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With 48K customers, Starry hopes IPO will fund buildout

Fixed wireless Internet provider Starry on Thursday inked a deal with a special purpose acquisition company (SPAC) called FirstMark to raise around $452 million in a public offering. The company said it plans to use the money to grow its customer base from 48,000 today to 1.4 million by 2026.

Starry, which counts 650 employees, reported a net loss of $125 million and an $83 million loss in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2020. The company forecasts it will lose $105 million in EBITDA this year, $75 million next year and $42 million in 2023 before turning the break-even corner in 2024 with EBITDA of $40 million. By 2026, Starry expects $1.1 billion in revenue.

"Starry is not a 'grand idea.' It is a proven and operational technology that is already transforming how networks are built and significantly changing the customer experience into something that delights, not frustrates. We could not be more thrilled to bring Starry to the public markets through this transaction that we believe is aligned for the long-term performance and long-term success of the company," said Amish Jani, chairman and president of FirstMark, in a release. At FirstMark, Jani has invested in the likes of Shopify, Frame.io, Schoology, InVision, Tracelink, Boomi, Aveksa and others, several of which have been acquired by major tech companies like Dell and EMC.

Starry's plans to go public represent yet another swing in the company's efforts to deploy fixed wireless Internet services in major US cities. As Light Reading previously reported, Starry launched in 2016 with grand plans to cover the world with broadband. Those plans narrowed at the beginning of 2018 to expand into almost two US dozen markets, including Chicago; Cleveland; San Francisco; Houston; Dallas; Seattle; Detroit; Atlanta; Indianapolis; Philadelphia; Miami; Memphis; Phoenix; Minneapolis; Manchester, New Hampshire; Portland, Oregon; and Sioux Falls, South Dakota. But the company quietly acknowledged in 2019 that it would not reach that goal. Today, the company offers service in just six markets: Boston; New York City; Washington, DC; Denver; and Los Angeles. It expanded into Columbus, Ohio, this summer. In total, the company counts 48,000 customers across those markets.

Part of Starry's plans involve using licensed spectrum and government funding to reach its targets. Starry spent $48 million on 104 licenses in the FCC's 24GHz millimeter wave (mmWave) spectrum auction. Those licenses combined with Starry's existing 37GHz holdings cover a total of around 40 million US households. Then, in 2020, Starry won $269 million in government funding to construct broadband services across nine states. However, the FCC has not yet approved the release of that money to Starry.

Starry has repeatedly touted its goal of covering "more than 40 million households across the United States" at some point in the future. That's how many households are covered by the company's spectrum holdings. However, in its new IPO presentation, the company reported covering 10 million households in 2020 – though it only counted 4.7 million "serviceable" households in the second quarter of 2021 – and projects it will cover 25 million households by 2026. The differences likely lie in the total number of households located in Starry's spectrum license areas versus the number of locations the company believes it can reach with its wireless signals.

Starry, headquartered in Boston, is run by Chet Kanojia, who previously headed up the video disruptor Aereo, which was sued out of existence by broadcast companies in 2014.

Starry is one of a number of companies hoping to challenge established wired Internet providers with fixed wireless technologies. For example, T-Mobile hopes to gain up to 8 million fixed wireless customers in the next five years, though the company plans to use its network for both fixed and mobile services. Others in the space include WeLink, Google's Webpass and Mediacom.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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