Satellite Communication Startup Bets on Direct Communication with $1 Billion Convertible Bond

AST SpaceMobile, Inc. (NASDAQ: ASTS) on February 17 entered into a trust agreement with U.S. Bank Trust Company providing for the issuance of up to $1.0 billion of 2.25% convertible notes due 2036. The agreement specifies interest payment terms, conversion into common stock and early redemption provisions.

In its Form 8-K filing, the company detailed the need for additional capital to support large-scale production and launch of its Block 2 satellites, its $550 million Ligado frequency transaction and loan facilities with UBS and Sound Point. It also warned of complex business and financial risks including regulatory and litigation uncertainties, competition from Starlink and others, and its multi-voting share structure.

The same filing reported a share-withholding transaction to cover tax obligations arising from the vesting of restricted stock units (RSUs) granted to Chief Accounting Officer Bernal Maya, clarifying that this event differs from voluntary open-market trading.

Around February 20, AST SpaceMobile added $75 million of notes, bringing the total issuance to $1.075 billion of 2036-maturity convertible debt. The announcement triggered heightened short-term volatility, with significant swings in the stock price and trading volume before and after the offering.

Earlier, in October 2025, the company disclosed a strategic partnership with Verizon under a space-based cellular service agreement designed to extend the U.S. communications network into space.

AST SpaceMobile is a U.S. satellite-communications firm building a space-based cellular broadband network that enables standard smartphones to connect directly to satellites without specialized handsets. To support large-scale deployments, it has signed multiple launch agreements with SpaceX and is preparing to expand its constellation.

The so-called direct-to-cell market, which links satellites directly to mobile phones, is attracting global telecom operators and space companies targeting non-terrestrial networks in the post-5G era. Success in this sector will hinge on initial investments in the hundreds of millions of dollars and on obtaining spectrum and satellite regulatory approvals in key markets.