ASTS vs. VSAT: Which Satellite Stock Has the Edge in Mobile Broadband?

AST SpaceMobile, Inc. ASTS and Viasat, Inc. VSAT are two leading communications services providers that focus on expanding broadband access via satellite. AST SpaceMobile is building the world’s first and only global cellular broadband network in space, accessible directly by standard smartphones (4G-LTE/5G devices) for commercial and government use, leveraging its extensive Intellectual Property and patent portfolio. The SpaceMobile Service is provided by a constellation of high-powered, large phased-array satellites in low Earth orbit (LEO) using low-band and mid-band spectrums controlled by Mobile Network Operators (MNOs) in areas lacking terrestrial network coverage.

Viasat operates a fleet of GEO (geostationary) satellites to provide high-speed, high-capacity Internet access, especially in areas where traditional terrestrial broadband service is unavailable. With an expansive field of vision, enhanced satellite productivity and flexible bandwidth economics, the GEO satellites provide solutions for various sectors like aviation, maritime, defense and enterprise, including IoT applications. 

Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.

The Case for AST SpaceMobile

AST SpaceMobile has deployed its first five commercial satellites (dubbed Bluebird) in LEO, marking a key advancement in developing a space-based mobile network infrastructure. These satellites have the largest-ever commercial communications arrays spanning 693 square feet. They offer non-continuous service across the United States using more than 5,600 cells within the premium low-band spectrum. The company boasts a diverse portfolio of more than 3,650 patents and patent-pending claims worldwide for the direct-to-cell satellite ecosystem from space to Earth. 

The SpaceMobile service is compatible with all major brands available in the market and connects directly to everyday mobile phones. It is based on a novel technology that delivers broadband connectivity from space to unmodified mobile devices, providing a service to fill cellular coverage gaps in a differentiated approach compared to other space-based communication services. AST SpaceMobile has partnered with leading carriers such as AT&T Inc. T and Verizon Communications Inc. VZ to tap into a pre-existing pool of cell customers and avail funds to help build a worldwide satellite network. This has enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.

However, unfavorable macroeconomic conditions, including rising inflation, higher interest rates, capital market volatility, tariff imposition and geopolitical conflicts, are negatively impacting the company’s operations. These have led to continued fluctuations in satellite material prices, resulting in increased capital costs and pressure on the company’s financial performance. In addition, AST SpaceMobile faces severe competition from existing and new industry leaders like SpaceX’s Starlink and Globalstar, which are developing satellite communications technology using LEO constellations. To combat such competitive pressure, ASTS has to continuously customize its network offerings, enhance the cost-effectiveness of its products and services and boost the satellite data networks, which increases operating costs and reduces margins.

The Case for Viasat

Viasat is ramping up investments in the development of its revolutionary ViaSat-3 broadband communications platform, which will have nearly 10 times the bandwidth capacity of ViaSat-2. These satellites will be capable of covering one-third of the world, including all of the Americas. The second ViaSat-3 will cover the Europe, Middle East and Africa region. The ViaSat-3 platform will help form a global broadband network with sufficient network capacity to allow better consumer choices with an affordable, high-quality, high-speed Internet and video streaming service. In a nutshell, Viasat has garnered enough economics of scale and scope to serve vast emerging markets in South America, Africa, the Middle East and Western Asia. Hence, the momentous market traction of ViaSat-1 and ViaSat-2 satellites, coupled with strategically planned ViaSat-3 satellites, is likely to provide the company with a solid competitive edge over its peers.

Viasat’s Satellite Services business is progressing well with key metrics, including ARPU (average revenue per user) and revenues, showing impressive growth. ARPU is growing on the back of a solid retail distribution network, which accounts for a rising proportion of a high-value and high-bandwidth subscriber base. Furthermore, the growing adoption of in-flight Wi-Fi services in commercial aircraft is proving conducive to business growth. Viasat’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models. Viasat has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, which makes it believe that mobile broadband will act as a profit churner with a significant improvement in in-flight connectivity (IFC) revenues.

However, Viasat operates in a dynamic and competitive market, owing to which it has to continuously customize its network offering as per client needs, enhance the cost-effectiveness of its products and services and boost the satellite data networks. Increased competition leads to price reductions, reduced margins and loss of market share, which hurts the operating results. Viasat’s satellite business is affected by the seasonality of demand due to traditional retail selling periods. In addition, a highly complex technology increases the operating risks. For instance, problems associated with the power sub-systems, control sub-systems and degradation or unforeseen anomalies in space can pose material threats to profitability.

How Do Zacks Estimates Compare for ASTS & VSAT?

The Zacks Consensus Estimate for AST SpaceMobile’s 2025 sales implies year-over-year growth of 1314.6%, while that of EPS suggests a decline of 51.5%. The EPS estimates have been trending southward over the past 60 days.

The Zacks Consensus Estimate for Viasat’s 2025 sales implies year-over-year growth of 2.7%, while that for EPS indicates a decline of 181.2%. The EPS estimates have been trending southward over the past 60 days.

Price Performance & Valuation of ASTS & VSAT

Over the past year, AST SpaceMobile has gained 325.1% compared with the industry’s growth of 32.2%. Viasat is down 4.2% over the same period.

Viasat looks more attractive than AST SpaceMobile from a valuation standpoint. Going by the price/sales ratio, Viasat’s shares currently trade at 0.43 forward sales, significantly lower than AST SpaceMobile’s 76.3.

ASTS or VSAT: Which is a Better Pick?

AST SpaceMobile carries a Zacks Rank #4 (Sell), while Viasat carries a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Both companies expect their sales to improve in 2025. Viasat has shown a relatively steady revenue growth for years, while AST SpaceMobile has been facing a bumpy road. In terms of price performance, AST SpaceMobile has outperformed Viasat. With long-term earnings growth expectations of 26.8%, AST SpaceMobile is relatively better placed than Viasat, despite a less attractive valuation metric.

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This article originally published on Zacks Investment Research (zacks.com).

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