Subsea Cables & Internet Infrastructure

Just a few months ago Linkedin Prophets were proclaiming SpaceX hegemony. It was in their words 'a space utility' that would dominate space infrastructure due to 'vertical integration', Musk Infallibility, and 'rocket launch cadence'. Now their only excuse is 'short selling' as though $18 billion in annual revenues naturally implies Space is worth two trillion dollars. This inference is built on the flimsy foundation of rocket usability and 'they launch a lot of stuff into space'. In fact, SpaceX is a space trucking company. Logistics. There is no intellectual moat, and in fact, SpaceX has no patents on rocket design. Not a single one. It has an edge on rocket design, but textbook economics tells us abnormally high profits attract competition and similar designs. Just last week a Chinese company completed their first successful reusable rocket launch.

Retelit is a competitive Italian carrier with a pan-European network. Retelit together with the Italian Ministry of Economy and Finance have purchased Sparkle with a 30/70 ownership split. Why the current Italian government keeps insisting on public ownership of telecommunications infrastructure is beyond me. There are no real benefits. Italian government interference in important sectors like banking and now telecom have brought only problems, no solutions.  Government ownership often leads to management sacrificing long term financial health to goals such as preserving head count. This purchase together with the recent EXA acquisition of Aquacomm for only $45 million despite a couple hundred million dollars in network investments raises alarm bells about the financial health of the subsea cable industry. Sparkle generated a billion Euros in fiscal 2023 or 1.14 billion dollars at the current exchange rate. Yet it was purchased for far less than current revenues, a sig...