Wireless Internet firm Starry shows growth, looks to complete merger to go public

Starry CEO Chet Kanojia said, addressing worried investors, that mediocre companies are to blame for the recent dip SPAC stocks took and his firm is poised to rise to the top of the market.Courtesy Starry

Internet service company Starry, aiming to go public soon, steadily increased its base of paying subscribers last year, though it remains a pipsqueak compared to rivals like Comcast, Verizon, and Charter.

In a meeting with investors this week ahead of its planned merger with a special purpose acquisition company, or SPAC, Starry said it had 63,230 household subscribers at the end of 2021, an 83 percent gain from a year earlier. And the Boston-based company has deployed its wireless technology in areas covering a total of 5.3 million households, up 28 percent from the end of 2020.

The network is now available in parts of five cities, including Boston, with one more — Columbus, Ohio —coming soon. The target customer for now is people living in multi-unit apartment buildings, though the Columbus service will be the company’s first available to individual homes.

Unlike a cable or telephone company providing Internet service, Starry doesn’t have to run wires to customers’ homes and apartments. Instead, it puts its radio gear on rooftops and cellular towers and gives each customer a compatible wireless router.

That allows it to expand at a fraction of the cost of wired services and offer cheaper rates to people living in places that typically haven’t had much competition for broadband, according to analyst Walt Piecyk at LightShed Partners, who watched Tuesday’s presentation.

“The tech delivers better speed at a lower price for a customer base that has not had many options to date,” Piecyk said.

Starry claimed on Tuesday that its network cost 1 percent the cost of a fiber optic cable network for similar coverage.

The company’s expansion last year came amid electronic-component supply shortages that have hampered others in the Internet service market. Starry assembles its own wireless equipment, giving it more flexibility to swap components when a shortage hits. Still, it has had to deal with the pandemic and worker shortages like every other business.

“You’ve got challenges across the board, whether it’s labor, whether it’s supply chains, whether it’s COVID on, or COVID off,” chief executive Chet Kanojia said in an interview. “It’s been an amazing journey.”

Starry’s equipment is assembled at a shop in Roxbury and the company is also expanding manufacturing in Lowell at a former Wang facility that ultimately will employ 100 or more workers, Kanojia said.

Starry announced its plan to merge with a SPAC and go public back in October, when the SPAC market was still booming. But stock prices of many companies that went public via SPACs have crashed recently, calling into question just how much money will be raised by companies with deals still pending. Boston biotech Gelesis completed its SPAC merger last week, raising less than one-third the amount it initially targeted in July.

Kanojia blames the SPAC market’s troubles on immature companies that went public too soon, and he argued that Starry is different.

“There are companies that are — let’s just call a spade a spade right there — just low-quality or have made up stuff, or have been through the wringer four times and are indebted up to the gills, or concept companies that have no idea what the business is going to be,” he said. “We are real with real growth and real fundamentals.”

Starry and its SPAC partner, FirstMark Horizon Acquisition Corp., have also taken steps to reassure investors that their interests are aligned. Sponsors of the FirstMark SPAC would typically get 20 percent of the shares of the new company no matter how the deal performed. But they’ve agreed to set aside three-quarters of their shares until Starry’s stock hits higher prices.

Starry’s service starts at $50 for 200 megabits-per-second speeds, fast enough to watch streaming video in 4K or download a high-definition movie file in a few minutes.

Starry also participates in government subsidy programs to bring Internet service to low-income households and has a free offering available in some Boston public housing complexes. That segment reached almost 56,000 households at the end of 2021, an 88 percent increase from a year earlier.