08.06.25
Posted in AST SpaceMobile, Echostar, Operators, Regulatory, Spectrum at 3:51 pm by timfarrar
AST is clearly frantic to talk about anything other than the “developmental delays” which are holding up shipment of the FM1 satellite to India and have caused the launch to be pushed back to late fall, despite some employees apparently taking the trouble to go public about the company’s satellite manufacturing tribulations.
So that helps to explain the bizarre announcement today that AST has an “Agreement to Acquire Global S-Band Spectrum Priority Rights Held under the International Telecommunication Union”. AST clearly didn’t want anyone to look to closely at this spectrum deal, because they simply refer to acquiring an unnamed “entity”, and the press release is disingenuously worded to convince the company’s clueless cult of investors that AST will have priority over “up to an additional 60 MHz of mid-band satellite spectrum”.
It doesn’t take much effort to identify the entity concerned, which is Sky and Space Global (SSG), as multiple people have confirmed to me today. SSG made a failed attempt to enter the MSS market almost a decade ago, after going public in Australia, hyping up its “unique expertise in space technology” that was “set to revolutionize the existing satellite communications industry with its price disruptive first mover technology” and “bring affordable coverage to billions of the world’s most unserved people”. AST’s original business plan (which involved a large number of nano-satellites and was intended to start with an equatorial constellation) could almost have been taken straight from the SSG pitch.
SSG only launched 3 satellites back in 2017, which de-orbited in spring 2023, though the filing was brought back into use by one of the satellites launched on the Jan 14 Falcon 9 Transporter-12 rideshare. But what AST’s language is trying to obscure is that SSG’s ITU filings have lower priority than both EchoStar and Omnispace, and also describe a system which is completely incompatible with AST’s recent application to the FCC.
AST is now planning 248 satellites of which 220 will be at 53 degrees inclination and the remaining 28 in sun synchronous orbit, having abandoned its original plan for an equatorial constellation. However, SSG (whose filing is named SSG-CSL in the ITU database) has filed for only 3 test satellites in sun synchronous orbit and the remaining 360 satellites in near equatorial orbits (0, 10 and 13 degrees inclination). So even if AST adjusted its orbit plan to conform with SSG’s filings, it would then be useless for serving high value markets in Central and North America, Europe, the Middle East and Asia.
That’s why it isn’t surprising that SSG’s licenses are so cheap, compared with EchoStar and Omnispace, and why by choosing to acquire SSG rather than say Omnispace, it is clear that AST is more interesting in gaining favorable PR (from people who either don’t understand or would prefer to lie about how spectrum rights work) than actually providing service using this filing. Just don’t ask when (if ever) AST will actually launch a constellation.
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08.02.25
Posted in AST SpaceMobile, Echostar, Handheld, Lynk, Operators, Regulatory, Services, SES, SpaceX, Spectrum, ViaSat at 9:36 am by timfarrar
Yesterday EchoStar chose to announce its plans for a new $5B D2D constellation of 200 satellites, including an initial US$1.3B contract with MDA to build the first 100 satellites. Though the MDA contract was in line with my prediction back in March, EchoStar’s heavy emphasis on prospective wholesale partnerships with mobile operators during the results call suggests that Apple has declined to provide financial backing for the system. That’s perhaps unsurprising after the press revelations in May describing a lack of consensus within Apple about whether to continue investing in D2D.
As EchoStar CEO Akhavan noted in the results call, EchoStar had to make a decision now, because the EU is in the process of deciding what to do about the current European 2GHz licenses held by EchoStar and Viasat when they expire in spring 2027. Indeed I understand that EchoStar assured the EU of its plans to build this system in its confidential response to the EU’s consultation back on June 30. Now we face an all-out battle between at least four players (Viasat, EchoStar, AST/Vodafone and SES/Lynk) for only two licenses when they are awarded at the end of this year.
However, EchoStar’s announcement also came as an unwelcome surprise to many investors, who were hoping that reports earlier in the week of FCC Chairman Carr’s “Best and Final Offer” to sell AWS-4 spectrum signaled that EchoStar would scale back its ambitions and strike a deal to sell or lease this spectrum. Contrary to some analyst perceptions, the biggest threat from the FCC has always been a potential rulemaking on the 2GHz MSS band that would open it up to additional sharing by Starlink. However, it was also very unlikely that Elon Musk and Charlie Ergen would have a meeting of minds on the value of this spectrum in any commercial deal for Starlink to access the band.
So its now clear that Ergen has decided to defy Carr’s mandate and move forward on his own, without providing any evidence that a major new partner for the system has been secured. Hopefully clarity on financing and partnerships will be provided in September when EchoStar has promised to give more details of its plans. But in the meantime, Carr must decide whether to launch a 2GHz rulemaking or leave Starlink out in the cold without access to MSS spectrum that will soon be sorely needed to increase the capacity of its D2D system. Carr’s decision may well turn on whether Ergen has secured President Trump’s backing, after his recent falling out with Elon Musk, and that would certainly help to explain why EchoStar is highlighting a large headline investment of $5B in the planned D2D system.
Fortuitously for those who are trying to make sense of these developments, yesterday evening I also released my new 100+ page deep dive report on D2D, telling you everything you need to know about D2D technology, regulation and the progress of all the different satellite operators involved in this market, updated with the latest information on EchoStar, AST, Starlink, Apple/Globalstar and other planned systems. We’ve seen lots of ludicrous forecasts about the size of this market, which simply fail to understand the technological constraints on these services in terms of capacity, data rates and costs. Unlike these other forecasts, my analysis looks at realistic capacity, usage and pricing models to assess how many customers Starlink and AST’s systems can serve and what they will need to charge per Gbyte of capacity. That’s a familiar topic to who followed my blog posts on LightSquared back in 2011-12 when it became clear that there was no there there…
I also analyze regulatory constraints, feasible deployment schedules (especially in light of continuing delays for AST which make the company’s claimed launch plans totally implausible) and how much spectrum will be needed for these systems to operate. As I discussed in another report back in January, MSS spectrum (and the 2GHz band in particular) is likely to be critical to providing adequate capacity for D2D constellations. Starlink only has a paired 5MHz block of spectrum in the US, but has already decided that it needed to upgrade to a paired 15MHz block in New Zealand after only 6 months of operations. So EchoStar’s announcement, and how the FCC now decides to respond, will be critical in determining the future direction of this market.
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07.25.25
Posted in AST SpaceMobile, AT&T, Operators, Regulatory, T-Mobile at 8:58 am by timfarrar
It’s been obvious for a long time that the quality of AST’s regulatory submissions has been poor, which has led to considerable delays in gaining FCC approval, as was evident when it took more than four years from the time AST’s initial petition for market access was submitted in April 2020 before approval was granted in August 2024 for launch of five BlueBird-1 satellites. I heard complaints on more than one occasion that more professionalism was needed from AST, with contrasts drawn to the high quality and intense focus of SpaceX’s regulatory team working on SCS. And the company seemed to have acknowledged this concern by hiring Jennifer Manner in May 2025.
But over the last month, AST and its partner AT&T have taken it upon themselves to go to a whole new level in causing annoyance to FCC staff. On July 1, AST “urge[d] the Commission to approve the [FM1] Application by July 11 to allow safe shipment of FM1 for its scheduled August launch on time. Failure to do so will place our ability to launch in August at significant risk.” The irritation of FCC staff was clear in a July 2 email noting that “due to substantial changes in the technical parameters of your S-band request, we will need to coordinate new spot frequencies with NTIA. This will restart the coordination timeline with NTIA”. Nevertheless, the NTIA and FCC pushed this through and granted the FM1 approval on July 11 as requested. But then AST didn’t ship the FM1 satellite the next day, and has now revealed that in fact the satellite won’t be shipped to India until August. So why did the FCC and NTIA have to put in all that work over the July 4 holiday?
AT&T’s actions this week have been even more egregious, with an announcement on July 23 (timed to try and counter T-Mobile’s launch of Starlink D2D satellite service that day) stating that “On Monday, July 21, AT&T and AST SpaceMobile successfully completed the first-ever native voice call (VoLTE) and text (SMS) made directly through AST’s Block 1 satellites with a standard cell phone using AT&T spectrum and passing through the AT&T core network.” But AST’s license for testing with AT&T expired on May 30 and the request for renewal has not yet been granted. So if AT&T did conduct a “call and text [which] utilized AT&T’s spectrum and commercial network” on July 21, that was clearly outside the licensed testing period.
As an aside, it’s also worth noting that AT&T has now pulled back on prior claims that AST will support broadband data services including video calls, modifying the website from the original version to indicate only that “One day [the satellite service] may also support video services”. AT&T also shifted from claiming that “Our customers will have access to a satellite-based cellular network with a standard smartphone – no special device is needed” to indicating that “More information on eligible devices and service requirements will be shared closer to launch”.
One potential reason for the delay in the FCC renewing AST’s applications for continued testing is that AST has also simply ignored the conditions of its test licenses, which required the company to “submit a test report in the ELS license file for this grant within 150 days reporting on activities occurring during the first 90 days of the license”. So for the AT&T testing license granted on January 23 (the grant letter erroneously says 2024 but it was actually granted on January 23, 2025), the initial test report would have been due by no later than June 22. However, to date, no test reports have been filed for any of AST’s BlueBird-1 experimental license grants.
The FCC has been accommodating of AST’s regulatory failings to date, and put the company’s June 2025 modification submission on public notice with regard to the feeder links and TT&C. That might even allow for approval of satellite launches later this year if the recent submission of an SCS agreement with FirstNet is deemed compliant. But before getting to that point, the FCC will also need to decide whether to overlook AST and AT&T’s recent violations of AST’s experimental license conditions.
EDIT (7/25): Well it seems like I ruined somebody’s Friday evening dinner plans, because a few hours after this post was published, AST submitted the delinquent 90 day test report for its experimental testing with AT&T and Verizon. Presumably the other missing test reports for the UK and Turkey will be filed soon as well.
EDIT (7/26): If the FCC was mildly annoyed with AST’s incompetence before, they must now be completely furious after AST submitted a new letter on Friday evening, characterized as a response to the Space Bureau’s request for additional information. And I can only conclude that the company’s engineers are total idiots. This letter completely contradicts itself, with the answer to question 1 stating that FM1-FM23 “will be deorbited from 520km through atmospheric drag” while AST’s “additional clarification” at the end indicates that after FM1 and FM2 (which is now clearly intended to be launched on a dedicated Falcon 9 rocket at huge cost), of the “up to 20 satellites” that AST “anticipates launching…through the end of this year…the remaining 18 satellites will operate at an altitude of 690km”.
And if this “additional clarification” is taken at face value, then the current public notice and comment period has just been invalidated, since the comments received on July 21 were based on AST’s June 12 submission, which claimed that FM1-FM23 would orbit at 520km and that these satellites would only carry 20kg of fuel. I’m left wondering if the paragraph on “planned upcoming satellite launches” was simply inserted by company management at the last minute to try and pump up the share price, and no one checked for compatibility with the rest of the document or AST’s prior submissions.
Of course if FM3-FM23 were at 690km then that’s not compatible with AST’s claim today (in response to question 5) that “The nominal deorbit plan is powered deorbit to below 530km”. And incidentally it also makes no sense for AST to suggest in response to question 4 that “During the disposal phase, the spacecraft will randomly tumble due to its shape and mass distribution throughout its descent, except for collision avoidance maneuvers during which the spacecraft will operate with an edge-on orientation” when AST indicates in question 1 that only “approximately 1kg of Xenon will remain available on FM1-FM23 for collision avoidance maneuvers throughout the mission-life and post-mission phases” since that’s certainly not going to be sufficient to stabilize such a huge spacecraft within a few hours and perform collision avoidance. Is AST instead suggesting that after FM2 it will move straight to launching FM24 and defer FM3-FM23 until later? Or is AST intending to use direct injection to 690km? It’s impossible to tell…
This continues AST’s prior incompetence in engineering submissions that was so evident during the review of FM1, when the company claimed that the mass in the Orbital Debris Assessment Report didn’t add up because of “quantity errors in the input” and “omissions” of various components. Then AST just added in suspiciously round numbers of 5000 fasteners (each weighing exactly 10g) and 100 brackets (each weighing exactly 500g) and still couldn’t make the mass of the phased array on FM1 and FM2 add up to 2863kg (an error of 117kg which has been carried over to the June 12 modification application).
It’s now hard to see how anyone can prepare reply comments based on this new nonsensical AST submission. So unless and until these issues are clarified, I suspect the FCC will either have to extend the reply timeline or even restart the whole process from scratch.
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07.23.25
Posted in Broadband, Operators, Regulatory, Services, SpaceX at 12:12 pm by timfarrar
Last week, the Washington Post published an article about Starlink’s supposed capacity limitations, based on a paper from X-Lab. This is part of the larger fight over the future of BEAD funding and how much should be redirected from fiber to satellite, with a rival ITIF paper suggesting the opposite, that it’s a myth that “LEOs Don’t Belong in BEAD”.
SpaceX has also been lobbying hard on this topic, publishing a network update that notes speeds and latency have both been improving in the US, even with more than 2M active users, and regulatory chief Dave Goldman highlighting his conversations with the FCC, NTIA and others “about how Starlink will make gigabit speeds available to people across the country”. Countering that, several articles have been published suggesting that Starship might never succeed, which would mean SpaceX being unable to launch the larger V3 satellites that the company is “targeting to begin launching…in the first half of 2026″
As one might expect, the lobbyists take an extreme position and the reality is somewhere in the middle: fundamentally there must be some limit to how much it is worth spending on fiber deployment to the most rural and remote locations, when Starlink (and in the future hopefully Kuiper) can provide an high quality, cost-effective residential broadband service. But on the other hand, putting fiber in the ground is a long term investment and it is comparing apples and oranges to equate that to the cost of a Starlink user terminal that the company expects to have a useful life of three years.
The X-Lab paper suggests that Starlink shouldn’t be funded by BEAD in areas where the population density is more than 6.7 Broadband Service Locations (BSLs) per square mile (which corresponds to limiting the addressable market to just over 3M homes around the country). However, when Starlink had waitlists in parts of the US such as the Pacific Northwest in January this year (since replaced by “congestion charges”), these were in regions with an average of about 4-5 customers per square mile, based on Starlink’s estimated US subscriber base in the area deemed “sold out”.
Since not all households would be expected to actually subscribe to internet service, this suggests that Starlink has already seen plenty of demand in areas at or above the proposed 6.7 BSL per square mile density limit, and those customers certainly found it worth paying for, even if the uplink speeds often fell short of the BEAD benchmark. Regardless of when/if Starlink actually gets to orbit, even the current Falcon 9 launch tempo is allowing the capacity of the Starlink service to improve significantly over time, so this proposed cutoff seems too low in limiting where Starlink can usefully provide service.
More to the point, the calculations in the paper simply don’t match the actual constraints on the Starlink service. The assumption is that only one satellite can serve a given cell, but a Starlink user would realize that’s not how it works in practice because if you set up a portable Starlink terminal and take it down each evening, one day you may be told (by the app) to point it say northeast, and the next day you may be told to point it west. That’s because the system is load balancing across the multiple satellites serving a given cell.
At the moment, the primary constraint on the downlink is the FCC’s limit on spectrum re-use (known technically as Nco=1) which means Starlink can only serve a single cell once with a given channel across Starlink’s 2GHz of downlink spectrum (10.7-12.7GHz). While the efficiency of spectrum use varies (for example it’s lower for a Starlink mini than a regular terminal), a reasonable estimate is ~3-4bps/Hz. So 2GHz of spectrum would equate to a maximum of ~7Gbps in a cell, which isn’t too different to the 6Gbps assumed in the paper. However, the FCC has allowed Starlink’s Gen1 and Gen2 satellites to be counted separately for the purposes of the re-use limit, and so the current theoretical maximum downlink speed in a cell is actually twice this level. And now the FCC is consulting on loosening these limits further.
The X-Lab paper focuses more on the uplink capacity as the key density constraint and it is certainly the case that the amount of spectrum available to Starlink is more limited there, because only 500MHz of Ku-band spectrum is allocated to uplink (14.0-14.5GHz) compared to 2GHz for downlink. However, the primary determinant of uplink capacity for Starlink end users is the number of timeslots allocated to uplink transmission, because the network uses Time Division Duplex (TDD) and was originally only configured to support transmission up to 10% of the time. That was intended to ensure that the terminal cannot produce enough radiation to heat up the head of someone standing in front of it (what the FCC refers to as SAR limits). Over time SpaceX has been able to improve this percentage (now 15.5% of the time for uncontrolled use) and professionally installed terminals can go even higher. So there’s no reason to conclude that the supposed 0.4Gbps per beam assumed in the paper is a hard limit.
On the other side of the lobbying effort, the ITIF paper ignores the fact that the BEAD funding mechanisms are extremely poorly suited to fund satellite deployments, as I discussed in this thread on X/Twitter. BEAD has been set up so you bid for money to deploy infrastructure in a particular geographical area, regardless of how many customers actually sign up. That makes sense when funding fiber or even wireless infrastructure: if you build a tower or lay a fiber line, the only way to make a return is to sell service within that coverage area. However, if you fund a satellite operator to build more LEO satellites, then those satellites will spend only a tiny fraction of 1% of the time over that area as they go around the Earth, and can devote 99%+ of the orbit to earning money from more valuable customers. So there is no real incentive for a satellite operator to actually sell service to the unserved customers.
The best way to square this circle would be to provide affordability instead of deployment incentives (i.e. a subsidy for terminals and/or monthly service), so that the satellite operator only earns money when end users in these unserved areas actually sign up, which was how the Affordable Connectivity Program (ACP) was structured. Otherwise the satellite operator is getting paid for something they are already doing: Starlink has over 7000 satellites in orbit already and is launching dozens every week, why pay them to launch a few hundred more? One possibility is to structure reimbursement payments “based on the number of subscribers the provider serves and/or enrolls” rather than “in equal installments throughout the period of performance”.
And when it comes to bidding, why wouldn’t any satellite operator bid a very low amount for the right to deploy service in unserved areas? If they can prevent terrestrial broadband technologies like fiber and wireless from getting subsidies for deployment, then they have a captive market to themselves. Certainly if both Starlink and Kuiper are bidding against one another, and these reimbursements are independent of the number of customers served, it would be logical for their deployment bids to be particularly low, since the cost of simply making service available is essentially zero. We saw in the RDOF auction (when Starlink didn’t face any meaningful competition from other satellite operators) that SpaceX was able to undercut terrestrial technologies, but the fight over whether or not they actually were going to receive their $885M in winning bids, made absolutely no difference to the number of satellites that the company put into orbit.
So in conclusion, satellite has a great opportunity to enhance broadband service in rural areas, potentially in more places than the very lowest density parts of the country. But unless the BEAD payments are linked to the number of customers served, the program will not do a good job of helping consumers realize those benefits.
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07.14.25
Posted in Broadband, Financials, KVH, Maritime, Operators, SpaceX at 4:29 pm by timfarrar
As I told the Wall St Journal last week, the revenue growth reported in the newly filed accounts for Starlink’s international operations is amazing, in the context of a satellite industry that does not grow fast. In fact, Starlink’s near $2B of international broadband service revenues reported in 2024 compares to about $3B for all other satellite operators combined, a roughly 40% market share that has been obtained in only the third full year of Starlink’s operations.
However, that alone represents a warning sign: in order to grow further and faster, Starlink now needs to focus heavily on expanding the market beyond traditional satellite users, not just winning customers from other satellite operators (though of course they will do that too). And terminal prices are already getting lower and lower: Starlink’s consumer terminal revenues in these international markets averaged only about $230 per new terminal manufactured in 2024, so terminal subsidies in 2025 (with 5M terminals manufactured in the last 11 months) may end up being as high as $1B.
These accounts don’t represent the whole of Starlink’s business, they exclude direct US sales to individuals, businesses and the government, which account for more than half of Starlink’s revenues. We’ve just published a note giving a more detailed breakdown of these accounts by customer type and geography, as well as an assessment of the changes to our 100+ page Starlink profile that was published last October. Get in touch if you’re interested in subscribing to our research.
One additional area of interest in Starlink’s financial reporting is the large prepayments that the company has received, which have gone a long way to shoring up its cash position and allowing the company to claim it has $3B of cash on hand (at least before the company handed over $2B of that to xAI). At the end of last year Starlink’s international business had booked over $600M of deferred revenue from one or more counterparties and I’m sure there will be lots of speculation about the source of those payments.
One example of how (much smaller) prepayments work is given by KVH, which as a public company helpfully discloses this information, with enough granularity to allow all of the details to be worked out. We published a profile of KVH last November which discusses all of this, but as shown below, KVH entered into a purchase of 15PB of data for a total of $16.95M in June 2024 (i.e. a price of $1.13 per Gbyte), with the data to be consumed over 15 months (according to KVH’s 2025Q1 call, the “follow-on pool” will be renegotiated “at some point later this year”).
However, according to KVH’s Q1 results, the company is far short of this goal, only having consumed 30% of the total after 9 months, and even being generous in terms of future growth in KVH’s Starlink business, it will likely take until early 2026 for the data pool to be used up. So the question is what will Starlink and KVH do at the end of Q3? Roll the additional data into a new larger pool? Or forfeit perhaps $5M of prepaid capacity?
This highlights one of the challenges for Starlink distributors that commit to prepurchase large amounts of data at an attractive rate. Each time a distributor renews their capacity pool, they may end up more and more dependent on Starlink continuing to supply them with capacity, and less and less able to divert spending to other LEO systems, even if they want to be “network-agnostic.”
And what then for other competing LEO providers who are seeking distributors to sell their services? Which distributors will actually have any spare budget to divert to these other sources of capacity? And what about the risk that Starlink might someday decide not to rollover millions of dollars of unused capacity if a distributor looks elsewhere? That’s likely to add to fears that Starlink will dominate the satellite industry, as I discussed in an NPR podcast a few weeks ago.
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07.07.25
Posted in Financials, SpaceX at 10:27 pm by timfarrar
As we head into summer, attention turns to the question of when SpaceX will launch its next secondary funding round and what valuation will be achieved. Over the last three years we have generally seen press reports in mid to late June, specifically on June 27, 2024, June 23, 2023 and June 13, 2022, which means a summer 2025 announcement is already overdue.
After the sharp jump in valuation to $350B in December 2024, the whisper number was that the next round was aiming for a $500B valuation. But with the political fallout in recent weeks is that still plausible? Is it even possible to raise a multi-billion dollar round for SpaceX right now? Of course there are nonsense valuation models out there, suggesting that SpaceX could be worth $2.5T in 2030, which don’t stand up to a moment’s scrutiny. Even a cursory sanity check would note that the TAM put together by ARK assumes each subscriber would receive 500kbps of provisioned capacity, which doesn’t increase between now and 2040. In reality, Starlink already provisions more than 2Mbps per subscriber today, and that number will need to more than double just to match today’s terrestrial provisioning rates, and then track double digit terrestrial growth rates. And when it comes to the financial modeling, the idea SpaceX will launch over 28,000 Starlink satellites in 2030 and sell all that capacity immediately to grow revenues by more than $80B during that year alone, is simply ludicrous. What is the point of this nonsense other than to convince gullible Musk fans who don’t bother to look at the Excel?
These secondary rounds don’t just serve to provide liquidity to employees, but also provide an important cash float for the company’s operations, due to the difference in timing between when the money comes in and when it’s paid out. It’s no surprise that there’s an equity round each December so that SpaceX can report a large cash balance at the end of each year (and pay down its credit line). That’s why SpaceX needs a very large Asset Backed Line of Credit (ABL), which the company had to increase in size in June 2023 after Elon Musk decreed that there wouldn’t be any more primary equity funding rounds.
The investment by Intesa Sanpaolo in October 2023 was critical in providing billions of dollars of liquidity to the company in the latter part of that year (so that the ABL could be paid down). Then in spring 2024 much of the money was used to buy back several billion dollars of Elon Musk’s SpaceX shares (his economic stake declined from 42.1% to 40.3% and his voting stake from 78.5% to 75.5%), when he needed cash to support a potential refinancing of Twitter. When that refinancing didn’t happen, Musk was able to execute a wash sale to avoid most taxes, by buying Gwynne Shotwell’s shares (and thereby increasing his economic stake from 40.3% to 41.7% and voting stake from 75.% to 79.3%) to persuade her to stay with SpaceX (and reject the Boeing CEO job that Boeing’s board apparently wanted to offer her).
It’s hardly surprising that many in the industry regard SpaceX’s CFO Bret Johnsen as a miracle worker for his ability to keep executing these financial deals and both providing Musk with cash when he needs it, and finding the money for SpaceX to continue investing billions of dollars in Starship plus new Starlink satellites and terminals each year (of course the above referenced nonsense model claims that SpaceX generated $2.6B of free cash flow in 2024 by simply forgetting about huge parts of SpaceX’s business, like Starlink terminals, which consume significant cash and working capital). The question now is whether, despite Musk’s best efforts to annoy the White House, Johnsen can keep the show on the road and execute another equity round at or above last December’s $350B valuation. And if he does, how much of the round will need to come from SpaceX buying back its own shares?
EDIT (7/8/25): Well I didn’t expect the news to break quite that quickly, but SpaceX has revealed that it is hoping for a roughly $400B valuation in the upcoming fundraising round. That number alone shows that the company may be feeling some pressure on valuation, or at least that Johnsen is trying to distance himself from some of Musk’s foolishness, since one might otherwise have expected the mooted valuation to be $420B. What’s even more significant is the suggestion that there will be a primary equity raise, in apparent repudiation of Musk’s April 2023 assertion that SpaceX doesn’t need any more primary equity fundraising rounds, because the company would be able to generate positive cashflows going forward (which was never true, instead SpaceX leaned more heavily on an expanded ABL credit line and then on Intesa Sanpaolo to meet its funding needs in summer and fall 2023).
It will also be interesting to see if more specific information emerges about Starlink revenues, which are now said to account for “more than half of SpaceX’s annual revenue”, because other details, including Starlink’s international accounts, suggest that Starlink’s 2024 revenues (excluding custom satellites, such as those being built for the NRO, which SpaceX doesn’t count in its Starlink revenue figures) were likely in the region of $5.7B, well below some analyst expectations (we published a note for subscribers detailing these previously unpublished Starlink figures last month).
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07.06.25
Posted in Echostar, Financials, Operators, Regulatory, SpaceX, Spectrum at 1:05 pm by timfarrar
After focusing my public posts mainly on Twitter/X threads for the past couple of years, I thought it would be better to resume blogging, especially as it’s got harder and harder to search X posts effectively. I’ve also been publishing numerous research publications, which included a detailed report on the IFC market last summer, an updated profile and revenue forecasts for Starlink in October 2024, and a new report projecting demand for satellite capacity in May 2025 that gives a full breakdown between LEO and GEO out to 2033 across the key professional verticals (maritime, aviation, backhaul, enterprise and government). Unlike some other industry forecasts, we are happy to share full details of our spreadsheets containing the historical base data, forecasting methodology and assumptions. One major satellite operator told us, “your assumptions (especially on the GEO outlook) differ from Novaspace’s, which is a bit more optimistic about the future of GEO (for now). And I tend to agree with your assessment/assumptions.”
And due to increased interest in the sector from investors, and the rapid pace of announcements, particularly in D2D, the research service now includes regular (approximately monthly) updates in response to key developments in the industry and takeaways from industry conferences. These include:
A summary of the WSBW conference (Sep 2024)
A note on the Globalstar-Apple deal (Nov 2024)
A briefing on the Globalstar investor day (Dec 2024)
An update on D2D and Starlink (Jan 2025)
A note on Starlink’s C-band filing (Feb 2025)
A summary of developments at Satellite 2025 (Mar 2025)
A review of AST’s technology (Apr 2025)
An update on EchoStar and the FCC (May 2025)
An update on EchoStar and AST (Jun 2025), and
A briefing giving details of Starlink’s international financials that have never been reported in the press (Jun 2025).
As another subscriber said recently, “Fascinating, as ever. Thanks for your continued bar-settingly-brilliant analysis.”
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02.07.23
Posted in Echostar, Financials, Globalstar, Handheld, Operators, Services, SpaceX, Spectrum at 8:35 pm by timfarrar
Yesterday, Globalstar filed an 8-K noting that on January 31 it had entered into a forbearance agreement with MDA and Rocket Lab, the contractors building 17 new satellites, under which additional payments beyond an initial $20M will be delayed until March 15. In addition, Globalstar noted that:
“The Company is currently exploring financing options for satisfying its remaining payment obligations under the Contractor Agreements, as well as its obligation to refinance its 2019 Facility Agreement. It cannot currently predict whether, and on what terms, any such financing will be available but maximizing shareholder value is the driving consideration.”
The reason for these financing challenges is that Globalstar is unable to close on the new first lien debt agreement to fund the satellites (that was expected to be backed by Apple to the tune of $450M) unless and until it has refinanced the $150M currently owed to Echostar under the 2019 Facility Agreement. Under the September 2022 Partnership Agreements between Apple and Globalstar, Globalstar is required:
“(i) upon commencement of the Services, to convert all loans outstanding under the 2019 Facility Agreement that are held by affiliates of the Thermo Companies (collectively, “Thermo”) into non-convertible perpetual preferred stock with a cash pay interest rate of 7% per annum or lower, convertible preferred stock with cash pay interest rate of 4% per annum or lower, common stock, or another security acceptable to Partner (the “Thermo Debt Conversion”) and (ii) within 90 days of the commencement of the Services, to refinance or convert all loans outstanding under the 2019 Facility Agreement that are held by persons other than Thermo on terms that are no less favorable to the Company than the Thermo Debt Conversion.”
Of course there was no chance whatsoever that Charlie Ergen would agree to exchange first lien debt with a PIK interest rate of 13.5% for preferred stock that would be subordinate to ~$500M of new first lien debt with an interest rate of 4%-7%, so the only plausible reason for Jay Monroe to agree to these terms was a Hail Mary bet that he could find a buyer for Globalstar before the deadline occurred for Echostar’s debt conversion.
That deadline is coming due on Monday February 13, 90 days after Apple began offering services on November 15, 2022 and no buyer has appeared for Globalstar. The Key Terms Agreement has specific provisions dealing with an offer for the company:
(i) Sale Notice. If a third party submits a non-frivolous proposal to acquire any material Required Resource or the Spectrum Subsidiary or for a Change of Control transaction involving Globalstar or Globalstar’s board of directors (or any committee thereof, including the Strategic Review Committee) approves a process with respect to the potential sale of any material Required Resource or the Spectrum Subsidiary or a Change of Control transaction (each, a “Sale Transaction”), Globalstar shall provide written notice of the Sale Transaction, with the material terms and related process of such transaction, including (A) at a minimum the structure of, and the assets proposed to be sold in the Sale Transaction and any relevant timelines or deadlines relating to the Sale Transaction, and (B) other material terms and related process to the extent permitted by Globalstar’s confidentiality obligations (a “Sale Notice”), to Partner within one day following Globalstar’s receipt of such proposal or such determination by Globalstar’s board of directors (or any committee thereof, including the Strategic Review Committee), which Sale Notice shall be considered Globalstar Confidential Information. If Globalstar enters into any confidentiality agreement relating to a potential Sale Transaction after the Effective Date, such agreement shall not restrict Globalstar from providing to Partner any of the information set forth in Section 10.2(e)(i)(A) that is required to be included in the Sale Notice.
(ii) Discussions. Following the delivery of the Sale Notice to Partner, Globalstar’s board of directors (or any committee thereof, including the Strategic Review Committee) shall, and shall cause the management, employees and other representatives of Globalstar to conduct discussions with Partner in good faith and on a non-exclusive basis and provide Partner with all information made available or provided to any potential third party acquiror, to enable Partner to make a proposal to Globalstar for a Sale Transaction, during the ten business day period following the date of the Sale Notice. Globalstar hereby agrees that it shall not, and shall cause its Related Entities, management, employees and other representatives not to, enter into a term sheet or letter of intent or other binding agreement or obligation with any other third party with respect to a Sale Transaction during the ten business day period commencing on the date of the Sale Notice.
(iii) Proposals. If Partner makes a proposal for a Sale Transaction prior to the expiration of the ten business day period, then Globalstar’s board of directors (or any committee thereof, including the Strategic Review Committee) will exercise its fiduciary duties to evaluate Partner’s proposal along with any other proposals for a Sale Transaction. In the event Globalstar’s board of directors (or any committee thereof, including the Strategic Review Committee) determines the proposal from Partner is in the best interests of Globalstar and its stockholders, then Globalstar will enter into a binding agreement to negotiate in good faith with Partner on an exclusive basis for a period of not less than 20 business days.
(iv) Consummation. If Partner declines to make, or Globalstar (after having considered such offer or proposal in good faith) declines to accept or pursue, a proposal for a Sale Transaction from Partner, then Globalstar shall be permitted to consummate a Sale Transaction with a third party, provided that Globalstar shall have first obtained and delivered to Partner a written agreement from the acquiror in the form included as Attachment 7.
So what happens next? The statement in the 8-K that “maximizing shareholder value is the driving consideration” suggests that Ergen will soon (or perhaps already has) submitted a “non-frivolous proposal” to acquire Globalstar, presumably at a very low price, given that Globalstar will soon be in breach of its obligations to Apple. This will trigger the 30 (business) day period for Globalstar to advise Apple of a sale transaction and then negotiate on an exclusive basis, which would also run through the mid March satellite payment deferral period (assuming Ergen has now made an offer for the company).
However, given the cards that Ergen and Apple hold in respect of a potential forced default on the Apple agreement, and that neither appears to have much interest (or belief that there is meaningful value) in Band 53, it is hard to see how their offers would meaningfully exceed the value generated by Globalstar’s satellite services, including the value of Apple’s messaging contract. I estimate that in those circumstances the best Globalstar might obtain would be roughly $1B-$1.5B in cash plus an agreement to assume the costs of the construction contract. That would be a pretty disastrous outcome for Jay Monroe after he’s invested over $800M and 20 years of his life in trying (against overwhelming odds) to make something of Globalstar, and Globalstar shareholders would also be hugely disappointed.
The most interesting question is what Ergen would seek to gain from Apple, if he was to either enable Apple to buy Globalstar at a low price or buy Globalstar himself (presumably through Echostar) and continue the partnership. One obvious possibility could be to collaborate to include the 2GHz satellite spectrum held by DISH and Echostar into future iPhones for additional NTN capacity. Perhaps not entirely coincidentally, Echostar announced plans to build a 28 satellite LEO IoT network just last week.
I also noted a few days ago that D2D is likely to be the next focus for hype over Starlink’s future prospects (which we can already see in the decision of SpaceX’s Jonathan Hofeller to join the Satellite-Cellular panel at Satellite 2023). And I predicted in my D2D report that SpaceX’s next step might be to acquire more MSS spectrum, most obviously Omnispace, but perhaps even Ligado. So now we could face the real prospect of a fight for this new market opportunity and the associated global satellite spectrum rights between Musk and Ergen, building on prior skirmishes over the 12.2-12.7GHz band. Wouldn’t that be fun!
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02.05.23
Posted in Globalstar, Handheld, Iridium, Operators, Regulatory, Services, SpaceX, Spectrum, T-Mobile at 9:42 pm by timfarrar
There’s been plenty of hype about the Direct-to-Device (D2D) market for satellite to smartphone connectivity in the last couple of years, and that has only intensified in the wake of recent announcements about Apple’s partnership with Globalstar and Qualcomm’s partnership with Iridium. Some analysts have even gone so far as to suggest that D2D represents the “largest opportunity in Satcom’s history“.
But the reality is that going beyond basic messaging presents significant technical challenges, and the messaging market will remain modest in size, anchored as it is by the size of Apple’s deal with Globalstar, which costs Apple little more than $100M per year for both global coverage and the ability to support tens of billions of messages per year. Regulatory challenges are still significant, with some regulators going so far as to ban systems that plan to use terrestrial spectrum from operating anywhere near their territory.
Nevertheless, D2D is becoming the next opportunity that SpaceX can hype, beyond its core fixed broadband market, as it looks for additional increases in the company’s valuation so it can keep raising money to keep developing Starship, while putting even more distance between Starlink and broadband competitors like OneWeb and Kuiper. And just as SpaceX has scared away potential investors in nascent LEO broadband systems like Telesat’s Lightspeed, we expect SpaceX to crowd out many of the other players in the D2D market, now that funding for speculative space projects is becoming more scarce.
Unfortunately, the perspectives of some investors and commentators have been skewed by the unrealistic D2D projections that were made during the SPAC boom, and they have failed to look at relevant benchmarks such as current levels of spending on international roaming. Our new 70+ page report on the D2D satellite smartphone communications opportunity, which has just been released, looks in detail at the regulatory constraints and technical limits to system performance, and projects revenue growth in both the messaging segment and in the voice and data segment over the next decade.
Our conclusion is that while D2D messaging is likely to deliver meaningful upside for existing MSS networks like Globalstar and Iridium, it will be much more difficult to gain global consensus on use of terrestrial spectrum. As a result, SpaceX is likely to hedge its bets and pursue a twin-track strategy of seeking access to both terrestrial and satellite spectrum, and potentially follow up its 2021 acquisition of Swarm with further deals to buy satellite operators and their spectrum licenses.
Then, as Starlink moves beyond its initial D2D messaging capabilities later this decade, and perhaps even amplifies the hype still further by suggesting that the next step will be to build a SpaceX smartphone, Starlink is likely to gain a majority share of the D2D market. Even so we project the potential market size to remain far smaller than Starlink’s fixed broadband opportunity and it is not at all clear that it will be possible to make an economic return on these D2D investments.
If you’d like to order a copy of the report then an order form is available here. And you can hear me speak about many of these issues this coming week at the SmallSat Symposium in Mountain View, CA.
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09.08.22
Posted in Broadband, Financials, Operators, SpaceX, Spectrum at 10:06 am by timfarrar
Up until 2020, I was very skeptical about the LEO broadband opportunity, and whether any of the planned systems would be able to raise enough money and build out a constellation that could deliver a service that is competitive with existing GEO operators. That skepticism seemed entirely justified after the failure of LeoSat in late 2019 and OneWeb’s spiral towards a bankruptcy filing in March 2020. SpaceX had also given wildly over-ambitious forecasts for Starlink’s revenue and timing, with projections for $6B of revenue in 2021, rising to over $30B in 2025.
But over the last two years, Starlink has launched a consumer broadband service that has upended the industry by providing vastly more capacity per subscriber than Viasat and Hughes, with a simple, easy to install terminal, and as of June 2022 already served over 400K users. Successfully developing such a system is an extraordinary technical feat when so many previous broadband constellation plans have failed. And after raising over $6B in the last 2.5 years at ever increasing valuations, SpaceX has been able to launch thousands of Starlink satellites and build scale that competitors will struggle to match.
I didn’t think that SpaceX would pull this off, but they did, and today too many people in the industry, who are rightly skeptical of Elon Musk’s litany of unfulfilled promises, remain far too complacent and are continuing to dismiss Starlink as just a consumer service that won’t threaten other parts of the satellite market, or are even suggesting that the network remains economically unviable and is doomed to failure.
However, the dam is starting to break for acceptance of Starlink amongst professional users, with Royal Caribbean’s recent move to deploy Starlink representing just the start of disruption in traditional satellite verticals. And SpaceX’s latest $2B in equity funding should see the company through to late 2023, by which time I expect Starlink to have captured around 1M users and have reached cash flow breakeven (even accounting for ongoing satellite replenishment costs).
That doesn’t mean Starlink (or SpaceX more broadly) will offer a positive return to those recent investors at the ludicrous valuation of $127B, because satellite will remain a last resort solution compared to terrestrial fiber, cable modem and even 5G fixed wireless options, but it does mean that there’s no reason to suppose that Starlink will cease to be an enormous competitive threat to the satellite industry in the foreseeable future.
One largely unrecognized issue in the LEO market is that there are significant benefits to scale, due to the virtuous circle that comes from adding more satellites to a constellation, as shown in the diagram below.
With more satellites in the sky, the user terminal antennas don’t have to scan as far to find a satellite to connect to, so they can be cheaper, with fewer antenna elements. And the altitude of the constellation can be lower, improving the link margin and capacity, and allowing the user terminal to operate at lower power. Capacity provisioning also becomes more uniform, as traffic loading can be averaged across multiple satellites, improving the quality of service. Starlink has been designed from the ground up to minimize the cost of the terminal, unlike traditional satellite systems (even recent designs like Telesat’s Lightspeed), which optimize the satellite and treat the terminal as an afterthought. Cheaper terminals and more capacity attract more users and generate more revenue, which can be fed back into building yet more satellites, making it ever harder for competitors to catch up.
So now we’re in a position where Starlink has clearly won the race for LEO broadband (at least for the next 4-5 years, since Amazon’s Kuiper won’t be completed before 2026-27), and is likely to become the largest satellite operator by revenue within that timeframe. Our new report on LEO broadband and the future of the satellite industry forecasts what this means for industrywide growth in revenue and traffic, and analyzes how satellite operators, distributors and equipment suppliers are likely to respond to what for many will represent an existential threat. The outcomes will include an acceleration of industry consolidation, decisions to exit, and even bankruptcies. The report also complements our June 2022 Starlink profile, which analyzes Starlink’s technology and forecasts Starlink’s revenue growth by segment. You can order one or both reports using the form here, or contact us to discuss subscription options for all of our industry analysis.
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