Farrar: “Small LEO players must consolidate”
February 20, 2024
By Chris Forrester
Most observers in the industry agree that there are far too many smaller would-be low Earth orbit (LEO) satellite operators chasing broadband delivery and the ‘holy grail’ of direct-to-smartphone business.
One consultant, Dr Tim Farrar (of TMF Associates) is blunt in saying “It’s quite plausible that rationality won’t return until the industry is in a completely different state, maybe some legacy players will be shut out of that new reality. There are parallels with the telecom and media bubbles of the late 1990s/early 2000s.”
He suggested that while Starlink is currently dominating the satellite broadband space (and has its own designs on a direct-to-smartphone market) it may not be true that Elon Musk is not wholly focussed on generating a return on investment (ROI).
“That’s simply not important to Musk,” said Farrar. “The logical choice when facing a competitor who doesn’t care about ROI is to not compete with them and wait for rationality to (hopefully) return to the business.”
“The one thing legacy players can do in the meantime is to consolidate, and cut both OpEx and CapEx. So now we wait for Telesat (and the Canadian govt) to decide: ride and die (for the shareholders!), or give up gracefully (for the bondholders!),” he suggested. “And in these circumstances the last thing you want to be is the ‘plucky underdog’ who no one needs to buy outside of bankruptcy.”
Meanwhile, Australia and Singapore-based Gilmore Space Technologies, sometimes described as the ‘SpaceX of Singapore’ has raised A$5 million (€3.4m) in a Series A financing round led by Blackbird Ventures. Other participating investors reportedly include 500 Startups. Gilmour Space will use the newly-raised funding to develop and launch low-cost rockets designed to carry small satellites.
“Today’s smallsats are getting smaller, cheaper and a lot more capable, and they are changing our perception of what’s possible in space,” said Gilmour Space CEO and Founder, Adam Gilmour.