AST Attempts To Bring 5G From Space: What To Know About The SPAC Deal

Another space-related SPAC deal was announced Wednesday morning, with space mobility company AST & Science LLC announcing a merger.

The SPAC Deal: AST announced it's merging with New Providence Acquisition Corp NPA.

The deal is being done at a post-transaction enterprise valuation of $1.4 billion. Investors in the PIPE include Rakuten, Vodafone Group VOD, Samsung, American Tower Corporation AMT and UBS Group UBS.

The merger is expected to close in the first quarter of 2021, with shares trading under the new ticker "ASTS" on the Nasdaq.

Existing shareholders of New Providence Acquisition will own 16% of the company. AST founder Abel Avellan will own 43% of the new company.

Related Link: Why Virgin Galactic’s Stock Could Rocket Higher On NASA Deal, Upcoming Flight Launch

About AST: The company is attempting to build the first and only space-based cellular broadband network accessible by mobile phones. Existing satellite networks require physical devices to connect to the service.

The company is targeting the $1-trillion global mobile wireless service market. There are over 5 billion mobile phones that move in and out of coverage.

Around 51% of the global population does not have mobile broadband, according to the company. AST said it has a built-in customer base “ready to be turned on.”

The company does face concerns from NASA, which objected to the company's satellite launch proposal, saying it could lead to catastrophic collisions.

T-Mobile and Verizon also voiced concern about AST’s satellites interfering with existing networks.

Growth: Vodafone is the No. 1 mobile provider outside of China. American Tower is the largest global tower provider, which gives the company two key large global partners.

Vodafone, which has 610 million customers, has an agreement with AST that will split revenue 50-50.

AT&T Inc T, which has 171 million customers, also has an agreement with AST. Telefonica TEF, which has 344 million customers, has signed a MOU with AST.

Blue Origin and SpaceX are listen in the presentation as potential launch partners.

The company’s Phase 1 plans for the launching of 20 satellites in equatorial regions targeting 1.6 billion people. The company will launch 168 global satellites for the European and North American markets at a later time.

AST joins Virgin Galactic SPCE and Momentus, which is merging with Stable Road Acquisition SRAC, among space companies using the SPAC route to go public.

Financials: AST is several years out from having significant revenue. The company sees nine million subscribers in the year 2023. AST said it expects to have 373 million subscribers by 2027.

The average revenue per user is seen at $1.68 in 2023 and growing to $2.15 in 2027, with more mature market regions targeted.

Revenue forecasts call for the company to post revenue of $181 million in 2023. Revenue is expected to grow at a compounded annual growth rate of 107% from 2024 to 2027, going from $1.07 billion to $9.66 billion.

In the long run, the company believes it can produce EBITDA margins of 90% as it ramps revenue up quickly.

Price Action: Shares of New Providence Acquisition were up 10.27% at $11.38 late in Wednesday's session.