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Amazon to Foray Into Broadband Space With Project Kuiper

Zacks Equity Research

Amazon AMZN is all set to join the race to provide broadband Internet globally through its Project Kuiper. The project aims to create a constellation of low Earth orbit satellites in order to provide Internet worldwide.

Reportedly, the e-commerce giant is aggressively pursuing the launch of 3,236 small satellites into space with the help of which the company intends to ensure high-speed Internet connectivity to unserved and underserved regions across the globe.

Per the company’s plans, there will be 3,236 satellites making up three layers – 784 satellites at an altitude of 590 kilometers, 1,296 satellites will be positioned at the height of 610 kilometers, while the rest 1,156 satellites will be at 630 kilometers.

This initiative is likely to aid Amazon to make a strong foray into the booming global broadband market.

Initiative Likely to Cause Disruption

Internet is ubiquitous and its increasing user penetration across the world has created immense growth opportunities for the companies operating in Internet connectivity market.

Amazon looks to disrupt this market with Project Kuiper, something that the company has been doing in other sectors for quite some time.

The company has already made filings with International Telecommunication Union (ITU) on behalf of the project. Further, the company has appointed Rajeev Badyal to run and execute the project seamlessly. Notably, Badyal served as vice president to the satellites unit of SpaceX, which is also focused on launching high-speed Internet satellites.

In fact, Amazon has hired a few other members of the team that was led by Badyal at SpaceX.

We believe Amazon’s growing initiatives related to Internet satellite project are likely to intensify competition for companies which have already forayed into the satellite space in a bid to ensure global broadband coverage like SpaceX, OneWeb, Telesat and Boeing BA, to name a few.

Further, the company‘s space initiatives will provide a strong competition to Alphabet’s GOOGL division Google which is also leaving no stone unturned to bolster presence in the Internet connectivity space via Project Loon and growing investments on satellites.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM) | Amazon.com, Inc. Quote

Increasing Focus on Satellite & Space

Amazon has been eyeing the satellite and space area for quite some time now in a bid to explore the opportunities of the space.

Apart from the latest initiative, the company’s cloud computing arm, Amazon Web Services (“AWS”), won a contract from Iridium Communications IRDM to develop a satellite-based network called CloudConnect for Internet of Things (IoT) applications.

Further, Amazon’s AWS is in talks with the president of Chile to house and mine astrodata from Chile’s giant telescopes.

Last year, the company was looking to hire people who can work on its new space and satellite initiative, namely interconnecting space system networks. Among the company’s several job listings, there was an opening for product manager for space related services and the launch of spacecraft.

Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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