Executives from fixed wireless provider Starry told investors on the company’s 2Q 2022 earnings call today that the company is performing well despite the tough macro-economic environment. The reason it’s immune to today’s economic climate? It’s better, faster and cheaper, said Starry co-founder and CEO Chet Kanojia, adding that because the company’s fixed wireless access (FWA) service is positioned well is because it is prepaid and therefore has minimal bad debt exposure.
He also said that like other FWA providers, Starry is benefiting from cable’s losses and the general trend that consumers are ditching their cable providers because they see more value in standalone broadband plans that are cheaper rather than bundled offers from the cable companies.
Starry, which caters to those that live in apartments and other multiple dwelling units (MDUs), added 9,703 net subscribers in 2Q, bringing its total subscriber base to 80,950, a 69.4% increase year over year. The company also increased its serviceable homes to 5.7 million, up 19.6% year over year.
Although Starry doesn’t provide the exact number of cell sites that it has deployed, Kanojia told investors during the company’s call that its current cell site number is in the “300 range.”
Starry’s average revenue per user (ARPU) in 2Q was $33.96, but the company noted that it doesn’t recognize revenue from customer trial periods, which can range from 7 days to 2 months and that can often depress ARPU figures.
The company is particularly bullish on its participation in the government’s Affordable Connectivity Program (ACP) and said that about 10% of its customers are enrolled in the program. “These are attractive customers that the market has ignored,” said Starry CFO Komal Misra. “We will pursue ACP customers,” he added.
Starry reported revenue of $7.8 million with a net loss of $36.3 million. The company said its capital expenditures for 2Q were $20.8 million, up from $20 million in 2Q 2021.
Starry is in the midst of expanding its footprint to Las Vegas, which will be its seventh market. The company plans to cover 500,000 households with its service and the market launch is expected to occur in the third quarter.
Kanojia said that usage on the company’s FWA service is “robust” with the average consumer using 432 Gigs per month.
Profitability analysis
Starry released some results from an analysis that the company conducted of its service. The company looked specifically at buildings it activated in 2020 and the first quarter of 2021 and found that the buildings are profitable in three or four quarters after launch.
Starry analyzed the performance of groups of buildings, called cohorts, and found that cohorts had a penetration rate of 16% within 30 days of launching. That penetration rate grew to 24% within one year of launching. After two years, cohorts have a penetration rate of 27% and after three years they have a penetration rate of 30%.
Wholesale opportunity?
Interestingly, Starry confirmed that it is engaged in discussions to license its technology so it can be deployed in other countries. Kanojia said that the Asian and Latin American markets are particularly interested because the technology is viewed as a cost effective way to drive broadband connectivity.
He also hinted that there may be a wholesale play for the company as it has extra capacity that could be appealing to other service providers. Kanojia wouldn’t talk specifics but said that there is demand domestically for capacity.