale of the constellation and.
Global coverage.
Thanks, Scott when would we expect the first.
Blue birds to be launched actually.
So we are we're starting <unk>.
Structure of those this year on top of the investments that we're making now.
And we haven't announced yet in 2000 2031, when we plan to launch our first one.
Okay. Thanks very much.
Yes.
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.
Yes.
<unk>.
First question.
You rollout the testing on.
Robert the Bluebird satellite.
Do you have to invest in terms of Capex and what is the staging to build out the sort of gateway infrastructure.
For testing.
Great.
Are you referring to gateway for Glu Walker deal gave us for the call installation.
Just for Blue Walker.
Okay, So Paul Walker basically.
We have three ground control centers, Maryland.
Colorado in Australia.
And then we have approximately 20 gateway stations.
Are pretty much getting online as we speak.
To basically get access to to this space.
Telemeter controllers reasons.
And then we have.
You know, we recently got the SEC.
Approval for our testing so we have gained with hearing Midland adding Hawaii.
For accessing in the United States, our QM be.
Gateways and also we have been assigned for the spectrum.
Okay.
For the testing directly to the cell phones.
Truly fair amount of license that we just got.
So all of that is on time.
For our planned launch.
The Soma.
Ron.
It will be it will be designed to basically the broadband capability the regulatory handset using our next satellite launch.
Got it and can you remind us as you move to the bluebirds, who handles that.
Ground station Capex is that.
Fronted by your partners or is ASP responsible for that spending.
Yes, we had an agreement with.
Wade.
American tower four four.
Probably not.
Carrier neutral locations, where we actually place the gateways.
Typically the gateways capex.
The <unk> the court declaration of all of that it is actually part of the agreement to be fulfilled by the operator.
We will install the actual gateways.
The antenna.
Typically in a fairly neutral location.
Either on by American tower or on Bye Bye Bye bye bye the operator itself.
Okay.
Great.
<unk>.
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 a fully operational.
FCC approved usage of the spectrum.
Yes.
We have our filings on the ICU and then they're not every country provide.
They are on.
Approvals for the use of our spectrum.
The use of the cellular operators spectrum.
So in the case of United States, we have the gateways that will be co located in.
American tower locations.
<unk> gateway.
They are sub.
Subject to their own license.
Using satellite spectrum.
B.
Q rebound in order to connect from the gate was up to the satellite and then and then we will work with our partner.
Operator, with our partner center operator.
Our spectrum in the areas, where they don't have the respect to deploy that the basic the basic setup.
That is.
We have been doing.
Very actively.
In many countries starting with the countries that will be first in operations.
That seems to be a process of adding a lot of a process that is working for us and we're very encouraged by the very mentor license, we got from from the FCC, but we continue country by country.
Getting these grants for operations of our system.
Yes.
And specific to the Q V band Gateway Peter links.
Relatively new deployment.
Deployment I think.
Echostar is also using that on their Jupiter three what have you done in terms of testing either ground testing we're optimally.
Satellite testing to ensure.
The strength of those feeder links.
Yes.
Yes, just to put it in context, I mean do you feel that links our forward the gateways, you'll get in the United States you need to.
Three for redundancy to add redundancy.
On the cover the coverage area all of this.
These links are very very small.
Few kilometers so Lisa.
They are basically designed where you place your gateways and then you'll get universal coverage through the cellular spectrum.
This one is very attractive.
Because of the amount of capacity that has.
Allowed us to grow significant amount of.
Sandra spectrum into the gateways, where we interconnect to the cellular operators.
We have done.
We have actually installations of these type of gateway.
Yeah.
Alrighty.
We have the equipment that we have procured to basically access the suspect room.
We will continue testing them.
With the launch of <unk>.
The incremental license that we got from the FCC.
Thank you and just if I can one final question.
Due to the Ukraine, where there has been a bit of a.
Short age of access on anti Tau aircraft, which are typically move to used to transport satellites were you planning on using aircrafts corridor.
Given your location in Texas, where you're already planning on using ground transport for the satellites.
No we're planning to use ground ground ground transportation.
The container probably will continue its actually already built.
We will be talking from Midland to Cape Canaveral, It will be one day, one five threep.
We also.
We are in contact with you see the also to brink.
Train.
Rails into the facility.
We plan to connected to train system.
Get.
So we're six satellites per month capability, but at the beginning.
Our baseline launch.
Just on U S launches.
We plan to use ground transportation for that.
Great. Thank you.
Thank you. Our next question comes from Andres Coello Scotiabank you May proceed with your question.
Yes, thank you very much.
I'm wondering if you could comment on how you mou's with wireless carriers all over the world.
We've actually translate into a business opportunity one of the testing.
So over everything.
Everything bodes well how did you translate the Mou for example in Latin America with mainly comprises foreign economic players how do you translate that into a business opportunity or put it differently each dose mou's in Brian obligation by the wireless carrier fluctuated start working with you.
Just any comment around the Mou.
Yes, Okay well base.
The terms of the Mou.
The barrier.
<unk>.
Partner by partner.
Participating MMO by participate in immuno body, but by and large the basically based on our revenue care, where we share the revenue that is being generated by our service inside the operator's network.
So the operator will retain the <unk>.
Retail.
Capability they market they sell the service the advertising services through sending a text message to the user when they use or get out of coverage or by other means in the retail capability. They provide the spectrum, we provide the network and based on that based on his plate on the revenue that is generated by that so.
When we count number of subs that we can access through the Mou when we say we have access to around $1 8 billion subscribers, what we're referring to is that the operators.
We have.
The agreements.
Yeah.
Or mou's, they do have $1 8 billion subscribers and that gave us those subscribers, we've gone accessible to us through these revenue too.
The agreement.
Then they said retail pricing they'll get agreed agreed between us between between the <unk>.
The operators our sales.
That it depends on what the kind of services.
If he is wherever you go plan.
Wherever you're located you get a service.
Through space model that service get price.
At a retail basis based on the country.
And other factors and then you have also the services that are target to serve people that leave on walk in places where there is no connectivity all the time, so the fundamental east 90% of the Earth surface do not have.
Several of broadband.
We'd end up 90% of the surface.
You have hopefully what population.
How sustainable broadband and you have three quarter of a billion people approximately without nothing.
How we capitalize.
These agreements with our immuno through our technology.
Thank you, but just to clarify.
<unk> successful mou's create an obligation.
The carrier to start using your services or.
You can understand needs your stock option at all I mean, when you deliver.
And then once you have your constellation ready.
Is there a clear commitment towards working with fewer cambay steel.
Sure.
Sure I'll take this one so.
Our our commitments and our our agreements in Mou does vary some of them are binding agreements.
But some of them are not the purpose of these agreements of course is to align interests.
<unk> been signing these since 2018 and to ensure that they participate in the development of the technology and regulatory approvals and also thinking through the business side as a bell took took us through.
At this point, though.
We get closer to launching service in each country, there will be <unk>.
Actual agreements put in place typical for for the telecom industry. Those are those are not ones that you saw in years in advance.
They don't generate good terms for the seller of the capacity in that case. So so we have some agreements that are binding.
And the others are our Mou and those are agreements that we want to make them some more definitive commercial agreements with.
Clear pricing levels and cleaner SLA among other terms so that as a next step before we launched 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.
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.
Are you guys 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 you can play in those markets and do you also expect to be eligible to potentially receive any funding from the <unk> program.
Here in the U S.
Okay, well we.
We only see that significant.
Number of other opportunities besides the consumer opportunity. However, we believe that the largest opportunity the <unk> 5 billion people that move in and out of connectivity everyday.
The goal of 1 billion people to live and work in places where there is nothing.
But having said that day's Iot defense on older type of opportunities that are going to be available to us.
Obviously, providing universal connectivity in countries in whole continents.
In areas, where there is not.
Any other means of or connectivity directly to handset, so very very large opportunity.
That goes beyond.
The consumer opportunity.
To your question yes.
Yes, we plan to participate in the program from the FCC.
A.
As it relates to extending <unk> E universally in United States. We do believe that that's an important political countries. There is a lot of political will to make sure that the.
A receipt doesn't get connectivity.
Regardless, where they live or work.
<unk> on a fix type of connections.
A more into what we do which is on our wireless cellular connection. So yes, we do have plans to connect all our models are primarily based on on the.
Retail consumer opportunity, but of course as many other verticals that we will be able to tap as we.
We develop our network.
Just a follow up on that.
Are there any particular use cases that stand out to you as particularly attractive within.
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, Scott here so.
Well said.
So it's a little unique for satellite company to be going after this new market the wireless market and 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 <unk> partners are really key towards.
Many of our <unk> partners are also very good at those other verticals you are talking about they're developing Iot governments enterprise, depending on the company and depending on the region. So there are opportunities that are really strong we have intentionally not highlighted.
Which ones might be best because we want to focus on the mass market opportunity, but but.
And interest is strong strong there we get in.
Inbounds on resiliency, obviously emergency backup and then of course, the fact that our network.
Functions without a terminal remains a real cornerstone of a lot of interest and non interest we get 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 side.
Satellite have and what is the channel sort of size in terms of gigahertz for those those feeder links.
Yes.
We have.
For satellite up to four feeder links.
H feeling is around.
10, gigahertz polarization will have to.
Two polarizations on.
And then on the spacecraft.
And then the down connect down to the game the gateways in country.
Typically.
Depending on the size of the country.
We have between two or three gateways or locations, where we will bring down youll see that links into the core network of the of the operators.
Okay. So just so it's up to fourth links of 10 gigahertz and two polarization.
What type of modulation.
Lego level do you think you can do.
And your feeder links well.
This estimate these signings basically to be inspiring being been former so basically the same modulation that we have.
Coming from the phone absolutely spacecraft, then translated into frequency to bring it down to the gateway So are the classical.
Modulation that you wouldn't see.
On the downlink.
From the spacecraft to the phone for the phone to the to the spacecraft. So there actually is a vampire piece is the same relation that you get on the <unk>.
I'm just wondering what.
So the fear links will have the same.
Modulate so what is that modulation.
Yes.
Yes.
Sure.
Right. So it is deep.
The panel manufacturers.
Is somewhere in that link between three bits per hertz to six weeks per hertz.
Between one five and two bits per hertz on the uplink.
Great.
That's the only thing to feed our link you are saying.
The <unk> is the from the phone into the spacecraft.
Okay, great. Thank you and.
On the.
The Bluebird program.
I don't know, if you reiterate or the expense guidance up top but yes.
Given the <unk>.
Pension issues, we've seen in other parts of the industry.
What gives you the confidence that youre not going to see some amount of inflation come through over time and do you think that there's any reasonable risk of that occurring over the next.
12 24 months.
Well first of all I mean for our technology. We are highly vertically integrated we have control of mostly every component that is in.
In the in the spacecraft from reaction with Minotaur birth flight computers.
The <unk> sale, which is a self contained system.
Our panel.
So our.
We are.
As vertically integrated us, we think makes sense in order to keep cost control of the cost out.
Our cost at this point is very well known.
Not only with the build of the Walker three but this is substantial advancement that we have.
The agreement that we had in place for the provisioning of parts for the for the constellation So on the last call we reiterate.
Our cost basis for Walker for the Bluebird.
Yeah.
Right.
So we we see no change in those but.
But at this point.
So do you see is there any significant risk in your mind to the upside over the next year.
Or are you feel quite confident those expense numbers.
We feel quite confident.
Given where we are on the procurement phase of those spots great.
Great.
And John 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 of the company has discussed.
Matt I think I give an overview of it.
To do this over a call but it's.
I have extensive contacts in the industry as a banker for quite a long time, so I did a lot of industry checks.
Was able to talk with.
Industry experts, who have either been in the industry or analyze the industry.
At a time with a number of wireless operators, who knew about that.
The project.
And.
It was a variety of markets technology regulatory.
Getting to know the team and understanding.
As I see it.
In my career I saw almost 10 or 15 different projects that tried to do something similar but always had a challenge.
A very very expensive.
In custom customer customer equipment to take on the downlink from the satellite and this is an incredibly up.
Yes.
Adding opportunity to do something where you'll be able to go after the entire cellular market and continue to help to 3 billion people around the world, who don't have that gap. So.
A lot of work and discussions with industry people regulatory announced.
It adds et cetera, and maybe very very comfortable.
Exciting opportunity.
Great. Thanks, very much for that color. Thanks for taking the questions.
Thank you and as a reminder, the state question you will need to press star one.
Our next question comes from Griffin Securities.
Securities.
Hey, Thanks for taking my question so thinking on competition link is really the only other player out there at the moment at least that I know of.
And I understand it's a very large market, but are you are you seeing them in the market at all or have they come up in your conversations with with M&A was just any color you could provide on that front.
And then similarly on the M&A front I believe you've said your partnership with Vodafone includes five year exclusivity I was just curious could you remind me does that exclusivity timeline began when commercial service starts.
Sure Hi, Griffin I'll take that so <unk>.
Second one first with Vodafone you're correct that our five year mutual exclusivity and there are 24 different markets around the world that starts at service initiation. So so it was signed years ago, but that five year period start to servicing of initiation.
And in terms of other players.
And then we run into.
We don't really run into other players at this time I think we have had success building the 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 in the mobile network operators who have.
Many of them have bad experiences of satellites historically.
Sorry. This is solving a lot of the problems of the past and so it's one that has always resonated well and you can see that in the and the success we've had adding.
More and more mobile network operators over the last few months.
Whom have.
Over 100 or multiple hundreds of subscribers under their belt today, So I think our opportunity to resonate very well I think as we approach our summer launch and plan for our calculation next year and thereafter.
With the mobile network operators are growing and that's really exciting to see.
But we don't.
When we're working with the mobile network operators are thinking about the opportunity. It's not it's not really one that they are benchmarking against anyone else at this time.
Got it thanks, Scott, that's really helpful and sort of sticking to the msos and jumping back a little bit in time here, but I know Verizon and T. Mobile had filed petitions back at the end of 2020, I think November 'twenty 'twenty Atlas.
To add to the FCC to deny.
Service and to the extent you guys can speak about ongoing conversations or anything like that have you had any progress with either of those two and then now since then I mean as you've been obviously you guys have come to the numerous agreements with other M&A. Since then I don't know if that.
So validated the service to them and if you guys had sort of struck up conversations again at all.
Sure So I think the.
<unk> is around the FCC docket were not unexpected.
More than a year ago now.
Our folks typically lay out their positions relative to where they sit in the market.
We think the U S market supports multiple providers for us for sure and that's something that would want to model approach but.
We have not announced any any conversations with any of those U S providers and.
But I think our solution fits really well.
The U S market in particular is very interesting for our solution given the.
The nature of the country.
The distribution coverage.
Coverage today, so I think.
The big three I'll, certainly have a need for our for ourselves.
Got it okay. That's great. Thanks, a lot for that and then just one more quick one for me.
Sean mentioned earlier that you were substantially completed with the BW III investment and I know on the last business update.
Call you said, we should we should assume a little more than $80 million of around that sort of that so I just wanted to make sure I understood correctly when.
When you say you are substantially completed with that investment does that mean as of right now or at the end of Q1, I'm just trying to get a better sense of why we should assume any additional investment for <unk> from AWS three in Q2 at all.
That was referring to as of today.
Okay. Thanks, a lot thats it for me guys.
Okay.
Thank you at this time I'm 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 of the phone in your pocket today I want to thank everyone for joining both the shareholders and the research analysts for the questions and I hope everyone have a great rest of the week.
Thank you. This concludes today's conference call. Thank you for participating.
You may now disconnect.
Okay.
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