Starlink IPO, a primer

Starlink, a division of SpaceX, was conceived by Elon Musk to provide satellite internet service. The project’s roots trace back to Musk’s vision of a future Mars colony, where he saw the need for a high-speed internet infrastructure. The idea of Starlink was to create a network of satellites in low Earth orbit (LEO), providing internet access to underserved and remote areas of the world.

In 2015, SpaceX publicly announced the Starlink project, and in 2018, they launched their first two test satellites. These launches marked the beginning of an ambitious plan to deploy thousands of small satellites in LEO. The primary goal was to create a megaconstellation, which would form the backbone of their global broadband service.

The development of Starlink coincided with advancements in satellite technology, particularly in miniaturization and cost reduction. SpaceX’s ability to launch satellites at a lower cost, thanks to their reusable Falcon 9 rockets, was a key factor in the feasibility of the project.

By 2019, Starlink began launching operational satellites, and the constellation grew rapidly. Each satellite was equipped with advanced technologies like phased array antennas and krypton-powered ion thrusters, enabling them to communicate with ground stations and adjust their orbit.

In 2020, Starlink started beta testing its service, dubbed “Better Than Nothing Beta,” providing users in select areas, like North America, with internet access. The service was unique due to its relatively low latency and high-speed capabilities compared to traditional satellite internet. This period saw an exponential increase in the number of satellites, with Starlink regularly conducting launches to expand its network.

Throughout its development, Starlink faced various challenges, including concerns from astronomers about the impact of the satellites on night sky observations and discussions about space debris and satellite management in LEO.

Despite these challenges, Starlink continued to expand its services, aiming to provide global coverage and improve internet access in remote and rural areas. The project’s progress is closely tied to SpaceX’s broader goals in space exploration and Musk’s vision of interplanetary connectivity, particularly between Earth and potential future colonies on Mars.

Starlink’s story is still unfolding, with ongoing launches and service expansions, making it a significant player in the future of global internet connectivity.

Starlink IPO. What we know

On November, 2023, Bloomberg posted an article entitled “SpaceX Weighs Spinning Off Starlink Via IPO as Soon as 2024”.

Bloomberg said SpaceX is in discussions about potentially launching an initial public offering (IPO) for its rapidly expanding Starlink satellite division, possibly by late 2024, according to Bloomberg sources it claimed were familiar with the matter. This move, the authors Edward Ludlow, Gillian Tan, Esteban Duarte, and Ryan Gould said aims to leverage the growing interest in space-based communication services. To prepare for this, SpaceX has been transitioning Starlink’s assets into a separate subsidiary, which could be the entity offered in the IPO, although these plans are not set in stone and could change, including a potential delay to 2025.

Space Exploration Technologies Corp., known as SpaceX, and its founder and CEO Elon Musk have not officially commented on these discussions. Following a report by Bloomberg on this topic, Musk labeled it as “false” on X, his own social media platform, but did not provide further details.

Musk has hinted at the possibility of a Starlink IPO for several years, suggesting that it would happen once the company had a stable understanding of its cash flow. In 2021, he indicated that the IPO would be considered when the company had a good grasp on its financial trajectory. Despite mentioning last year that an IPO might be years away, the success and growth of Starlink have been significant recently. It is projected that Starlink will bring in about $10 billion in sales next year, surpassing SpaceX’s rocket launch revenues and constituting a major portion of the company’s total income.

SpaceX, established in 2002, operates over 5,000 satellites that provide high-speed internet across more than 60 countries. The company has committed substantial investment to expand this network. Starlink is part of a competitive sector that includes projects like Amazon.com Inc.’s Project Kuiper, both vying to deploy thousands more satellites in low-Earth orbit to offer connectivity in remote or disaster-affected areas.

While financial specifics for SpaceX, a privately held firm, are limited, Musk recently shared on X that Starlink had achieved cash flow breakeven, marking a notable improvement from a year ago when he expressed concerns about the venture’s financial sustainability.

On November 10, 2023 investor Ron Baron told CNBC that he expects Starlink to go public not in 2024 but in 2027.

““We think that by the time they go public with SpaceX, with Starlink … in 2027 or so, four years, the company will be worth $250 billion to $300 billion,” he told CNBC’s Andrew Ross Sorkin.

Baron, who has invested in multiple Musk ventures said an IPO might be a way for some investors to exit, although he does not want to.

“A lot of people have been investors for a long time, and they probably want exits,” he said.  “I don’t want an exit in my lifetime, but there are people who want exits.”.

How does Starlink’s technology work?

Starlink’s technology represents a groundbreaking approach to providing high-speed internet access across the globe, utilizing a constellation of small satellites in low Earth orbit (LEO). The heart of Starlink’s system lies in its extensive network of satellites, which are positioned much closer to the Earth compared to traditional geostationary satellites, resulting in reduced latency and increased data transfer speeds.

The satellites employed by Starlink are equipped with advanced technologies like phased array antennas and krypton-powered ion thrusters. Phased array antennas allow the satellites to dynamically direct their broadband signals without physically reorienting the satellite, enabling efficient communication with ground receivers. These antennas play a crucial role in maintaining a stable and high-bandwidth internet connection, even as satellites move rapidly across the sky.

The krypton-powered ion thrusters are used to adjust the satellite’s orbit, avoid collisions with space debris, and ultimately deorbit the satellite at the end of its life cycle. This is part of SpaceX’s commitment to minimizing space debris and ensuring a sustainable space environment.

On the ground, users connect to the Starlink network through a Starlink Kit, which includes a user terminal commonly known as a “dish.” This terminal automatically aligns itself to communicate with the satellites overhead. The user terminal is compact and easy to set up, designed to require minimal technical knowledge from the user.

The interconnected nature of the Starlink satellite network allows for data to be handed over from one satellite to another as they pass over different parts of the Earth. This network is supported by ground stations spread across the globe, which link the satellite network to the existing internet infrastructure. These ground stations receive data from the satellites and then connect to fiber-optic internet networks, bridging the space-to-Earth gap in the connectivity chain.

Starlink’s approach marks a significant departure from traditional satellite internet services that rely on fewer, larger satellites in much higher geostationary orbits. By operating in LEO, Starlink’s satellites can reduce the time it takes for data to travel between the user and the satellite, thereby decreasing latency and improving the overall speed and reliability of the internet service.

As Starlink continues to expand its constellation with more satellite launches, the network’s capacity, coverage, and performance are expected to improve, bringing high-speed internet access to more locations around the world, including those previously underserved or unserved by traditional internet infrastructure.

Who are Starlink’s competitors?

Starlink, SpaceX’s satellite internet service, operates in a competitive and rapidly evolving market for space-based internet connectivity. Its main competitors include:

1. OneWeb: A company that is deploying its own constellation of satellites to provide global broadband internet services. OneWeb’s approach is similar to Starlink’s, focusing on low Earth orbit (LEO) satellites to reduce latency and increase speeds.
2. Amazon’s Project Kuiper: A planned satellite internet service by Amazon, aiming to launch over 3,000 satellites into LEO. It is backed by significant resources and has the potential to be a major player in the market.
3. Telesat: A Canadian company that is working on its LEO satellite network, known as Telesat Lightspeed, targeting broadband service delivery to remote and rural areas as well as maritime and aeronautical sectors.
4. Viasat and HughesNet: These companies offer geostationary satellite internet services and are established players in the satellite internet market. Their services typically have higher latency compared to LEO-based services but have wide coverage areas.
5. SES O3b: This company operates a network of medium Earth orbit (MEO) satellites offering high-speed internet services to businesses, governments, and other organizations around the world.
6. AST & Science’s SpaceMobile: This company is developing a space-based cellular broadband network that aims to connect directly to mobile phones, presenting a unique approach compared to traditional satellite internet models.
7. China’s Hongyun and Hongyan Projects: Initiated by China Aerospace Science and Industry Corp and China Aerospace Science and Technology Corp respectively, these projects aim to establish satellite constellations for global broadband coverage, potentially competing in the same market as Starlink.

The satellite internet market is characterized by rapid technological advancements and significant capital investments, with several companies vying to establish global connectivity through innovative satellite networks.