Lynk reveals its direct-to-cell financial projections

Lynk Global said it inked a final agreement with Slam Corp., a special purpose acquisition company (SPAC) fronted by former Yankees slugger Alex Rodriguez, in a deal that positions Lynk to go public on the Nasdaq. Lynk also disclosed its financial situation and aspirations through 2025 as part of the deal.

Lynk's financial figures are important, considering there's an ongoing debate about the overall value of the satellite-to-cell industry. They're also interesting because Lynk's rival AST SpaceMobile, in 2020, offered its financial projections as part of its IPO efforts. But AST SpaceMobile's aspirations proved too ambitious; the company in 2020 hoped to sign up 9 million customers – each paying around $1 per month – to its service by the end of 2023. Now, at the beginning of 2024, AST SpaceMobile hasn't yet begun offering commercial services.

Regardless, Lynk's new investors remain optimistic. "Lynk seeks to connect the world by extending cell coverage everywhere. We are thrilled to announce this business combination agreement," said Rodriguez, the CEO of Slam, in a release. Rodriguez, nicknamed "A-Rod," played 22 seasons of Major League Baseball, including more than a decade as a third baseman and shortstop with the New York Yankees.

But Lynk's new deal with Slam is just the start of the company's financial efforts. As noted by SpaceNews, it's still unclear how much money Lynk will get through Slam, as the SPAC's investors can still bow out of the deal before it closes. Slam commanded around $575 million in 2021 but now has less than $99 million.

Moreover, Lynk is also pursuing other fundraising efforts in parallel with its Slam merger and initial public offering (IPO), including a Series B round of funding. "Lynk is pursuing a number of avenues," Lynk VP of Government Affairs Tony DeTora told the publication.

The details

In its lengthy investor presentation, Lynk said its deal with Slam values the company at around $800 million. Lynk also disclosed its expenses: each satellite cost around $400,000 to build and up to $815,000 to launch into space. The company hopes to have up to 74 satellites in orbit by 2025, up from three today.

Lynk hasn't generated any revenues yet but hopes to change that starting in 2025 with $10 million in revenues in the second quarter of 2025, $21 million in the third quarter of 2025 and $41 million in the fourth quarter of 2025.

Those revenues assume the company scores enough funding to steadily build and launch satellites over the next few years. And that it will have 20 mobile network operator customers in operation by the end of 2024 and 32 by the end of 2025. The company currently touts contracts with 35 mobile network operators around the world – but none yet in the US.

By the fourth quarter of 2025, Lynk said its satellite constellation "is projected to generate $175 million in annualized monthly revenue at $164 million cumulative capex spend," the company said in its presentation.

What's in it for mobile network operators

Lynk also offered insight into how it hopes to work with its mobile network operator customers. It said it will support either revenue-sharing models or usage-based models. Its customers can offer satellite-to-phone messaging services via daily, weekly or per-message pricing packages or bundle the service into their existing plans.

Lynk added that – with its three existing satellites – it can only offer a "controlled trial." It will need 25-50 satellites before it can start offering messaging services every 30 minutes (due to the orbit of its satellites). For "seamless" messaging, the company will need 74-186 satellites. With 250-920 satellites, Lynk said it can offer voice and broadband services.

Lynk is one of three companies offering mobile network operators the chance to use their existing spectrum holdings to connect smartphone customers directly to satellites. SpaceX and AST SpaceMobile are promising similar satellite constellations and technologies. Other companies – from Iridium to MidWave Wireless – are promising similar services using their own spectrum holdings.

In the US, AT&T has already signaled its intention to work with AST SpaceMobile, including via its recent investment into the company. T-Mobile is working with SpaceX, and has already tested its service over the company's new satellites. Verizon hasn't yet articulated a direct-to-cell plan, but most expect the company to work with Amazon and its Project Kuiper satellite effort.

Thus, Lynk appears to be chasing business in the US with smaller wireless network operators. The company's DeTora recently scheduled a webinar through the Rural Wireless Association (RWA) to provide "an overview of Supplemental Coverage from Space (SCS) and how it will impact rural carriers, avenues for engagement between rural carriers and SCS providers, and regulatory approaches." RWA represents the nation's small wireless network operators.