Starry Going Public Via SPAC: What Investors Should Know About This Unlimited Home Internet Company

Starry announced a SPAC merger with FirstMark Horizon Acquisition Corp (NYSE: FMAC) valuing the company at a pro forma enterprise value of $1.66 billion.

The company announced 75% of sponsor-held shares are subject to performance-based earn-outs.

PIPE investors include Fidelity Management, Tiger Global Management and others.

Current FMAC shareholders will own 23% of the company after the merger. The company will trade with the ticker STRY.

About Starry: With a mission to become one of the largest broadband providers in the U.S., Starry offers a high-speed, fixed wireless experience for customers using its end-to-end technology stack.

Founded in 2016, the company now covers 4.7 million homes in six markets in the U.S.: Boston, New York, Los Angeles, Washington D.C., Denver, and Columbus, Ohio.

“Starry’s wireless technology has transformed the economics of connecting homes and small businesses to a fiber-quality connection through the air — without having to sacrifice reliability or the customer experience,” Starry co-founder and CEO Chet Kanojia said.

Starry has spent more than $200 million to develop its technology, which enables gigabit-speed internet from towers and rooftops at a fraction of the cost of fiber networks.

The company lists a net promoter score of 72 in its presentation, compared to much lower scores for current cable providers.

Related Link: October SPAC Merger Calendar: A Look At Upcoming Votes, Stocks To Watch

Growth Ahead: Starry’s spectrum rights cover 40 million homes across 37 states. The company plans to expand its network to cover 25 million households by 2026.

Cable incumbents have a 67% market share of the U.S. broadband market according to Starry.

The company plans on using its customer-first approach and cheaper plan offerings to increase market share in current and new markets and take on the legacy broadband providers.

Starry also lists global expansion and new services expansion as future growth objectives.

Financials: Starry had revenue of $13 million in fiscal 2020 and is estimating revenue of $222 million in 2021. Revenue is expected to grow at a compounded annual growth rate of 124% from 2020 through 2023.

Starry sees revenue hitting $1.1 billion in fiscal 2026, with a compounded annual growth rate of 80% from fiscal 2024 to fiscal 2026.

Starry had more than 35,000 subscribers in 2020. The company is estimating it will hit 62,000 subscribers in fiscal 2021. Subscriber estimates from the company call for 1.4 million in fiscal 2026.

The company says it hits positive EBITDA when it is at 4% subscriber penetration in covered markets. Estimates see the company hitting positive EBITDA in fiscal 2024.

FMAC Price Action: FMAC shares are up 0.66% to $9.88 on Thursday morning.

Image by dlohner from Pixabay