Bank of America: Amazon's satellite broadband service will not bring significant returns in the short term
An analyst at Bank of America pointed out that Amazon's satellite broadband project Project Kuiper is not expected to bring significant returns in the short term, and it is estimated that it will take at least several years to achieve market value expansion. Despite 2.6 billion people worldwide lacking broadband access and the global broadband revenue potential exceeding $26 billion by 2032, Amazon faces competition from Starlink and needs 7 million users to achieve break-even
According to the Zhitong Finance and Economics APP, analysts at Bank of America believe that Amazon (AMZN.US) is not expected to see significant returns from its satellite network project Project Kuiper for at least several years, but it may spark investors' interest in the long-term potential of the project.
It is reported that Amazon's Project Kuiper aims to provide broadband internet services through a network of over 3,000 satellites in low Earth orbit. Amazon plans to launch the first batch of satellites by the end of 2024 and provide commercial services the following year.
Bank of America analyst Justin Post pointed out that on the positive side, there are 2.6 billion people globally without broadband access, and the global broadband revenue potential is expected to exceed $26 billion by 2032. If Amazon's logistics network (including autonomous vehicles, trucks, drones, and delivery robots) can benefit from an always-available interconnected network, the business synergies are also worth considering. The analyst also stated that Amazon's corporate and government customers may see use cases. However, he added, "Nevertheless, due to the expected losses from Project Kuiper and Amazon's market value exceeding $1.8 trillion, we believe it will take Amazon several years to achieve market value expansion related to Project Kuiper."
The analyst believes that in the short term, the disposable income of the unconnected population will be limited. In addition, Amazon's satellite network services face established competition from Starlink, and will continue to require significant upfront investments and high ongoing costs. The analyst stated that satellite services would need 7 million users to achieve a break-even on an annual supplementary cost basis