Due Diligence Capital Notes

When a company files a prospectus to issue new shares, the obvious assumption is that it is raising cash. That is what prospectuses are for. But AST SpaceMobile's 424B5 filing from November 14, 2025 describes something different: 381,990 new Class A shares issued to spectrum holders Ligado Networks LLC and One Dot Six LLC, with the company explicitly receiving zero cash proceeds. Not "minimal" proceeds — zero.

So why issue shares at all? Because ASTS is in a race. It is trying to build what it calls "the first and only global Cellular Broadband network in space to be accessible directly by everyday smartphones (2G/4G-LTE/5G devices) for commercial use." The most precious ingredient in that project is not money alone. It is radio spectrum — the specific slices of the electromagnetic spectrum that regulators license for wireless communication. Getting access to 45 MHz of lower mid-band L-band spectrum, even at the cost of equity dilution, may be one of the most consequential moves the company has made.

What Is L-Band Spectrum and Why Does ASTS Need It?

Radio spectrum is the invisible infrastructure of wireless communication. Every LTE byte you download, every voice call you make, travels over a frequency band that someone — a telecom operator, a satellite company, a government agency — has been licensed to use. Not all spectrum is equal: lower frequencies travel farther and penetrate buildings better, which is why they are fiercely competed for.

L-band refers to a range of frequencies between roughly 1 and 2 GHz. It sits in what engineers call the lower mid-band — not so high that signals attenuate quickly, not so low that data capacity is severely constrained. For satellite-to-ground communications it has a long pedigree: Inmarsat, the satellite operator that received the bulk of ASTS's cash payments, has used L-band for maritime and aviation communications for decades.

AST SpaceMobile needs spectrum for one specific reason. Its BlueBird (BB) satellites are engineered to communicate directly with standard smartphones — the same 4G LTE and 5G handsets that billions of people already carry. For that to work, the satellites must broadcast on frequency bands that cellular devices are already tuned to receive. L-band fits that requirement. Securing 45 MHz of it across the US and Canada is not a marginal upgrade for ASTS — it is a foundational prerequisite for commercial service.

How the Ligado Deal Actually Works

The transaction is a three-layer structure. The stock issuance at the center of the November filing is only one piece.

The bankruptcy acquisition. Ligado Networks — a company that had held L-band spectrum licenses in the US and Canada for years but never successfully commercialized them — filed for bankruptcy. AST SpaceMobile negotiated a deal during the restructuring, and the Bankruptcy Court approved it on June 23, 2025. Under the arrangement, AST gained rights to use up to 45 MHz of lower mid-band L-band spectrum.
The cash layer — the Sound Point credit facility. Raising $550 million is not trivial for a pre-revenue satellite company. ASTS accomplished it through a $550 million non-recourse senior-secured delayed-draw term loan — a specialized credit facility where "non-recourse" means Sound Point Capital, the lender, has claims only against specific designated assets rather than AST's entire balance sheet. This facility closed July 15, 2025. Of that $550 million, $420 million was wired to Inmarsat — which held prior claims on the spectrum — on October 31, 2025. A further $100 million is due March 31, 2026, and $30 million is due at regulatory closing.
The ongoing equity payments — what the November filing is actually about. Beyond the upfront cash, AST owes a minimum of $80 million per year in ongoing spectrum access fees to Ligado. Rather than paying those fees in cash — liquidity that ASTS needs for satellite manufacturing and launch campaigns — the company negotiated the right to pay in stock. The November 14, 2025 prospectus covers exactly that: 53,093 shares settling $4,081,310 in Q3 2025 L-band fees, and 328,897 shares covering L-band fees for Q4 2025 and full-year 2026, plus $4,825,667 for Crown Castle spectrum access in 2026. Total shares issued: 381,990. Total cash ASTS received: zero.

There is also a warrant layer. As part of the original deal, ASTS issued 4,714,226 penny warrants — warrants exercisable at $0.01 per share — to Ligado, subject to a 12-month lock-up from March 22, 2025. At the filing's reference price of $61.44 per share, those warrants represent roughly $290 million in equity value handed to Ligado at nearly no cost. This is another form of consideration that preserves ASTS's cash at the expense of dilution.

The BlueBird Constellation Roadmap

Spectrum is the license. Satellites are the infrastructure. Here is where AST's capital requirements become concrete.

The company's 424B5 prospectus lays out a three-stage constellation build:

25 BB satellites (5 Block 1 + 20 Block 2): This is the threshold for non-continuous SpaceMobile service — meaning a subscriber's phone connects when a satellite passes overhead but coverage gaps exist between passes. This is the critical first commercial milestone. As the prospectus states, ASTS believes "the operation of a constellation of 25 BB satellites will enable us to potentially generate cash flows from operating activities to further support the buildup of the remaining constellation."
45–60 BB satellites: The threshold for continuous coverage across the US, Europe, and Japan — a persistent connection at all times, similar to how terrestrial cellular works.
~90 BB satellites: Full global continuous coverage — the long-term endgame.

Each Block 2 satellite costs between $21 million and $23 million to manufacture. Launch agreements covering 60+ Block 2 satellites are already in place for 2025–2026 campaigns. Do the arithmetic: 60 satellites at $22 million average is $1.32 billion in manufacturing costs alone, before launch fees. The company is direct about the implication: "We will need to raise significant additional capital for operating and capital expenditures to design, assemble and launch our Block 2 BB satellites."

Paying spectrum fees in stock rather than cash is one practical answer to that constraint. Every dollar not spent on Ligado access payments is a dollar available for satellite manufacturing.

The Equity Overhang: What the Share Count Actually Looks Like

As of this filing, Class A Common Stock outstanding stands at 272,363,884 shares. But that number understates the full potential share count considerably.

Founder Abel Avellan holds all 78,163,078 Class C shares, each carrying up to 10 votes per share prior to a defined Sunset Date. This dual-class share structure — a setup where one class of shares carries disproportionate voting power — gives Avellan effective strategic control regardless of what outside shareholders think. That is common in founder-led technology companies, but it means minority investors have limited recourse on major capital allocation decisions.

Beyond that, three series of convertible notes — bonds that holders can swap into equity at defined prices rather than receiving repayment in cash — are outstanding:

2.375% notes due 2032: up to 7,978,125 shares issuable on conversion
4.25% notes due 2032: up to 1,852,675 shares issuable on conversion
2.00% notes due 2036: up to 11,942,175 shares issuable on conversion

Convertible notes carry below-market interest rates because the conversion option gives holders equity upside if the stock rises above the conversion price — investors accept less yield in exchange for optionality. For ASTS, they are a way to raise debt capital at lower cash interest cost, at the price of potential future dilution. Combined with the penny warrants, any ATM equity program, and ongoing stock-based spectrum payments, the fully diluted share count runs well above the headline 272 million. Whether that dilution is accretive — meaning each new share issued grows the underlying asset base faster than it divides ownership — depends entirely on execution.

What Could Break This Thesis

Regulatory approval failure on the Ligado spectrum. The entire spectrum usage rights transaction is conditional on satisfactory regulatory approvals. The FCC's treatment of L-band spectrum has been contentious — Ligado faced significant pushback from GPS stakeholders who argued its signals interfered with navigation systems. If regulatory approvals are denied or delayed, ASTS could find itself having committed $550 million, much of it already wired to Inmarsat, to spectrum it cannot legally operate on a commercial basis.

Capital raise failure during constellation buildout. ASTS has been explicit in its filings that it needs substantially more capital than it currently holds. If equity markets cool, if the stock falls materially, or if institutional confidence wavers, the ability to fund the remaining Block 2 manufacturing and launch campaigns erodes. Canceling launch agreements triggers termination fees, which creates a destructive feedback loop between financial stress and operational capability.

Shareholder dilution reaching a tipping point. The fully diluted share count — factoring in penny warrants, three convertible note series, ongoing stock-for-spectrum payments, and incentive plan awards — is meaningfully larger than 272 million. If the stock declines sharply, the mechanisms that make dilution tolerable (accretive issuances at high prices) stop working, and the capital table becomes a liability rather than a tool.

Satellite launch and manufacturing delays. Deploying 60+ Block 2 satellites across multiple launch campaigns in roughly 24 months is an extraordinarily demanding industrial schedule. Novel satellite designs, launch vehicle availability, and international regulatory clearances for orbital slots each represent a potential chokepoint. Every month of delay is a month of cash burn without commercial revenue to offset it.

Conclusion

AST SpaceMobile's November 2025 share issuance — 381,990 shares, zero cash received — is easy to dismiss as routine equity dilution. It is actually a window into how the company is solving a genuinely hard capital allocation problem: build a constellation of roughly 90 satellites costing $21–23 million each, while simultaneously locking up the spectrum rights that make those satellites commercially useful to mobile network operators and their subscribers.

The logic of paying spectrum fees in stock rather than cash is sound, provided the stock itself holds value and the satellites actually get into orbit. What I find myself tracking is not the share issuances at all — it is the trajectory toward that first 25-satellite threshold. ASTS's own prospectus describes that milestone as the point where the company might begin generating cash flows from operations. If that transition happens, the character of this investment changes fundamentally: from a pre-revenue, dilution-heavy buildout story to a nascent cash-generating network with a clear path toward continuous global coverage. The Ligado spectrum deal is a bet that the former eventually becomes the latter.