Starry Group Holdings announced today that it has successfully completed its Chapter 11 restructuring process and now has a clear path to profitability.
Starry, which provides home internet service using millimeter wave (mmWave) spectrum, was a rising star in March 2022 when it debuted on the New York Stock Exchange (NYSE). But all of that came crashing down as it burned through cash and capital sources dried up.
Last fall, the company had to lay off about 500 people – half of its workforce – and stop expanding into new markets. In January, it laid off another 100 employees. In June, the company’s COO, Alex Moulle-Berteaux, took over the CEO role, replacing co-founder Chet Kanojia, who remains on the board.
Moulle-Berteaux said he’s excited about the next stage for the business. The U.S. Bankruptcy Court for the District of Delaware confirmed the company’s reorganization plan in May. Going forward, Starry will be a privately held company.
Looking back
As a public company with goals to meet and not enough capital, Starry was starting out on defensive footing, so to speak, at the get-go, Moulle-Berteaux said. The equity and debt markets shifted significantly in the summer of 2022, and at that time, Starry was driving a bigger growth plan than the capital it had to support it.
“Like many companies, we were caught up by the timing,” he said.
Through last fall, Starry was looking at strategic options and was courted by some industry incumbents, but “none of the options felt right,” he said. “We leveraged the Chapter 11 process to essentially turn the business into a leaner business,” which meant recapitalizing the balance sheet and refinancing the debt. “That was really the goal of the bankruptcy, to emerge a leaner company and a private company.”
Starry’s headcount is now around 300 versus the 950 it was at about a year ago.
Building the business to profitability requires focusing on the markets that it’s already in. Starry exited the Columbus, Ohio, market, and it’s now focused on five core markets: Boston, New York City, Denver, Los Angeles and the Washington, D.C., area.
Moulle-Berteaux said the main effort now is on multi-dwelling units (MDUs), which includes a broad range of apartment buildings, in densely populated areas as opposed to single-family homes. In all of its markets, there’s at least one major cable company and one major telco. Starry’s $50/month/200 Mbps data offer is its most popular plan, he said.
Starry uses 37 GHz spectrum in its five core markets; the Columbus market used 24 GHz, which it acquired in the FCC’s 2019 auction. Asked if Starry is looking to sell its 24 GHz licenses, Moulle-Berteaux said that’s something they’re exploring “as we speak.”
As for competition from the big wireless carriers that use fixed wireless access (FWA) to offer high-speed home internet services, he said the way Starry looks at it is there’s not enough capacity in cellular networks to serve mobile phones today, let alone all those apartment buildings with multiple users and high data demands.
“That FWA product will do well in rural” and less dense suburban areas, but in apartment buildings where people are using 40 to 50 times more data, running a residential service off a cellular network is a tough play, he said.
Starry’s base technology is 802.11ax, so it’s Wi-Fi based, and using mmWave allows it to offer faster service capable of carrying more data, he said.
Back from the brink
From going public to proceeding through bankruptcy, it’s been “a very, very tough process for employees and investors,” so it’s exciting to be able to exit bankruptcy, he said.
“A lot of companies don’t get this far,” he said. Everything that inspired them to start the company seven or eight years ago is still true. In fact, he said their desire to disrupt is possibly even greater now that it was on the brink and has come back.
“We’re doing things as differently as we can from what incumbent services are to provide differentiated value to customers,” which includes everything from choosing upload speeds to bundling privacy and security products, he said.