(Bloomberg) -- AT&T Inc. and satellite provider AST SpaceMobile Inc. are teaming up to provide wireless service from space  — a challenge to Elon Musk’s SpaceX, which struck a similar deal two years ago with T-Mobile US Inc. AST SpaceMobile jumped in extended trading on the news. 

AT&T and AST SpaceMobile formalized the partnership following an earlier testing period, the companies said Wednesday in a statement. They said their agreement to build a space-based broadband network will run through 2030. AT&T head of network Chris Sambar will join the AST SpaceMobile board, deepening a relationship that dates back to at least 2018. 

Sambar said in an interview that his team is confident in AST SpaceMobile’s technology, as demonstrated by the performance of the BlueWalker 3 test satellite. The relationship is moving from “loose partner to a strategic partner,” he said.

Wireless providers are in a race to offer connections for the world’s estimated 5 billion mobile phones when those devices are in remote areas beyond the reach of cell towers. For consumers, these services hold the promise of connectivity along rural roads and in places likes national parks. The service is typically marketed as a supplement to standard wireless coverage.

The new network will work with ordinary mobile phones, offering a level of convenience that’s lacking in current call-via-satellite services, which require the assistance of bulky specialized equipment.

Shares of Midland, Texas-based AST SpaceMobile gained about 35% to $3.25 in extended trading after closing at $2.39 in New York. AT&T was little changed.

AST SpaceMobile will deliver five satellites to Cape Canaveral, Florida, in July or August with launch on a SpaceX rocket expected “shortly thereafter,” Scott Wisniewski, SpaceMobile’s chief strategy officer, said in an interview.

The satellites will be operational about three months after launch, he said. Because the satellites fly around the Earth quickly, they will be overhead and in position to relay signals a few times a day. It will take 45 to 60 spacecraft to offer continuous service, Wisniewski said.

Initial markets include the US and Japan, he added.

“Space-based direct-to-mobile technology is designed to provide customers connectivity by complementing and integrating with our existing mobile network,” Jeff McElfresh, AT&T’s chief operating officer, in the statement. “This agreement is the next step in our industry leadership to use emerging satellite technologies to provide services to consumers and in locations where connectivity was not previously feasible.”

Abel Avellan, AST SpaceMobile’s founder, chairman and chief executive officer, said his company’s partnership with AT&T “has paved the way to unlock the potential of space-based cellular broadband directly to everyday smartphones.” 

AT&T’s Sambar didn’t say when service to customers might begin.

“This will be a full data service, unlike anything you can get today from a low-Earth orbit constellation,” Sambar said.

T-Mobile is working with the low-Earth orbiting Starlink service from Musk’s Space Exploration Technologies Corp. The mobile carrier earlier said that its calling-via-satellite service could begin this year.

SpaceX has roughly 6,000 satellites aloft in low-Earth orbit — far more than any other company. The trajectory, with satellites circling near the Earth’s surface, allows communications signals to travel quickly between spacecraft and a terrestrial user.

SpaceX in January launched its first set of satellites capable of offering mobile phone service. The service “will allow for mobile phone connectivity anywhere on Earth,” Musk said in a post on X, the social network formerly known as Twitter, though he added that technical limitations mean “it is not meaningfully competitive with existing terrestrial cellular networks.”

Apple Inc. in 2022 introduced an emergency satellite-messaging feature for its iPhones. The service lets users send SOS messages without a cellular connection.

--With assistance from Loren Grush.

(Updates with comments from executive beginning in the seventh paragraph.)

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