Aside from keeping track of all the latest data in cloud-based repositories, satellites are also becoming valuable to the space industry. The space industry includes building rockets that can get satellites into orbit. So, with the further development of the satellite industry, analysts can expect movement in satellite internet stocks.
With private interests and increasing technological capabilities, it’s clear that the pace of space development is not slowing down, which could accelerate humanity’s capabilities in exploring the final frontier.
Why invest in satellite internet stocks
In 1957, the Soviet Union launched the Sputnik 1 satellite, beginning the space age. Over the years, various countries such as Spain, Japan, China, Canada, India, the UK, Germany, Argentina, and Luxemburg have joined the US and Russia in contributing to space technology development.
More companies contribute to the space industry’s growth with the reduced costs of satellite and rocket fuel. According to data, more than 3,000 satellites are in orbit around Earth. The number of these objects will likely increase significantly in the next decade.
The global revenue of the satellite industry comes from various segments such as ground equipment, satellite services, satellite manufacturing, and the launch industry. Satellites have played a vital role in the technological advancements of today. They have traveled thousands of kilometers away from Earth and have ushered in new scientific and military capabilities.
These satellites play a vital role in our lives. They provide us with crucial information and entertainment. They also keep us safe. As a result, the future will heavily rely on advanced satellites.
The growing popularity of satellite broadband Internet Access will conceivably drive the industry’s growth in the coming years as bandwidth needs to meet the increasing demands of nations.
These are all excellent reasons to consider investing in satellite internet stocks.
Image credit: NASA
What Is Satellite Internet?
Satellite internet is a wireless internet service sent from space. More precisely, from satellites orbiting the Earth. It’s different from traditional internets like cable or DSL because the data does not transmit through wires. Since satellite internet is the only internet service provider available countrywide, it is usually the only option for many rural businesses and homes. Viasat and HughesNet are the two leading providers of satellite internet in the US. In the future, other companies such as Project Kuiper from Amazon and Starlink from SpaceX will enter this industry.
Satellite internet works by sending and receiving radio waves from satellites orbiting Earth. Data transmission happens through a communication network. It starts with your device and goes through a satellite dish to a ground station. Ground stations are known as NOC (Network operations centers).
Data travels back and forth between space and Earth. A satellite dish delivers the data to your device on Earth. Satellite internet is a five-part relay system that consists of a satellite dish, a modem/router, an Internet-ready device, a Satellite in space, and a Network Operations Center (NOC).
Five-part relay system
An internet-ready device is a device that can access the Internet using the proper service. That includes mobile platforms, gaming consoles, smartphones, smart TVs, or any other internet equipment. When you use an internet-capable device, it sends and receives data through its modem/router. A modem translates data from a satellite dish to a device that’s connected to the Internet. You can connect various devices to your modems using an Ethernet cable, such as computers or smart TVs. Of course, Wi-Fi capabilities are still necessary for tablets and smartphones.
A router is a device that connects to a modem. It then broadcasts an internet signal to connect to the network from a phone, tablet, laptop, etc. Viasat and HughesNet satellite internet modems have a built-in router. You can upgrade your network with a better model, however. Your home satellite dish is the next step in the relay. It coordinates with the satellite to receive and transmit information back to you. Since most RV owners rely on satellite internet to get around, the location of their satellite dish can make it difficult to get Internet when traveling.
Satellite in space
Satellites used for internet service hover over the equator. They keep their distance from Earth by 22,000 miles. A geostationary orbit is a type of satellite that maintains a consistent rotation around the planet. It allows two-way data communication between a dish and a hub. Starlink and Project Kuiper’s next-generation satellites are about 300 miles above Earth. They’re from SpaceX and Amazon, respectively. Next-generation satellites are launched into low Earth orbit (LEO) to provide faster internet connections and lower latency. However, due to the limitations of the Starlink satellites, they cannot offer the same coverage area as those using geostationary orbit. Starlink would need to launch thousands of satellites to provide the same coverage area as two or three traditional satellites.
Network operations center (NOC)
When someone requests information from the Internet, like opening a website or streaming a show, the data goes through a relay. The satellite beams that request to the NOC. When users request information, the NOC uses a larger satellite dish to receive and gather the data they need. Afterward, the relay sends the information back. This process involves sending data about 22,000 miles into space and back. It happens in fractions of a second. Because the information travels so far, users may experience more latency (or lag) when using a satellite internet connection. However, advancements in technology reduce latency and make satellite internet much faster than before.
Image source: Donald Giannatti
What are LEO Satellites?
The telecommunication industry focuses on providing faster connectivity solutions to address the varying needs of its customers. For this reason, satellite technologies have been widely used in the last half of the 20th century to provide communications services globally.
The satellite communication market will shift from Geosynchronous (GEO) satellite technology to Low Earth orbit (LEO), as it is more advantageous for operators to utilize it. Low-Earth Orbit satellites are around 50 times closer to Earth than GEO satellites and typically offer better connectivity and lower latency.
Since it consumes less energy to place a satellite into an LEO, it needs less powerful amplifiers for transmission. As a result, many communication apps such as the Iridium phone system use LEO.
Can LEO Satellites Bridge the Connectivity Divide?
The COVID-19 pandemic has accelerated the pace of digital transformation, but it also highlighted the challenges of providing universal internet access. The report by the ITU revealed that the penetration rate of the Internet in the developed world is 87%, while in developing countries, it’s 47%. In comparison, the least developed countries have a rate of 19%.
Aside from geographical access, the cost of building physical infrastructures such as fiber optic cables is also a crucial factor that prevents many people from accessing broadband Internet. Satellites known as LEO can provide low latency broadband connectivity and global coverage. Therefore, they do not require large ground infrastructures typically associated with traditional satellites.
Despite its potential to address the digital divide, the commercialization of LEO is not yet in sight. While satellite modem subscription fees can be customized to meet various market and profitability needs, the end-user terminals typically cost over $1,000. Starlink’s beta version of end-user terminals, released in October 2020, is heavily subsidized to drive adoption with the price of $499 per device. The cost of end-user terminals remains a significant constraint for Starlink and Kuiper, as seen from their announcements.
According to expectations, the cost of end-user terminals will likely reach around $130-300 per device by 2030.
Further benefits of LEO
The global satellite communications market will expectedly grow at a robust rate of 7% annually to reach $40 billion by 2030. Although the market is still relatively new, it can snowball over the next decade. LEO technology will drive most of the growth, accounting for around 40% of the overall market by 2030.
Its high-quality and enhanced coverage is well-suited to serve areas where terrestrial connectivity is unavailable. In terms of technology, LEO can promote the adoption of the Internet of Things (IoT) and digital business. Particularly in the oil and gas industry.
By delivering high-quality connectivity to the remote sites of oil fields, LEO technology can help operators enhance their digital capabilities and security initiatives. Also, LEO technology can help airlines offer better connectivity in-flight. Additionally, future developments in LEO will enable autonomous vehicles in inland transport.
Finally, through LEO technology, cities can benefit from enhanced connectivity and avoid the need for in-ground infrastructure. That eliminates the need for costly infrastructure upgrades and provides a backup system in terrestrial failure.
The future of LEO satellites
A few global players will dominate the satellite internet market according to expectations. Starlink has the advantage of being the first-mover in the US. However, it will likely face competition from other players when they finally enter the commercial market. For example, Amazon’s Project Kuiper is an ambitious project that will launch in 2026. It will most likely launch alongside other similar ventures.
Despite the potential profitability of the LEO satellite market, its various risks remain unresolved. First and foremost, the constellation is still not complete, and the number of use cases is limited.
From a commercial point of view, a lack of awareness and possible prohibitive prices could result in insufficient penetration or uptake of certain services. From a regulatory perspective, the requirements imposed by international organizations and local authorities on businesses could affect service continuity.
Instead of being relegated to a silo, many believe that LEO technology should develop interconnected ecosystems for technology companies.
For example, SpaceX aims to enable Tesla cars to connect to the Internet using its cellular network through its Starlink satellite. That could allow the development of self-driving vehicles. Similarly, project Kuiper could help Amazon expand its cloud services offerings by enabling it to capture and process large amounts of data through satellites.
In addition, as evidenced by the acquisition of a 24% share in OneWeb by Eutelsat, satellite operators are increasingly looking to expand their capabilities in the areas of LEO satellites.
Apart from privately-owned businesses, China could also become a disruptor in the satellite market as it prepares to establish a mega-LEO constellation with over 13 000 satellites.
Image credit: Howard Bouchevereau
iPhone 13 satellite connectivity – rumors
While the launch of the iPhone 13 was around the corner, there were a lot of rumors swirling around. The analyst Ming-Chi Kuo speculated that the upcoming iPhone 13 would have a built-in satellite communication system that will allow users to send and receive calls without cellular coverage.
Ming-Chi Kuo stated that the iPhone 13 would support low orbit or satellite communication in his notes to investors. That will allow users to make calls and send messages in areas hard to reach with 4G LTE networks. In addition, according to Ming-Chi Kuo, the company was working on a custom version of the Qualcomm X60 baseband modem that would allow users to connect to a satellite without a local network connection.
According to Kuo, the potential impact of satellite communication on the network industry is comparable to the mmWave 5G technology. That suggests that Apple might have considered using both technologies in its products. The company has also established a research and development department to accelerate the pace of innovation.
Even though ultimately, iPhone13 did not come with this feature, such capability might be around the corner with advancing technology.
How to invest in satellite internet stocks?
The rise of space exploration and spaceflight firms is mainly due to the increasing public interest in the area and lower costs. Elon Musk and Jeff Bezos have both invested in their private space firms. The report noted that the space industry will reach a total of $1 trillion by 2040.
The aerospace and defense industry was valued at around $35 billion in 2020. However, according to Morgan Stanley, the sector is expected to expand beyond defense and aerospace, including information technology and telecom. SpaceX, owned by Tesla, and Blue Origins, which Jeff Bezos leads, are likely to guide this new wave of tech companies. The value of Blue Origin is over $10 billion, while the value of SpaceX is at $74 billion.
Due to the increasing number of private funds in the space sector, commercial space applications, such as space tourism and broadband services, are expected to dominate discussions. SpaceX, the space company owned by Elon Musk, launched Starlink, a constellation of satellites that will provide broadband Internet services. SpaceX CEO Elon Musk has also mentioned that he might take his Company’s Starlink public even before SpaceX. Amazon.com’s (AMZN) chair Jeff Bezos took a flight aboard a spaceplane operated by Blue Origin, a private company founded by Amazon’s CEO.
From the investors’ perspective, it is vital to follow the industry trends when choosing between satellite internet stocks to make the right decision.
Other participants on the satellite internet stocks market
The number of investors in satellite internet stocks has grown significantly. According to the investment bank, the cost of launching a satellite has significantly decreased in recent years due to reusable rockets. In addition, due to industry innovations, the satellite mass production cost dropped from around $500 million per satellite to $500,000.
Aside from Tesla and Amazon.com, some of the top companies in the space sector include Lockheed Martin, Northrop Grumman, and The Boeing Company. According to Bank of America, the space market will reach a value of over $1 trillion by 2030.
Image credit: NASA
Best satellite internet stocks to invest in
Internet satellite stocks have been in focus lately because Apple is getting ready to release a new version of its iPhone. According to a report, Apple is working with Globalstar to secure a satellite service provider for the upcoming iPhone 13 lineup. Additionally, the iPhone 13 will reportedly have satellite communications capabilities, which has raised the stock price of GSAT significantly.
In terms of smartphones, connecting to the Internet via satellite technology could provide a new level of communication to the public. Satellite-equipped phones could make calls and send messages even if they’re not within 4G or 5G coverage. That could prove advantageous for mobile carriers like Verizon (VZ). With the tech world’s attention on internet satellite stocks, there’s bound to be a lot of investors looking to take advantage of these opportunities.
Globalstar
The next generation of Apple’s iPhones will support satellite communication, Ming-Chi Kuo said. Qualcomm’s (NASDAQ:QCOM) baseband chip would allow the iPhone to make calls and send e-mails without using cellular networks. Qualcomm’s 5G modem will include GlobalStar’s Bandstar technology.
There are many scenarios for Apple’s partnership with Globalstar. The simplest one is if the user’s operator has already signed up for Globalstar’s service, they can directly use it on the iPhone 13 through their operator’s service. Satellite networks could make the new iPhones more attractive to consumers in countries where cellular connections are unreliable. In addition, the ability to receive and transmit satellite signals would give the iPhone an advantage over its rivals in terms of bandwidth.
According to a report by Ming Kuo, a potential deal between Globalstar and Apple could drive the satellite company’s revenue significantly higher and help it achieve profitability.
Globalstar offers a variety of satellite Internet of Things (IoT) solutions for customers globally in industries such as emergency management, oil and gas, government, transportation, outdoor recreation, and maritime.
Globalstar is a leading provider of satellite voice and data services. Its solutions allow businesses to monitor and secure mobile assets remotely.
The company’s commercial Internet of Things (IoT) product portfolio includes various types of asset tracking devices and satellite transmitters and different personal safety devices and emergency response solutions.
Globalstar employs up to 500 people and is listed on the New York stock exchange with the symbol GSAT.
Company website: www.globalstar.com
Iridium Communications
Investing in quality multi-year winners is an intelligent move. There are plenty of them out there, but finding the right ones can be challenging.
Over the past five years, the share price of Iridium Communications has soared 376%. However, Iridium Communications didn’t break even in the last twelve months, and it’s unlikely that it will see a strong correlation between its share price and EPS (Earnings Per Share) shortly.
Probably the most crucial option for unprofitable companies is to generate substantial revenue growth. For the last five years, Iridium Communications’ revenue has grown at a rate of 7.7%. Over the past decade, the company’s share price has appreciated by 37%. It is good to see that Iridium has rewarded its shareholders with a 43% annual return.
Looking at the long-term performance of Iridium Communications is interesting. But, to properly understand this company, investors should consider many factors.
Iridium Communications is the only mobile satellite service that offers pole-to-pole coverage across the globe. The Iridium constellation of satellites provides vital voice and data services to areas not served by terrestrial networks. The rise of international communications has driven the demand for reliable, secure, and global communications. As a result, Iridium is a leading provider of satellite communications.
With a worldwide customer base, the company spans various industries. Iridium’s continuous growth is apparent by the number of new customers and partners that the company acquired over the years. This impeccable growth is due to the company’s global reach and reliability.
The company has a headquarters in McLean, Virginia, and employs up to 5000 people. It was founded in 2000 and is listed on the Nasdaq with the symbol IRDM.
Company Website: http://www.iridium.com
Eutelsat
Eutelsat Communications SA board has decided to increase its annual dividend to 0.93 euros. That will increase its annual dividend yield to 9.5%. Arguably, the cash flow from a dividend is more important than the profit measures of a company.
Over the next year, earnings will likely expand by 29.1%. The company’s payout ratio could also be sustainable. The company has a long history of paying a steady dividend. It has a track record of paying annual distributions of 0.76. That implies that the company’s distributions grew at a rate of about 2.0% annually. However, this modest growth is offset by the company’s history of reducing its payouts.
Over the last five years, the earnings per share of Eutelsat Communications has shrunk by 9.3%. That shows that the company is struggling to make a profit. Nevertheless, there is growth potential. However, this stock is a bit of a cautious pick.
As a global satellite operator, they are helping shape a fast-evolving digital society. Their global fleet of satellites and ground infrastructure delivers robust and reliable communication solutions to their clients across various sectors.
Their goal is to make digital services more widely available to users on land, sea, and in-flight.
Eutelsat employs up to 1000 people and is listed with the symbol ETL.
Company Website: https://www.eutelsat.com
SES SA.
SES SA offers video and data connectivity solutions to broadcasters and content creators globally. The company is a leading global satellite owner and operator with over 70 satellites in two separate orbits. These include the European Astra TV satellites, as well as the O3b data satellites. There are also others such as SES and Quetzsat.
Furthermore, SES Global is a Luxembourg-based satellite operator founded in 1985. It was formerly known as Société Européenne des Satellites. SESG is a Luxembourg-based holding company. Its stock is listed on the Euronext Paris and Luxembourg Stock Exchange. The headquarter is in Betzdorf, Luxembourg.
A book celebrating the company’s 25th anniversary was published in 2010. The company employs up to 5000 people.
Company Website: http://www.ses.com
Qualcomm
Qualcomm is a multinational corporation that focuses on wireless technology. It owns thousands of patents related to various mobile communications standards. Irwin M. Jacobs and other founding members of Qualcomm Incorporated founded the company in 1985. It quickly became the leading developer of CDMA wireless technology.
The adoption of the 2G standard came after a heated debate between the wireless industry and Qualcomm. This debate led to multiple legal disputes. Over the years, Qualcomm has been diversifying its product line by developing various semiconductor products in a largely fabless manufacturing model.
The company employs more than 10 000 people and has a headquarter in San Diego, California.
Among other satellite internet stocks, this one is listed on the Nasdaq stock exchange with the symbol QCOM.
Company Website: qualcomm.com
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