Satellite-based direct-to-cell service unlikely to disrupt Indian telcos' business: Analysts

Satellite internet companies also typically impose data caps, while Jio and Bharti offer unlimited data in their home broadband plans

Satellite-based direct-to-cell services, offered by players like Starlink, are unlikely to disrupt the mobile broadband business of Indian telecom giants Reliance Jio and Bharti Airtel in the near future. Analysts argue that the technology is still in its infancy and heavily depends on telcos to access their 4G spectrum for smartphone connectivity.

In a note, JM Financial highlighted that direct-to-cell technology currently delivers “inferior performance” compared to traditional wireless networks, limiting its ability to impact Indian telcos’ wireless business. Wireless services account for 80-90% of the valuations of Bharti and Jio. Additionally, satellite players would require partnerships with telecom operators to authenticate users via SIM cards, adding another layer of reliance on established telcos.

The brokerage added that while satellite internet performance has improved due to advancements in low-earth orbit (LEO) satellites, its high costs—7 to 18 times more expensive than Indian telcos’ home broadband plans—combined with slower speeds and data caps, significantly reduce its competitive threat. The home broadband segment constitutes only 6-10% of Indian telcos’ projected FY30 EBITDA and valuation.

“Indian telcos’ home broadband plans start at $5–7 per month, with higher-end plans costing up to $47 per month, offering speeds of up to 1 Gbps and access to all OTT apps, among other benefits. In comparison, satellite internet pricing, excluding one-time hardware costs, is 7–18 times more expensive,” the note stated.

Satellite internet companies also typically impose data caps, while Jio and Bharti offer unlimited data in their home broadband plans. This disparity in pricing and offerings presents a significant challenge for satellite internet providers planning to enter the cost-conscious Indian market. “Pricing becomes even more critical given that the target customers for satellite internet services are often from rural and remote areas, who are more price-sensitive than their urban counterparts,” JM Financial added.

The reliance on telcos for spectrum and user authentication could act as a strong entry barrier for satellite players in India’s wireless business, where telcos perceive this technology as a potential threat. “Additionally, the high price of satellite spectrum could further constrain the business plans of satcom companies,” the brokerage noted.

Indian telecom operators, such as Reliance Jio and Bharti Airtel, are advocating for satellite spectrum to be auctioned under the “same service, same rules” principle. This demand is based on the fact that telcos acquire spectrum through auctions at significantly high prices. Conversely, satellite companies like Starlink and Amazon’s Project Kuiper are pushing for an administrative allocation of satcom spectrum.

Analysts believe that satellite internet is better suited for niche use cases, such as providing connectivity in rural and remote areas where fibre networks are unfeasible or economically unviable or serving as a backup connection. Despite advancements in LEO satellite technology offering improved speeds and reduced latency, high costs remain a major barrier to adoption, particularly for rural and remote users who are more price-sensitive than urban consumers.