2 months ago
15
David Jagielski, CPA, The Motley Fool
Tue, July 14, 2026 astatine 7:50 AM CDT 4 min read
The large moneymaker for Space Exploration Technologies (NASDAQ: SPCX), which is besides known arsenic SpaceX, is its Starlink business. That's the 1 country of the institution that generates beardown growth, and that's really profitable. Without it, SpaceX's losses and currency pain would beryllium adjacent worse.
The breathtaking imaginable for Starlink has resulted successful galore telecom stocks struggling this year, arsenic investors interest astir what it mightiness mean for the broader sector. An summation successful contention could measurement connected margins and bounds maturation adjacent further for companies specified arsenic AT&T (NYSE: T) and Verizon Communications (NYSE: VZ) that don't make overmuch maturation to statesman with.
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Starlink is reportedly looking astatine expanding its work successful the U.S., which whitethorn lone exacerbate those worries. Are the large players successful telecom successful trouble, and are their shares apt to autumn adjacent lower?
Starlink to ramp up contention successful the telecom sector?
According to a caller report, SpaceX whitethorn beryllium readying to physique a terrestrial mobile web successful the U.S. for Starlink, which would alteration it to much straight vie with telecom providers specified arsenic AT&T and Verizon. Its work presently fulfills a large request for customers successful hard-to-reach distant areas, but by readying to put heavy into processing its ain mobile network, it could drastically ramp up its maturation complaint and perchance wreak havoc for rivals successful the process.
As of the extremity of March, Starlink had 10.3 cardinal subscribers, which was much than treble what it reported a twelvemonth earlier. The concern has been increasing fast, arsenic astatine the extremity of 2023 its subscriber number was conscionable 2.3 million. By reaching a broader conception of the market, that could alteration its maturation complaint to accelerate astatine an adjacent faster rate.
The capital-intensive concern comes with challenges
However, there's a crushed investors aren't thrilled with telecom stocks, and wherefore they typically don't marque for large maturation stocks: their costs and indebtedness loads are often high. These capital-intensive businesses aren't perfect for fast-moving businesses and tin marque them less-than-ideal investments to own, peculiarly erstwhile involvement rates are precocious and indebtedness is costly. In the past 5 years, Verizon's banal has declined by much than 20% portion AT&T has delivered level returns. Meanwhile, the S&P 500 has risen by implicit 70%.
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