SpaceX’s Starlink Could Build a Nationwide Cell Network. Here’s What Investors Need to Know
Space Exploration Technologies‘ (SPCX +8.62%) future hinges on its ability to scale its AI division, which comprises more than 90% of the company’s total anticipated growth runway. But for now, the space company’s Starlink satellite network is generating the most cash flow.
Starlink already provides millions around the world with high-speed internet connectivity. The division has also begun selling bandwidth to terrestrial cellphone networks when users are outside a service zone.
Long term, however, Starlink appears poised to launch its own cellular network. Here’s what investors should know.
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Here’s why Starlink’s potential cellular network matters
According to Axios, “SpaceX has spent billions on spectrum and struck a multiyear agreement with Qualcomm to build a 5G network.” The outlet also reports that SpaceX may be interested in acquiring an existing terrestrial cellular network to jump-start its user base and acquire additional frequency rights.
SpaceX estimates that the entire Starlink opportunity long-term is valued at roughly $1.6 trillion. Based on the valuations of major U.S. carriers, a successful cellular division could capture several hundred billion dollars of that estimated total value.
Image source: Getty Images.
But building a terrestrial network won’t just be about consumer cellphone plans. As Axios points out, a “combined satellite and terrestrial network could eventually serve autonomous vehicles, delivery drones, robots, and other connected devices. That could give SpaceX opportunities beyond the already competitive consumer wireless market.”
In short, building a complementary terrestrial cellular network would help SpaceX not only launch a consumer cellphone offering, but also target the rest of its estimated $1.6 trillion connectivity opportunity. It will likely take years for this process to fully play out, but it’s key for SpaceX to realize all of its growth opportunities and justify its lofty valuation.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Qualcomm and Space Exploration Technologies. The Motley Fool has a disclosure policy.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.