Starlink fears discount rural telecom stocks
The guest argued that high-quality regional and rural telecom companies are trading at excessively cheap valuations due to an overblown market fear of disruption from Starlink.
The argument
While Starlink is acknowledged as a viable business, the guest suggested its threat to established regional cable and wireless providers is overestimated by the market. This has left companies like Shenandoah Telecom and Liberty trading at low multiples, such as under 10 times free cash flow, despite stable cash generation.
The thesis, stress-tested
✓ What validates it
- ✓Shenandoah Telecom reporting stable or growing subscriber numbers in rural Virginia
- ✓Stabilization or expansion of valuation multiples for regional telecom operators
▸ Risks discussed
- ▸Starlink successfully capturing significant market share in rural markets
- ▸High capital expenditure requirements for regional telecom infrastructure
Hear it yourself
"And that's that's kinda where we're coming from. We we have, we're blessed with a great constitution, you know, fifty or so years ago where we're gonna try to do the right thing, be aligned with our clients. We're grateful for them, and that's kinda where we're coming from today. When you look at the, portfolio, Ross, what names stand out to you as sort of representing the philosophy that you you espouse? You know, it's it's we're whenever we kinda get a question like this, we usually kinda mentally start going down what are our largest weightings, in in the portfolio."
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