Jefferies expects limited capacity, premium pricing from Starlink; sees no disruption to Indian telcos

New Delhi, Mar 27 (PTI) Starlink’s current capacity may be able to support 0.18 million subscribers in India for now, going up to 5.7 million users by 2030, and the “limited capacity” could necessitate premium pricing, Jefferies said on Thursday.

India will be an important market for Starlink but its launch is unlikely to be disruptive to telcos here.

The observations made by Jefferies in its latest report assumes significance given that Starlink, the satellite-based ‘broadband from the skies’ services, is eyeing the Indian market with great interest as Indian regulator TRAI readies to spell out rules, and other nuances, of spectrum allocation to satcom players.

“Starlink’s imminent launch in India will help it monetise a large capacity given India’s large area. Our analysis suggests that Starlink’s capacity will support 0.18 million subscribers at present and 5.7 million subscribers by 2030,” the report said.

This could necessitate premium pricing, in line with what it has done in other markets.

“The government also seems to be balancing the interests of Satcom operators and telcos which bodes well. Starlink’s launch is unlikely to be disruptive to telcos,” as per Jefferies’ analysis.

Starlink, it noted, has about 4.6 million subscribers globally with North America being the largest market.

While LEO or Low Earth Orbit satellite networks have their capacities distributed across the globe, they target larger countries as it unlocks a larger portion of their capacity.

“With Starlink not having access to the top-2 countries by area (Russia/China), other large countries such as India (7th largest) have become more important,” it said.

Starlink has priced its services at 2-3 times of other telcos in both high-income (US) and low-income markets (Kenya/Nigeria).

“Per our analysis, at current capacity, Starlink may be able to serve 0.18 million subscribers at 100 Mbps. Assuming about 30x rise in its capacity by 2030, they will still be able to service 5.7 million subscribers,” Jefferies said.

And while this is meaningful for Starlink (on the current subscriber base of 4.6 million), it is still fairly small when compared to the size of Indian fixed-line broadband market (46 million at present; can grow to 90-100 million over the next few years).

Jefferies believes that Starlink is unlikely to be disruptive for multiple reasons including premium pricing due to capacity constraints, and its need for tie-ups with telcos for distribution/installation and backhaul.

“Government also seems to be inclined to balance the interests of telcos and satellite operators, rather than accepting everything that Satcom players have asked for. Home broadband segment forms about 8-9 per cent of Jio’s revenues and 4 per cent of Bharti Airtel’s India revenues-ex tower, hence Starlink’s entry in this segment is unlikely to impact the fortunes of Indian telcos significantly,” it said.