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⚠ The Constellation RaceModerate threat
SpaceX (SPCX) — threat to the moat
What keeps a rival out of this business is not the first constellation but the second one — and SpaceX now writes off $986 million of satellites every quarter.
The usual way to describe this risk is to list the rivals. A better way is to read what the constellation costs SpaceX to keep, because that is the bill any challenger has to be able to pay twice over — once to build and then forever to replace.
In the September quarter Connectivity recorded $986 million of depreciation and amortisation, against $628 million in the same quarter last year; over nine months the figure was $2,574 million against $1,706 million1. That is the satellites wearing out, and the figure has risen in each of the periods shown. On top of it the segment spent $1,543 million of fresh capital in the quarter2 to densify capacity and replace what is coming down. Neither number is optional, and neither falls if growth does.
For an incumbent at scale that is a manageable arrangement: the segment earned $2,367 million from operations in the same three months3, so the decay is paid for out of the business it protects. For an entrant it is the whole problem. A new constellation must be built in full, before it has customers, and then kept rebuilt at a similar rate while it carries a fraction of the traffic. That is why the orbital shells and the coordinated spectrum matter less as a legal barrier than as a financial one — the moat is not that the slots are taken, it is that holding them is expensive and only a large subscriber base makes it affordable.
Which also sets the way this page can fail. If depreciation and capital spending together start growing faster than Connectivity revenue, the constellation will have stopped getting cheaper per subscriber and started getting dearer — and a treadmill that outruns its revenue is not a barrier to entry, it is a liability the incumbent carries alone. This quarter revenue grew 69%4 and the replacement bill grew by rather less. The quarter that reverses is the one to mark.
- ReportedIn the September quarter Connectivity recorded $986 million of depreciation and amortisation, against $628 million in the same quarter last year; over nine months the figure was $2,574 million against $1,706 million.SpaceX Q3 2026 results release (Form 8-K exhibit 99.1, 20 October 2026) — Connectivity segment operating and financial data and business highlights — Q3 2026 — quarter ended 30 September 2026 · publ. 20 October 2026 · source ↗
- ReportedOn top of it the segment spent $1,543 million of fresh capital in the quarter to densify capacity and replace what is coming down.SpaceX Q3 2026 results release (Form 8-K exhibit 99.1, 20 October 2026) — segment table: revenue, income from operations, Adjusted EBITDA and capital expenditure by segment — Q3 2026 — quarter ended 30 September 2026 · publ. 20 October 2026 · source ↗
- ReportedFor an incumbent at scale that is a manageable arrangement: the segment earned $2,367 million from operations in the same three months, so the decay is paid for out of the business it protects.SpaceX Q3 2026 results release (Form 8-K exhibit 99.1, 20 October 2026) — segment table: revenue, income from operations, Adjusted EBITDA and capital expenditure by segment — Q3 2026 — quarter ended 30 September 2026 · publ. 20 October 2026 · source ↗
- ReportedThis quarter revenue grew 69% and the replacement bill grew by rather less.SpaceX Q3 2026 results release (Form 8-K exhibit 99.1, 20 October 2026) — headline results and CFO commentary — Q3 2026 — quarter ended 30 September 2026 · publ. 20 October 2026 · source ↗