Can ASTS Gain From Successful Direct-to-Cell-Services Test in Canada?

AST SpaceMobile, Inc. ASTS has successfully tested space-based direct-to-cell 4G voice over LTE (VoLTE) call, video call, broadband data connectivity and video streaming services in Canada in association with BCE Inc.’s wholly owned subsidiary Bell Canada. The trial, conducted through the Bell Fibe TV app on a standard, unmodified smartphone over a local wireless network, underscores the importance of seamless connectivity across Canada's most geographically challenging areas, from northern communities to remote coastal regions. 

This is likely to pave the way for Bell Canada to deploy low Earth orbit (LEO) direct-to-cell service in 2026, boosting regional tourism facilities and enabling residents to stay connected from virtually anywhere in the country. The test also included SMS messaging and emergency alerts using Bell's powerful low-band spectrum, supporting vital emergency response services, and improving remote operations in the mining, forestry, agriculture and energy sectors. This, in turn, is expected to enhance the country’s economic growth, providing the backbone for critical data and enabling new efficiencies for business enterprises.

ASTS Builds on Partnership With Leading Carriers

Similar to Bell Canada, AST SpaceMobile earlier 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 raise funds to help build a worldwide satellite network. With AT&T, ASTS has entered into a definitive commercial agreement, extending until 2030, to offer a space-based direct-to-mobile technology that complements and integrates with the former’s mobile network. This approach aims to provide customers with connectivity in locations previously deemed unreachable, enhancing AT&T’s industry leadership in utilizing emerging satellite technologies.

ASTS also collaborated with Verizon, which made a $100 million commitment for satellite direct-to-cellular service for its customers. The deals enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.

ASTS Buoyed by Bluebird Satellite Deployments

AST SpaceMobile is reportedly on track to deploy about 45-60 satellites in orbit by the end of 2026. The company has already 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. 

This achievement follows the success of the company's in-orbit BlueWalker 3 satellite, creating a space-based cellular broadband network that can directly link with mobile devices, eliminating the need for ground-based infrastructure. By expanding its connectivity to remote areas, AST SpaceMobile aims to ensure that more people have access to vital communication services.

Price Performance

AST SpaceMobile has gained 230.6% over the past year compared with the industry’s growth of 36.4%. It has also outperformed its peers like Aviat Networks, Inc. AVNW and Comtech Telecommunications Corp. CMTL over this period. While Aviat has declined 1.2%, Comtech fell 37.7% over the same period. 

One-Year ASTS Stock Price Performance

ASTS Plagued by High Operating Costs

Despite the uptrend, AST SpaceMobile has been adversely impacted by unfavorable macroeconomic conditions, including rising inflation, higher interest rates, capital market volatility, tariff imposition and geopolitical conflicts. 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 has to continuously customize its network offerings, enhance the cost-effectiveness of its products and services and boost its satellite data networks to remain ahead of the competition, which results in higher operating costs.    

Due to high infrastructure setup costs and research and development expenses for highly sophisticated satellite technology, AST SpaceMobile expects significant expenditures in the upcoming months for building and launching the next crop of satellites in tune with its expansion plans to serve the full spectrum of U.S. subscribers.  

Estimate Revision Trend of ASTS

The Zacks Consensus Estimate for AST SpaceMobile for 2025 and 2026 has widened 92.2% and 108.8%, respectively, to a loss of 98 cents and a loss of 71 cents per share over the past year. The negative estimate revision depicts pessimism about the stock’s growth potential as investors remain skeptical about the success of its business model.  
 

End Note

The collaboration with leading carriers is seen as a pathway to unlocking the potential of space-based cellular broadband, promising seamless, reliable service across the continental United States and Canada. The successful launch of the Bluebird satellites will likely transform network connectivity and help bridge the digital divide, significantly expanding its global presence and enhancing AST SpaceMobile’s capabilities in providing ubiquitous connectivity.

However, with a Zacks Rank #3 (Hold), AST SpaceMobile appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. The downtrend in estimate revisions further portrays skepticism about the business model. Consequently, it might not be a prudent investment decision to bet on the stock at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

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

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