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Yellowbrick Investing
$IRDM sell
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$IRDM sell
$ASTS $IRDM
Initiating a SELL rating on Iridium communications with a 1 year PT of $8 per share.
SpaceX/Starlink Spectrum Acquisition and Its Disruption to Iridium
SpaceX announced a $17 billion deal to acquire EchoStar’s AWS-4 and H-block spectrum licenses, encompassing 50 MHz of exclusive S-band spectrum in the US and global mobile satellite service (MSS) rights. The transaction includes $8.5 billion in cash, up to $8.5 billion in SpaceX stock (valuing the company at around $400 billion), and $2 billion in debt interest support for EchoStar through November 2027, pending FCC approval. This spectrum, which is not yet natively supported by most phones but can be enabled through device updates, will power the next generation of Starlink’s Direct-to-Cell (D2C) service, allowing seamless 5G connectivity to unmodified smartphones without reliance on terrestrial towers. SpaceX plans to integrate this into its Version 3 satellites, boosting throughput by 20x and overall capacity by over 100x compared to its initial D2C offerings, enabling multi-Gbps speeds in many environments.
This acquisition disrupts Iridium’s business by intensifying competition in the satellite communications market, particularly in direct-to-device (D2D) services where Iridium has been developing its own Project Stardust for smartphone connectivity. Iridium, which relies on its L-band spectrum for voice, data, and IoT services via specialized handsets, faces pressure as Starlink’s D2C expands to regular phones, potentially eroding Iridium’s market share in remote and maritime communications. For instance, SpaceX’s aggressive pricing, such as a $2,500/month unlimited maritime plan, could undercut Iridium’s professional services. The deal also forces EchoStar to abandon its own LEO D2D constellation plans, consolidating the market and making it harder for established players like Iridium to compete against SpaceX’s rapid satellite deployment and vertical integration. Analysts note this creates a potential D2C duopoly between Starlink and AST SpaceMobile, reducing Iridium’s relevance in civilian and emerging markets while challenging its $110.5 million annual U.S. Department of Defense (DoD) contracts, as D2C tech could disrupt programs like the Mobile User Objective System (MUOS). Iridium’s Enhanced Mobile Satellite Services (EMSS) contract with the DoD is up for renewal in 2026, and evolving D2C capabilities may reshape it toward more flexible, commercial alternatives.
AST SpaceMobile’s Disruption to Iridium
AST SpaceMobile is advancing its space-based cellular broadband network, aiming to deploy 45-60 satellites by the end of 2026 to provide 4G/5G connectivity directly to unmodified smartphones worldwide. Backed by partnerships with major carriers like AT&T, Verizon, and Vodafone (representing over 3 billion subscribers), AST has secured investments, commercial agreements, and spectrum rights, including a $46.5 million deal for Ligado’s 45 MHz of L-band spectrum for 80 years. The company is transitioning from R&D to commercialization, with recent milestones like ordering 80 Q/V-band gateways for global rollout and launching its first five BlueBird satellites. AST’s model embeds itself into carrier revenue streams, turning remote areas into profitable zones without additional hardware.
This positions AST as a disruptive force against Iridium’s more traditional model, which emphasizes stability through its 66-satellite LEO constellation for military, IoT, and specialized voice/data services. AST’s direct-to-smartphone broadband could fully disrupt Iridium’s civilian satellite phone segment, where users currently need dedicated devices, by offering seamless, low-latency coverage in dead zones for everyday phones. tweet
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Aadit Sheth
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RT @neatprompts: This guy literally dropped the best life advice you’ll ever hear. https://t.co/ky6cvUiZfJ
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