Musk’s Starlink needs $30 billion investment to be viable

The Tesla Inc CEO and founder of SpaceX, billionaire Elon Musk said that he expected his Starlink satellite internet to attract an investment of $20 billion to $30 billion.

He was speaking in a video interview from California with the ongoing Mobile World Congress in Barcelona. He revealed that the company had managed partnerships with two major telco companies that would be helpful in deploying fifth-generation mobile and cellular networks.

Musk said investment costs before Starlink achieves fully positive cash flow would be $5-$10 billion.

Starlink Satellites

Starlink offers internet to the remotest parts of the world through low orbit satellites. It will most likely be able to provide global coverage by September, according to the company’s president, Gwynne Shotwell. The network has already garnered over 500,000 preorders for its service It has more than 1,800 satellites aloft and plans to deploy another 12,000 satellites at the cost of roughly $10 billion. Currently, it offers beta services in 11 countries, adding more every month. The current customer base is 69,000.

Musk said during his video call that the company was losing money on its Starlink terminals that receive the signals from the satellites for broadband beaming.

The terminals cost $1,000 to make, and the company sells them for $500 – plus a $99 monthly subscription. The company will soon release a new model of its terminal, which will be cheaper to make, he said.

The high cost of investment is a point of worry for some analysts who fear that services are aimed at people living in remote parts of the world and they will not be able to afford the high tariffs needed to cover the costs.

According to analyst Tim Farrar, president of TMF Associates, Starlink needs a few million subscribers to pay $99 a month to recoup a $5 billion investment in a year’s time.

And to achieve the ambitious $30 billion revenue a year that Musk talks about, it would require tens of millions of subscribers to achieve.

Once it is able to give continuous internet services, the company will seek the required regulatory approvals. SpaceX has got approval from the US Federal Communications Commission this year to deploy some Starlink satellites at a lower earth orbit than planned to provide high-speed broadband internet services.

There are some reservations about deploying so many satellites at such low orbits. Astronauts fear that they will obstruct observations and even create some signal interference.

SpaceX is working with NASA and other research labs to minimize the risk to the astronauts and the space observatory. Plans are to tilt the angle of the satellite and paint it black to stop reflection from the Sun. But will it be enough is yet to be seen.

The Starlink team is in talks with “several” airlines to beam internet to their airplanes, the project’s vice president Jonathan Hofeller, SpaceX’s VP of Starlink and commercial sales, told a panel at the Connected Aviation Intelligence Summit.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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