Q4 2023 AST SpaceMobile Inc Earnings Call

Participants

Scott Wisniewski; Executive Vice President and Chief Strategy Officer; AST SpaceMobile Inc

Abel Avellan; Chairman of the Board, Chief Executive Officer; AST SpaceMobile Inc

Sean Wallace; Chief Financial Officer, Executive Vice President; AST SpaceMobile Inc

Chris Quilty; Analyst; Quilty Analytics

Mike Crawford; Analyst; B. Riley

Benjamin Soff; Analyst; Deutsche Bank Securities Inc.

Christopher Schoell; Analyst; UBS Securities LLC

Presentation

Operator

Good day, and thank you for standing by, and welcome to the AST Space mobile fourth quarter 2023 business update call. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your host today, Scott Wisniewski, Chief Strategy Officer of AST. based mobile.
Please go ahead.

Scott Wisniewski

Thank you, and good afternoon, everyone. Let me refer you to page 2 of the presentation, which contains our Safe Harbor disclaimer. During today's call, we may make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements on this call. For more information about these risks and uncertainties, please refer to the Risk Factors section of empty space mobile's annual report on Form 10 K for the year ended December 31st, 2023 with the Securities and Exchange Commission and other documents filed by AST. space mobile with the SEC from time to time. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company specifically disclaims any obligation to update forward-looking statements that may be discussed during this call. Also, after our initial remarks, we will be starting our Q&A section with questions submitted in advance by our shareholders.
Now referring to Page 3. For those of you who are new to our company and mission, there are over 5 billion mobile phones in use today around the world, but many of us still experience gaps in coverage as we live work and travel. Additionally, there are billions of people without cellular broadband who remain unconnected to the global digital economy. These markets that we are pursuing are massive and the problem we are solving is important and touches nearly all of us in this backdrop, AST space mobile is building the first and only global cellular broadband network and space to operate directly with everyday unmodified mobile devices, supported by our extensive IP and patent portfolio and design for both commercial and government use.
With that, I would like to introduce Chairman and CEO, Abel Avellan.

Abel Avellan

Thank you, Scott. I would like to welcome everybody to our Q4 2023 business update call. You had been an incredibly busy few months here at AST space mobile, and I will walk you through update on our key areas of focus today. First, at the start of the year, we announced the strategic investments from AT&T, Google and Vodafone, which represent a vote of confidence in our technology and business model. With this, we have the necessary funding on hand to execute near-term strategic plan for the launch of five 700 square-foot block one bluebird satellite on the initial next-generation 2,400 square foot bluebird, which will surpass block one at the largest phased array into in law at Orbis. We're also very excited to continuing to advance discussion with additional strategic partners following the blueprint for strategic investment alongside commercial payments.
Another great development on our commercialization was a new contract award we announced with United State Government through a prime contractor, which we believe will open the door for dual use commercial and government applications of our satellites.
On the regulatory front, we have received great news recently with the new FCC rules, which we provide a pathway to log over 200 megahertz of spectrum for directly device to support the rollout of our technology. The FCC board at March 14th to approve this supplemental call restaurant space, which was published in February. This should facilitate a S. D's space mobile SEC obligation to provide commercial services in the US. This will simplify the overall application process by making the standard rules, which will cover the majority of it is based mobile applications. We anticipate many regulatory entities globally will follow the new U.S. regulatory regime to regulate our services. We're starting to see these in large countries like Brazil.
Moving to manufacturing, our 185,000 square foot Texas facility are fully operational with production assembly and testing. Unfortunately, production was negative negatively impacted primarily by two suppliers, leading to delays in integration and testing for these five 700 square-foot block one bluebirds. While we have also face initial challenges on the manufacturing of our new great microns to be used for Block one and Block two in order to sell at a production of our next satellite and reduce dependency on outside suppliers. We acquire a license to manufacture one of the components and replace the older supply with our own IP and design at the same time were rapidly stabilizing our Micron production line. This is important because these are the same Micron building blocks for our next satellite launch. With the supplier fixes, we will be able to manufacture in house and through our third parties of our own IP, approximately 95% of all satellite subsystem for our next-generation block to bluebird satellite, securing our supply chain folks mix I can share updates on our Orbital launches to provide a near term top line. We expect that the five 700 foot law firm Lubert-Adler will be transported from our assembly facility to the loan side between July and August 2024.
And looking ahead, we have secured an additional launch contract for the first 2,400 square foot next-generation block to bluebird satellite with a contract launch window from December 2024 to March 2025, which will surpass block one as the largest phase array in loaded orbit Also we announced last week our custom A6 entering the tape-out phase, which is planned to enable 120 megabits big data rate on 40 megahertz spectrum channels. These novel custom and low-power architecture was developed to enable up to tenfold improvement in processing bandwidth on each next-generation 24 hundred square feet block to bluebird satellites. The design of our custom A6 with our processing balances of approximately 10,000 megahertz per satellite, along with the face with the large phased array is the enabler of true space-based cellular broadband with a relatively small number of satellites. These sales will represent over four years equivalent to an estimated 150 man years of intensive work will approximate about [$145 million] of development on the Asic alone.
And lastly, in addition to the strategic discussion referred to earlier, we are very excited to have received three non-binding letter of interest for non-dealer requested governmental funding as a result, we have initiated the process with these funding sources onshore, we will be explaining more to you about it.
Turning to page 5, the business from AT&T, Google and Vodafone are of a great significant for us. They are some of our largest prospective customers alongside the US government with Google. In particular, the agreement to collaborate on product development will be a great benefit for our prospective MNO customers. We had agreements and understand that we more than 40 mobile network operator globally, which have over 2 billion IT system subscribers globally. AT&T and Google joined Vodafone, Rakuten American Tower and Bell Canada as an investors. I cannot be more proud to have these great organizations alongside us on the execution of our mission and as I stated before, we continue to advance discussion with additional equity power following the blueprint of strategic investments alongside commercial payments.
Turning to Page 6. A few weeks ago, we announced our new contract award with United States Government through a prime contractor, want to take a step back on what is the opportunity here. Our large phased array antenna technology in this space is able to address many potential opportunity from formation critical capabilities in the government sector. The large opportunity on high-power de-lever into orbit at a locals compare with historical benchmark feed the desired or mental model for capturing commercial networks with dual use capabilities. And while we remain focused on a large commercial opportunity for our business, we're excited about initiatives underway with the U.S. government as well.
We have begun recording the initial revenue under this contract in Q1 2024.
Also, there are potential other awards, including additional phases of this contract available to us in calendar year 2020.
For Turning to page 7, I want to take a moment to walk through why haven't our ACV is really a big deal and it's critical to achieve true broadband phone space. Our normal cost on a low-power architecture was developed to enable up to tenfold improvement in processing bandwidth on each satellite satellite, which will be lighter, cheaper to produce and will require less mass to orbit. The tape-out would be completed with TSMC, the world's leading foundries following war with leaders in the semiconductor industry over the last years. For those of you who are not familiar with the industry jargon, the tape-out means that we and our development partners complete the design of the AC after four years of work and $45 million of investment, we have now formally handed over those designs to TSMC to produce a chip for the initial sale of A6 to enable the 2,400 square foot net generation block to bluebird's, which will we expect to receive later this year. I am truly proud of the team effort to reach this critical milestone. Our AC, along with our large antenna, will be enable up to 120 megabits per second data rates for being on a 40 megahertz channels and 10,000 megahertz of processing bandwidth. That combined with our large base of Ray is a key enabler for true broadband from a space to the phone that you have already in your pocket.
I will now pass it to Scott to provide a brief regulatory update.

Scott Wisniewski

Thank you about on page 8. I'll take us through some of the important progress on the regulatory front, to provide a reminder for everyone. We made our first filings with the SEC back in 2020, and we've been in front of them regularly around DIRECTOR device using standard unmodified cellular phones from a very early stage. Importantly, the unanimous decision to adopt the new rules in March facilitates our SEC application to provide commercial service in the U.S. because it specifically enables over 200 megahertz of low-band frequencies for director device use. And just prior to this SEC vote, we also filed an updated application to reflect the licensing jurisdiction with the U.S. This represents a closer strategic alignment of AST. space, mobile network build-out and future network operations in the United States. And internationally, Brazil announced an initial regulatory framework for director devices. Well, this framework enables us to test in Brazil with TIM Brazil in Claro, a subsidiary of América Móvil. And with that, I'll hand it off to Sean for our financial update.

Sean Wallace

Thanks, Scott, and good afternoon, everybody, everyone. The AST. space mobile business continued to make progress this quarter with a significant fund raising in January, continued work on the regulatory front and a substantial level of activity in our assembly integration and testing facility in Midland. Focusing on the production of five BB. one satellites I would also like to point out that we have entered the tape-out phase of our custom A6 chip.
The A6 chip will provide for increases in processing capacity that will significantly raise the inventory of gigabytes on future planned satellites we can sell through our M&O partners to end users. Basic design has been a normal four year process, supported by a large investment, which we believe will be difficult for competing systems to develop from a standing start as we get closer to the completion of the production of our five block one satellites I want to recognize and thank the hard-working teams of engineers, technicians and suppliers for completing this incredible task. We believe our strategy of backward integration into the assembly, integration and testing of satellites will enable us to build our constellation years ahead of an outsourced strategy and at a lower cost.
I want to move on to reviewing our key operating metrics for the fourth quarter that are displayed.
On Slide 9. On the first chart, we see the fourth quarter of 2023. We had non-GAAP adjusted cash operating expenses of $38.6 million versus $37.3 million in the third quarter. Non-gaap adjusted operating expenses excludes certain noncash operating costs, including depreciation and amortization and stock-based compensation. Our fourth quarter non-GAAP adjusted operating expenses increased by $1.3 million versus the third quarter.
Our research and development expenses rose by $1.5 million this quarter due to increased expenditures on engineering models and prototypes in connection with our manufacturing process. Our R&D expenses consist primarily of nonrecurring development activities for which we typically engage third party vendors and payments are based on the completion of milestone. Our engineering services expenses increased by $0.5 million and our general administration expenses decreased by $0.6 million in the fourth quarter as compared to the third quarter.
Turning towards the second chart on this page, our capital expenditures for the fourth quarter were $33.9 million versus $71.7 million for the third quarter. This figure was made up of some modest launch payments, capitalized direct materials for the Block one satellites, additional facility and production equipment for our assembly integration and test facility in Midland and the delivery of commercial-grade software from Nokia.
As of the end of the fourth quarter, we have spent over 90% of the expected amounts for the five block one satellites, we are still projecting to spend approximately $150 million for the five BB. one satellites. And on the final chart on this slide, we ended the first quarter with $210.8 million in cash. We are continuing to pursue using the balance of our senior credit facility, which would add an amount of capital in the low 40s efforts around raising strategic capital may take precedence over the senior credit facility and at a minimum, the deferment has reduced a bit of a negative carry would have incurred if we had access to the facility earlier. As we stated in our 10 K, we believe this cash as well as our ability to raise capital through our existing facilities is sufficient to support our expenditures for at least the next 12 months. As we have also discussed in our 10 K, our cost positions and capital plans are quite modular, and this characteristics provides us the flexibility to increase or decrease our rate of expenditures, depending upon changes in our build-out plans and availability of capital this flexibility provides us comfort that we can manage our liquidity profile dynamically depending on our rate of raising capital.
Earlier this year, we provide guidance on our expected operating expense levels. We have been supporting the development of efforts of our two critical satellite designs, Block one and Block two, our A6 chip design and the construction of five BV. one satellite completion of this BB. one work and a significant portion of the BB. two and Asic design work is expected to result in a material reduction in our adjusted operating expenses and future capital expenditures. This reduction in cash expenditures will be done without a material reduction in our employment headcount as most of these reductions are related to the completion of third party work.
Overall, our adjusted operating expenses is expected to decline from an average of $38.7 million per quarter during 2023 to an average of $30 million per quarter for 2024 as the Block one design is completed and the Block two design approaches completion. These figures will vary depending upon manufacturing activity in each period. This guidance does not include the expected cost of approximately $15 million related to the tapeout and initial production of our Asic chips.
These basic related costs will be recognized as an R & D expense in subsequent quarters in 2024. As the milestones are completed, we also plan to reduce our outlook for capital expenditures as we reach the final investment for BP one. For the next three quarters, we expect to spend in the aggregate approximately $50 million to $60 million in capital expenditures. Any increase beyond these levels will be in conjunction with the timing of the deployment of our block two satellites, which could be either in late 2024 or the first quarter of 2025. Timing of the changes in our adjusted operating expenditures and capital expenditures, as I have just described, could be delayed or may not be realized due to a variety of factors.
On a final note, I'd like to provide some additional detail on one of our additional funding strategies, which is complement to our recent strategic growth, satellite and other infrastructure providers have historically utilized government and quasi-government institutions, which are known as export credit agencies to source cost-effective, long-term debt funding of large projects. The key underpinning of these funding structures has been proven technology and the sale of significant capacity through long-term agreements to large creditworthy entities. We have begun the process of approaching these funding institutions, which includes the hiring of an adviser and developing marketing materials after preliminary discussions with a few of these agencies, we have received letters which indicate their willingness to evaluate this type of financing with us. We are in the very early stages of this process. And as we progress, I will provide updates on these potential finance. There can be no assurance that we will be successful in the pursuit of this type of financing and funding.
And with that, this completes the presentation component of our earnings call, and I pass it back to Scott.

Scott Wisniewski

Thank you, Sean. Before we go to the queue of analyst questions, we'd like to address a few of the questions submitted ahead of the call by our investors. Operator, could you please start us off with the first question?

Question and Answer Session

Operator

Trevor, from Colorado, asks where's the company on scaling up production to be able to meet the four satellites per month figure? Will that production begin immediately? Or will there be a serious delay while the facilities are being built?

Abel Avellan

Thank you, Trevor, for the question. So first of all, let me let me report. The facilities are fully built. We had all the testing facilities for our built in-house. If we do not require in any step of the build of our satellites to be taken out of our facilities, we have 185,000 square feet facility of manufacturing capability. We are with the addition of these two suppliers that cost us it problems in Block one, we are getting to a 95% vertical integration all the way from the Aitik, all to do all the structures on everything that he's required to build and launch this spacecraft. So so we don't we don't anticipate any any delays related to facility building or manufacturing building. And also the other aspect is the same building block that we use for Block one on data that it took this time to go to stabilize and to and to and to produce ad-based will be the same five parts that we will use for Block two further satellites going forward.
So so on of course, our focus right now is putting the block once in orbit. Again, we estimated that we would be at the launch path in around June, July or August, and we're already working on producing on the on the mix on the next launch that is on a window between A. in December and March.

Operator

Christian from Estonia. As Could you please give comments on the $100 million stock offering earlier this year, reasoning why it was raised and structured the way it was.

Sean Wallace

Thank you for that. Taking the advice of our banks we believe the offering structure we chose with the best route to raise additional capital to complement our strategic capital raise. At the end of the day, the transaction achieved our goal of providing a significant level of funding so that we can continue to pursue our business plan moving forward, we will continue to look to raise capital with strategic players in the wireless ecosystem like we did in January. And we are working to raise long-term low-cost debt capital with export credit agency agencies, as I described during my presentation.
I'd also point out that most of the senior management team is aligned with the shareholders as most of their compensation is made up of restricted shares and options.

Abel Avellan

Complemented to churn. And sir, on on why we needed to do that, that public equity deal we needed to prioritize timing. We needed to complement the investment from AT&T, Google and Vodafone to keep on target to our our production plan and our build and our launches.
And at the same time, we have continue.
We're very excited about the strategic, the original strategic support that we will continue to have and also the non-dilutive funding that that John and the team is working in order to complement our strategic financing with non-dilutive financing, which is which is why we have commenced to receive a letter of interest on that or that regard In addition, with prepayments from MNOs and government payments.

Operator

Dennis from Chile due to their larger size, Uber satellites, in Block two need a space at Star ship rockets to be lost?

Abel Avellan

Thank you, Danny, for the question. No, the answer is not. As a matter of fact, we're launching five a Bluebird ones in the next launch. And we can launch it also on a Falcon nine on other providers, including the one that we'll be using for our next launch pass the launch for Block one. And so we have built our our satellite to be completely agnostic to one large provider is used. We obviously count on Falcon nine i. and six Israel, the upcoming new launchers, future new blend and other launch providers that have medium to large size vehicles.
So the answer to your question is no, we do not require we don't we're not counting with the stock cheap for our Block two launches.

Operator

Lead-in from New Zealand asks how does about his appointment as a commissioner of the ITU affected TS. mission.

Abel Avellan

So Lyndon, I mean, listen, our Our mission is to enable broadband globally regarding where people leave work, undergo the phone that they had in that bucket in the broadband commission had a single focus is making sure that the 2.6 billion people that remain on Connected Care connected on.
I do not know any other program.
I'm a diehard a global scope that have truly the ability to make a significant dent done in the in the amount of people that get connected to broadband through their phones, that our program so this is in alignment with the broadband commissioning in the middle of our commission. And we have great participants like absolutely he's the owner of Telmex in Mexico. We have the Chairman of the FCC. We have the Chairman of Verizon. We have the Chairman of many of the large wireless ecosystem, including a very vibrant and full participation of governments, regulators and people that core interest is making sure that that the fact that connectivity is a human right get Institute on a global basis. So so we see this as something that support our mission. It is a program where we are proud to be part of it.
In the broadband COMMISSIONER, we have many, many a new initiative on tasks like locals, locals funds for democratizing access to knowledge and information, a universal network available to everybody on a global basis. So we think that this is this is supportive as is part of of our of our work and making sure that everybody exactly where we will work have access to broadband in the phone.

Scott Wisniewski

And with that, I'd like to thank our shareholders for submitting these questions. Operator, let's open the call to analyst questions now.

Operator

(Operator Instructions) Chris Quilty, Quilty Analytics.

Chris Quilty

Thanks, Justin. First question on the Micron's and bringing those in-house. When you look at the supply chain for the Micron manufacturing, are there any elements of that that were your view is particularly difficult or where you might have pricing issues relative to a vendor that might have had higher volumes associated with certain components in order to manufacture them.

Abel Avellan

Hi, Kris, and thank you for the question. On the Micron part, which is, as you know the building block of the of the satellite is it's all components are either design or manufacture with us. We basically manufacture from the solar panel on all the way to the A., the B, all the electronics batteries structures, everything that goes into them the currently for this launch, the Microsemi based on FPGA so that we're buying those from from pro forma from existing source for the first block one, there will be also be FPGAs. So then we move forward with the following launches or with the AC with the 85,000 launch.
So the just a clarification there, two suppliers that give us initially issue. We are not naming them. They were not in the Micron. They were part of the of the of the control subsystem.

Chris Quilty

Perfect. Um, second question, with the redomiciling for regulatory purposes to the US, how does that impact your stand in any regulatory filings or done?

Abel Avellan

We don't we don't see that the impact, none of that. I think we are finding our opportunity with the US government potential fundings from United States and the now that the SEC had a we've got a framework that we think will lead the rest of the world and how and how to regulate our product globally. We thought that it was the right time and the right process to actually move our satellites to our US flag. So we're very proud of that. And we don't we see that to be able to accelerate. We're working very closely now with the FCC.
And we are obviously very happy with the with the new regulatory framework that now we start seeing replicated in large countries through the process of basically reusing the spectrum that is used on terrestrial deployments from space, which is actually the core of our of our technology, reusing the existing phone that is already in the focus of everybody using it for connecting regardless where the people is regarded where the phone is, it's on a global basis.

Chris Quilty

Very good.
Thank you. I'll circle back in the queue.

Operator

Thank you. Mike Crawford, B. Riley Securities.

Mike Crawford

Thank you. I heard that you're putting five BlackLine bluebirds on a Falcon nine at the end of the summer, how many blocks in Q2 Can you fit on to the launch that you're looking for in December and the March timeframe? And sounds like that's from a different it was provided by specialists.

Abel Avellan

Yes, the next provider is not a space. X is a large rock into low vehicle. We have a we're not we're not disclosing yet who the provider, but is a contra that that that is already negotiated. And the launch window is already agreed between December on a march 25, we're putting one satellite on the launch in the U.S. also an SPGA base, but is the large 24 hundred A.M. and square feet Block two type of satellite.

Mike Crawford

Okay, thank you. And then you previously disclosed our intent to enable initial service in Japan in 2026, how many block two's need to be in service and for you to be able to implement service in Japan on around 45 satellites.

Abel Avellan

It had initial service launch between 45 and 60. We are working very hard on them. Now just as a clarification deserve the same block one micron. This a double Micron that we're producing now are the one that we continue to produce for Block two. It took our more than expected to stabilize. That line is a new micro with a new full capability, will everything vertically integrated by ourselves. But the good news that is passed us and we plan to continue to do that. It's to get to a cadence of 72 satellites. We're a year later a U.S. We we stabilize or have enough parts to be able to do that. Obviously, the first ones are the more difficult to get up into space. They are also the one would you implement for the first time the changes and the upgrades that you do on them.

Mike Crawford

Okay. Thank you. And then a final question just relates to your new strategic partner, Google. So I know your service works with just any phone that people already have, but are there certain things that Google could do to say Android operating system to make those phones connect even better with your network? Thank you.

Abel Avellan

Yes, I mean, you're absolutely right. Our our our network, our technology is completely open for any phone two G. four G. five G. in the future 60. So we are completely independent of the phone manufacturer or actually the G on the phone. However, we believe and we are super excited about the relationship with eight with Google. Google is, as you know, the the largest ecosystem provider for cellular phones with over 3.5 billion devices on a global basis.
And we had agreed to collaborate in product development and implementation of features on the glue on the Google ecosystem that 80s on the sole benefit of the Chairman of our customers and have it on Ambien, the end users, the usage-based model. So we're very excited about this relationship with super strategic for us is to create value at Arm A. on the on the Android ecosystem for our customers and users.

Mike Crawford

All right.
Thank you very much.

Operator

Benjamin Soff, Deutsche Bank.

Benjamin Soff

Hey, guys, thanks for taking the question. On my first one is just on the the government contract. Is there any additional color you can provide on the type of service you're providing? And just generally, how do you think about the market opportunity to work with government agencies in the US and abroad? And then I have a follow-up.

Abel Avellan

Yes. I mean, the we do see the opportunity to be very, very large. I mean, obviously, a technology that can deliver on our Race Face rate of the size or the power that they generate. And if you compare with the benchmark costing of that today for non-communications applications, we're talking about a similar order of magnitude, a higher cost that we can do despite the fact that we're doing it, we had 185,000 square feet facility were ramping up our production as we speak. So the government is super interested in this. We do see if these opportunities not only to be in the communication side, which is an obvious application being able to connect any 3GPP, any cellular device that government use on a lower basis of defense users use on a global basis. But also there are multitude of applications of the same technology without any major changes to our it technology to be used in the non-communications space, which we think is a very large market, very large opportunity. And we see it also in combination of the prepayments that we expect to continue to get from MNOs payments from governments and the non-dilutive funding that we see that the most efficient way to take our our network forward and continue to build satellites based on these agreements that we're starting to see. So we're very excited about the government opportunity on them. And we think that we're in the very, very early innings of that of what we can do for our government with our technology.

Benjamin Soff

Great.
And then my second question is on the Block two satellite. Obviously, there's been a lot of moving pieces over the last couple of years. And I'm just wondering wondering what your latest thoughts are on the timing and costs for these last two satellites? And has there been any changes recently?

Abel Avellan

Yes, no, we are maintaining our guidance on costs for the Block two. As I said, the part the building blocks are the same. We are building for Block one. So the line our assembly line, our processes of are they can maintain. We now control around 95% of our cost to build our satellites and also our supply chains.
And that includes for Block two.
So we have in Block two, we use these micro, which are the same for Block one and Block two A., they rely in the same solar system, same same same solar panel, assemble battery systems structures and so for silver to maintain them. So we are that we had that done. So we are very excited where we are on that. And we have taken an approach of incrementally it features to the satellite. So we block two where we review that, but they obviously are they are larger than 2,400 square feet each, which is the what do you make it possible to get to 120 megabytes of data rate on a 10,000 megahertz of processing bandwidth, which is really the only way to provide broadband directly to regular handsets.

Benjamin Soff

Helpful. Thank you.

Operator

Chris Schoell, UBS.

Christopher Schoell

Great. Thank you for the Block one satellites. Can you just update us on how you're thinking about initial use cases and expected revenue generation as you await more continuous coverage? And then once in orbit, can you also remind us the time line for testing and calibrating those satellites? And what are the key milestones that you need to reach to commence commercial service? Thank you.

Abel Avellan

I mean, the the initial the known commercial usage is normal installation base is basically a news use it by satellite. So he says the RONA generation for that is incremental as we add satellites on the for the MNOs what we would what we will be doing is immediately integrating that to the core to the core system.
We keep launching more satellites.
So so the data we disclosed there is an initial payment by AT&T with the launch of Block one, the supply agreement with Vodafone to start using them in some of the core markets and a zone revenue that we start generating initially also for non continuous service. We build the satellites, but it is a combination of revenue for non-voice or noncommercial is scale on a satellite by satellite basis on a for commercial for non continuous service type of applications. We start to see early revenue on that, but our plan is to rapidly ramp with the support of of the government contracts, non-diluted revenue and prepayment revenues to continually build into you do the calculations. So we're doing that by region and whether we end up prioritizing the MNOs or are investors with us and continue to support on the build of the of the constellation.

Christopher Schoell

That's helpful. Thank you. And I appreciate your dialogue with potential M&O customers is likely ongoing, but any update you can give on where your discussions stand? And are you seeing interest beyond the already announced set of partners that you have?

Abel Avellan

Yes. The answer is yes, absolutely. We have 48, approximately 48 operators that we had agreements or M. or MOUs with them while using the same formula that we use initially with AT&T and Vodafone will continue to do that in a in a way of of prepayments it or advanced payments, sometimes combined with a strategic investment or not. So we have a very, very vibrant ecosystem. We have now already AT&T with iPhone, Google, Bracco, then Bell Canada and American Tower. But we had only 48 relationships that we are in constant constant dialogue. Everybody is super interested in seeing our constellation app as soon as possible. Everybody wants the regions and the customer to reprioritize and we're taking we're taking we're taking advantage of that. Our relationship is very symbiotic between us and the operators.

Christopher Schoell

Great. Thank you for all the color.

Operator

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to management for closing remarks.

Scott Wisniewski

Thank you, operator. We're building a space-based cellular broadband network designed for the use of the phone in your pocket today. I want to thank everybody for joining both shareholders and analysts for their questions, and I hope everybody had a great week. Thank you.

Operator

And this concludes today's conference. You may disconnect your lines at this time. Thank you and have a good day.