Does Elon Musk’s Starlink pose a threat to telecom giants Reliance Jio and Bharti Airtel? | Stock Market News

Billionaire Elon Musk’s SpaceX has tied up with telecom giants Reliance Jio and Bharti Airtel to bring high-speed satellite internet service Starlink to India. Currently, the agreement seems limited to Bharti and Jio distributing Starlink’s satellite broadband services via their extensive retail network, mostly to B2C and B2B customers in rural and remote areas, in return for some limited distribution income.

Analysts at JM Financial believe that this deal aligns well with Jio and Airtel’s businesses and doesn’t pose a threat to them.

Why Starlink is not a threat to Jio & Airtel

Starlink, and other global satcom companies have globally priced satellite internet plans at $10-500 per month, excluding the one-time cost for hardware (which is around $250-380). This, as per JM Financial, is 7-18 times more expensive than Indian telcos’ home broadband plans, which start from $5-7 per month. Higher-end plans from Jio and Airtel cost up to $47 per month, offering speeds of up to 1 Gbps and access to all OTT apps.

Additionally, Starlink (and other satcom companies) offer plans with data caps and limited speeds, while Jio and Bharti provide unlimited data and higher speeds. This pricing difference makes it challenging for Starlink to compete in India’s price-sensitive market.

Starlink’s satellite internet is mainly intended for rural and remote areas. Therefore, this partnership supports, rather than competes with, Bharti and Jio Fiber and AirFiber broadband services by speeding up access to high-speed internet in hard-to-reach locations, as per the report.

Moreover, the segment doesn’t constitute more than 6-10% of FY30 EBITDA and valuation for Bharti and Jio, not making up a big chunk of these companies’ financials.

Additionally, Starlink’s direct-to-cell satellite service is unlikely to disrupt telcos’ wireless business as well due to its reliance on telcos and limited performance. While Starlink was the first to test this technology, it currently supports only text messages, with voice, data, and IoT services planned for 2025. The technology faces challenges like moving satellites and phone limitations, requiring partnerships with telcos for 4G/LTE access and SIM card authentication. These dependencies, combined with inferior performance compared to traditional wireless services, make it difficult for Starlink to disrupt India’s mobile market, as per the brokerage. Additionally, the high cost of satellite spectrum poses further challenges for satcom companies in India, it added.

“Hence, we believe this tie-up is largely neutral for Bharti and Jio, and we also don’t foresee any significant risk to growth potential for Indus Towers,” it said.

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