You can wish upon a star, but the satellite industry might need to do more than that to break free from the boom-and-bust cycle it’s facing. Notoriously difficult to crack, the satellite communication industry is logistically, financially, and operationally demanding — costing billions to propel satellites into space, upkeep and upgrade the service, and retain customers. And as space-faring firms continue to discover, there’s little room for error in this business.

Beam me up: Two decades ago, satellite communication companies crowded bankruptcy courts as competition and modern technology sank struggling firms like IridiumIRDM

and GlobalstarGSAT

. Today, many of those enterprises have survived through reorganization, but similar challenges are putting high-flying players on a path that could burn them. After three major satellite company bankruptcies in 2020, investors have spent 2024 pricing in worries that debt-heavy, outdated providers could be overtaken by high-tech competition — potentially leading to a new wave of bankruptcies or mergers in the satellite communication sector.

• Due to profitability pressures, satellite giants ViaSatVSAT
  , SiriusXMSIRI
  , and Iridium are down 59%, 59%, and 26%, respectively, this year.
• EchoStarSATS
  recently sold DISH Network for $1 to offload billions in debt — trying to avoid the fate of recently bankrupted satellite providers like Kleos Space and OneWeb.

Tossed Out of Orbit

Elon Musk says that “space is hard,” but he neglects to mention that he’s a significant reason why. Newcomers like SpaceX’s Starlink have brought fresh competition to the satcom space — threatening legacy providers. These companies have been losing subscribers and high-value contracts to Starlink’s more current constellation, particularly in the in-flight wifi market, one of the industry’s strongholds. And, like the space launch sector, things aren’t getting any easier.

• Tech leaders like AmazonAMZN
  and MetaMETA
  plan to build their own constellations, potentially involving thousands of advanced satellites.
• Novice AST SpaceMobileASTS
  has minted a deal with AT&TT
  and VerizonVZ
  to provide satellite internet, propelling its stock up nearly 600% this year — bucking the broader industry trend.

Who wins? To avoid repeating the past, legacy satellite providers will need to build longer-lasting, higher-tech constellations to compete with new-fangled competition — a tall order given the cost advantages and diversified finances their competitors enjoy. It may be prohibitively challenging for satcom providers to turn things around, especially considering the billions already spent on their satellite networks — which could lead to even more disruption in an already buzzy business.