SpaceX's satellite connectivity venture, Starlink, might be a boon to plug connectivity gaps and connect rural areas, but it is also a “massive disruptive threat” for traditional telecom companies. Starlink is aggressively pursuing operating licenses to expand across geographies while also signing deals with various other industries.
Speaking to telecom news portal Developing Telecoms, Accenture’s Managing Director for Communications, Media & Technology Lead Africa, Nitesh Singh, warned that what existing “operators need to do is reinvent themselves, offer different services, explore new verticals, and enter different industries. They must transform their businesses because the traditional telco won’t survive.”
Disrupting the Global Telecom Industry
With the arrival of Starlink five years ago, competition among traditional telecom providers has significantly intensified. The new entrant’s low-cost, scalable infrastructure is changing market dynamics, forcing telecom companies to rethink their offerings and business strategies. The situation is further complicated by changing customer demand for high-speed internet at affordable prices, across the urban and underserved areas.
Apart from redefining the residential internet market, Starlink is now taking market share in other markets, such as maritime, government and in-flight connectivity. The company had entered into a landmark agreement with United Airlines in September 2024, to outfit its entire fleet with connectivity. A similar contract with Air France was announced soon after this. Starlink has also entered into contracts with major cruise lines while having also acquired numerous government contracts.
The stock markets dipped after the United Airlines contract, with ViaSat’s stock declining 14% immediately after the announcement and United Airlines' up 2%. If more North American airlines follow suit, or if Starlink captures a large share of international airlines, it could adversely affect other telecom stocks. The SpaceX subsidiary has already taken market share from US-based Hughes Communications Inc. and Viasat Inc. since its launch in 2021.
Hughes reported 714,000 broadband subscribers in the US as of June 30, 2024, down from 1.144 million subscribers in 2021. Meanwhile, Viasat reported its subscriber count at 257,000 in August 2025, down from 603,000 in September 2020. On the other hand, Starlink had garnered a whopping 1.4 million subscribers by August 2024. The impact of market share loss can be seen in the highly bearish market sentiment on Viasat’s stock, as viewed on Acuity’s AssetIQ widget.
The Starlink Impact
Starlink’s entry into the market has significantly impacted US telecom giants, challenging the dominance of traditional terrestrial networks and impacting their customer base, especially in underserved regions. Its widespread coverage, particularly in rural areas where traditional providers might have limited reach, creates direct competition, pushing established telecom companies to improve their services and pricing to remain competitive.
As Starlink gains traction in underserved areas, it could potentially draw customers away from traditional telecom providers, impacting their market share. To counter such advancements, telecom giants are likely to accelerate their own investments in satellite technology and network upgrades to provide similar capabilities. Starlink’s pricing strategy could influence the overall market, putting pressure on telecom giants to adjust their pricing to remain competitive.
In addition, the focus on rural areas could force telecom companies to reevaluate their business models and prioritise expanding their network reach to underserved regions. This can already be seen in Amazon’ Project Kuiper working to launch its own low-Earth orbit (LEO) satellite network in 2025 to provide high-speed internet to underserved areas, including rural and remote areas.
Meanwhile, Iridium Communications Inc. is also feeling the pressure, with the stock down 19.79% in the 12 months to February 10, 2025. About 17% of the company's total service revenue is accounted for by government contacts. The company’s LEO network functions on L-band frequencies, which are less vulnerable to adverse weather effects. This ensures low latency and strong connectivity, making the network ideal for the government’s mission-critical operations. Still, the Starlink effect on Iridium can be seen on Acuity's AssetIQ widget, which shows very bearish market sentiment towards the stock.
Starlink is also likely to impact Deutsche Telekom, particularly in regions with limited terrestrial internet access and rural areas where fibre optic infrastructure might be less developed. However, Deutsche Telekom is also exploring its own satellite solutions, and could potentially mitigate this impact by integrating satellite connectivity into its existing network. This could be one of the reasons why market sentiment on the stock is very bullish, according to Acuity’s AssetIQ widget. Deutsche Telekom’s stock was up 12.82% YTD, as of February 10, 2025.
Starlink is a formidable competitor for telecom giants worldwide, especially as it actively adds capacity and depth to its network. For now, it has considerable unused capacity, which allows the company to offer high-speed connectivity with low latency through its LEO network.
However, Starlink does not have high-throughput GEO satellite capacity, which could give other telecom players the chance to capture their fair share of contracts. Going forward, telecom companies could also consider potential partnerships with Starlink to combine strengths and capture market share.