AST SpaceMobile to Go Public Through SPAC Merger Deal With NPA in 2021

Space-based Internet company AST SpaceMobile is gearing up to go public through a reverse merger with New Providence Acquisition Corp. The SPAC raised about $230 million in a September 2019 IPO. The two companies are expected to announce an IPO date after the merger deal closes.

Founded in May 2017, AST SpaceMobile is building a space-based cellular broadband network. The company seeks to offer broadband service from space to smartphones. Currently, AST SpaceMobile has one test satellite in orbit and plans to start commercial launches in 2022. The company expects to have its services up and running by 2023.

AST SpaceMobile is planning a reverse merger with SPAC company New Providence Acquisition Corp. The combined company is expected to have an enterprise value of about $1.4 billion and will have an equity value of about $1.8 billion at closing. The deal will provide the satellite network company with nearly $462 million in gross proceeds. The amount includes about $232 million of cash held by New Providence Acquisition and $230 million in PIPE (private investment in public equity).

In a statement, AST’s chairman and CEO, Abel Avellan, said, “Universal broadband access has become a global necessity, and we are uniquely positioned to leverage our innovative technology solution and efficient business model to democratize broadband cellular access across the globe.” Avellan also said, “Building on the strong investor support we have received in the private markets, we are thrilled to partner with New Providence and transition AST SpaceMobile to a public company, which will solidify our financial profile as we continue to execute on our vision.”

AST SpaceMobile will utilize the funds to build a new mobile network in space. The company claims that this will allow it to deliver cellular coverage to its users without any service gaps. AST’s investors including Vodafone, Rakuten, American Tower, and Cisneros will likely increase their equity holding in the company.

AST SpaceMobile's IPO date hasn't been set, but it could happen in the coming months. Both companies' boards of directors have unanimously approved the merger deal. The business combination will likely close in the first quarter of 2021. The deal is subject to approval by New Providence’s shareholders and other customary closing conditions.

AST SpaceMobile plans to list its stock on Nasdaq under the ticker symbol “ASTS.” On Jan. 15, New Providence stock was up by 0.3 percent at $14.50.

AST SpaceMobile stock is a buy since the addressable market for the company looks massive. AST highlighted that about 51 percent of the world’s population doesn't have Internet on their mobile phone and about 5 billion mobile customers face Internet connectivity issues when moving in and out of a coverage area. The company plans to provide initial connectivity to 1.3 billion customers through existing wireless carriers worldwide and promises to offer coverage to existing phones without the need for advanced hardware.

AST SpaceMobile has partnered with Vodafone to introduce its commercial mobile communications service in 2023. The company plans to rapidly scale its customer base and revenues from 9 million and $181 million in 2023, respectively, to 44 million users and $1 billion in revenues in 2024.