Satellite stocks surge 500% on spectrum deals but time is running out

ViaSat, EchoStar and Iridium have surged as much as 600% in the past year as SpaceX, Amazon and AST SpaceMobile compete for the spectrum needed to deliver broadband from space. The clock is ticking for sellers to monetize before new supply and carrier counter-moves erode pricing power.

"With scarce, high-quality direct-to-device spectrum seeing strong marks in recent transactions, we think Viasat's portfolio, arguably the largest and cleanest globally, represents meaningful upside," said Brent Penter, analyst at Raymond James.

EchoStar already struck its deal — SpaceX agreed to pay $17 billion in cash and stock for 65 megahertz of its spectrum last year, sending the stock up fourfold. ViaSat holds 68 MHz of global L-band spectrum valued at $10 billion to $15 billion, according to analysts at William Blair and Raymond James. Iridium's 9 MHz of L-band spectrum is worth about $3.5 billion, Penter estimates.

The pressure to sell is mounting. The FCC plans to auction roughly 300 MHz of low- and mid-band spectrum by the end of 2027, potentially reducing the need for SpaceX and Amazon to buy from legacy holders. Meanwhile, AT&T, Verizon and T-Mobile formed a joint venture pooling their own spectrum to counter satellite players. If ViaSat and Iridium cannot complete sales soon, their stocks could face sharp reversals.

The Spectrum That's Worth Billions

The value of mobile satellite services spectrum has exploded as SpaceX builds its Starlink Mobile service for a satellite-internet market it claims is worth as much as $740 billion. Amazon is also constructing its Project Leo constellation and recently agreed to acquire Globalstar for nearly $12 billion, including licenses for about 25 MHz of MSS spectrum. Both companies are likely to need more, according to KeyBanc analyst Brandon Nispel.

ViaSat's 68 MHz portfolio is the largest and cleanest among independent holders, Penter said. The stock has risen 538% in the past 12 months to trade at about $73, giving it a market value of $9.93 billion and an enterprise value of $15.42 billion including debt. One complication: ViaSat has pledged to pool its spectrum in a joint venture with UAE-based Space42. CEO Mark Dankberg told analysts the company would keep its options open and would not necessarily need all of its spectrum for the venture.

Iridium's shares have gained 187% this year to trade at about $50, putting its market capitalization at $5.52 billion. CEO Matt Desch said on a February earnings call that the company would "continuously consider" its assets.

Why Buyers May Not Be in a Rush

The big question for SpaceX, Amazon and investors betting on megadeals is how large the satellite-broadband market really is. Satellites typically complement rather than compete with wireless offerings because low-frequency spectrum struggles to penetrate buildings.

"If you're camping in Yosemite or Yellowstone then having that connectivity is worth paying for — but most people don't do that," said Craig Moffett, analyst at MoffettNathanson. "For the majority of consumers it's probably in the back of your mind, a nice thing to have, but you'll never end up using it."

FCC Chair Brendan Carr has taken a different view, clearing SpaceX's EchoStar spectrum acquisition and calling it a "potential game changer." He noted that more than $28 billion has been spent across 130 MHz of spectrum for direct-to-device connections. The FCC plans to release about 300 MHz of additional spectrum by the end of 2027, which could reduce the urgency for SpaceX and Amazon to buy from ViaSat and Iridium.

AST SpaceMobile, which has agreements to lease up to 40 MHz of L-band spectrum in the U.S. and Canada for 80 years, plans to stay on the sidelines. "Our strategy is very much one of sharing cellular spectrum that our partners have," President Scott Wisniewski said.

For ViaSat and Iridium, the math is straightforward. High spectrum valuations validate their assets, but FCC auctions could flood the market with alternatives. Stocks that have rocketed higher on expectations of huge spectrum sales could fall to Earth unless they seal the deal soon.

This article is for informational purposes only and does not constitute investment advice.