In a video conference on Tuesday billionaire carnival barker Elon Musk claimed that while the Starlink satellite internet venture was growing quickly, it was going to need a massive infusion of cash to continue.
“If we succeed in not going bankrupt, then that’ll be great, and we can move on from there,” Musk said. He explained that he predicts the total investment cost in SpaceX’s Starlink venture being between $20 and 30 billion. With a B.
I guess he could always use some of that totally real, liquid $170 billion he is said to have!
Without making any details public, he claimed that Starlink had already secured “two quite significant partnerships with major country telcos.” Which seems to be the standard Musk move of promising big things without providing corroborating details. The internet service provider has secured about 69,000 global customers in about a dozen countries, each paying around $99 per month for a high-speed low-latency connection, after buying a terminal costing in excess of $1,000. Another extremely Musk move came when he said he expects Starlink’s customer base to grow to around half a million users within 12 months. What is that based on?
Starlink has already launched more than 1,500 satellites into low orbit, meaning each satellite is serving about 40 Starlink customers at the moment. Analysts have been skeptical of the idea since its inception. Because Starlink is primarily targeting remote area users where high speed internet service is difficult and expensive, there simply may not be enough target users to recoup the massive initial investment.
In 2020 Musk claimed that Starlink projected a $30 billion annual revenue stream, but such a number would require tens of millions of users signing up. Admittedly, around 70 percent of the global population is connected to the internet, meaning Starlink would only need to convince a very small percentage of web surfers to switch to their service.
Tim Farrar, analyst and president of TMF Associates, gave Reuters his take on the situation.
“It is not implausible to get this number (a few million) to make the system not to go bankrupt. But this is not enough to justify the valuation of SpaceX,” he said.
“The more Elon talks up that he is going to invest tens of billions, the harder it becomes for other people. Obviously, that’s the big part of Musk’s objective: to limit competition.”
Starlink needs to scale, and it needs to do so quickly in order to fend off competition from Amazon subsidiary Kuiper, the British government-owned OneWeb, and Telesat. If Musk can convince investors with his rhetoric that it’s going to cost billions to get this tech scaled, then other investors will be less likely to back the competition.
Correction: An earlier version of this article claimed that Starlink would need a $30 Billion dollar investment to remain solvent. That does not appear to be the case.