Space-based broadband internet for the masses is being built over at Elon Musk's SpaceX, with the initial launch of the service -- dubbed Starlink -- expected by the end of 2020. The company's forward-thinking mentality on the commercialization of the final frontier is partially responsible for the surge in interest in investing in the movement. Problem is, SpaceX isn't a publicly traded company, leaving just a few names like Virgin Galactic (NYSE:SPCE) for investors to choose from when it comes to innovation in the burgeoning space economy.

But there's another possibility: Iridium Communications (NASDAQ:IRDM), which just completed its first year operating its own broadband-speed service with global coverage. The company has yet to reach peak operational efficiency with its new satellite constellation, but solid progress is being made.

Planet Earth as viewed from space. The European continent is centered.

Image source: Getty Images.

Year one is in the books

When I first bought in on Iridium a few years ago, it was all on the promise of the company being able to deploy its NEXT satellite constellation, a broadband-speed communications service with 100% coverage of the globe. The company already provided services -- primarily to government organizations, and the maritime and aviation industries -- but high-speed data services were something else entirely. 

Fast-forward a few years (and some 220% in share price advance), and NEXT is up and running. The service has helped Iridium reignite growth with new global Internet of Things connectivity capabilities and broadband internet for industries operating in remote locations (like aviation, maritime, mining, and government entities). A new air traffic control system based on the satellites, called Aireon, is also just getting going. With the first year of next-gen operations in the books, 18% total growth in billable subscribers led to a 10% increase in service revenues.  

Service

End of 2019 Billable Subscribers

End of 2018 Billable Subscribers

% Growth

Commercial voice and data

363,000

361,000

1%

Commercial IoT

802,000

647,000

24%

Government voice and data

57,000

54,000

6%

Government IoT

78,000

59,000

32%

Data source: Iridium Communications.  

Expect more slow-and-steady progress ahead

For 2020, management said to expect another 6% to 8% increase in service revenue to $474 million to $483 million, and operational earnings before interest, tax, depreciation, and amortization (EBITDA) to increase 7% to 10% to $355 million to $365 million. Not too shabby.  

More importantly, though, is that with the NEXT satellites now in orbit and Iridium having recently restructured its debt associated with getting the constellation in orbit, free cash flow (what's left after cash operating and capital expenses are paid for) ran at positive $80.3 million in 2019. Management expects free cash flow should increase somewhere in the 20% ballpark in 2020.

But what about that new SpaceX Starlink service coming online? Iridium CEO Matthew Desch had this to say on the last earnings call:

I would say that they're mostly focused on what I would call the commodity broadband space, trying to provide services that compete almost -- more with existing [very small aperture terminal (VSAT)] and fixed satellite services space, but even going beyond that to someone like StarLink or maybe someday Amazon Web Services, I would say that they're even going after what I would call the core fixed market, particularly consumer kind of markets that maybe are served by Hughes and ViaSat today or even by fiber and other kinds of solutions. Those are completely different markets from what Iridium is interested in or has been addressing. We've stayed away from those.  

Desch said he and the rest of Iridium are rooting on the progress of Starlink and others because it's good for the space industry and complementary to the service Iridium already provides -- namely, commercial and government broadband versus consumer broadband. That should put a potential investor's mind at ease for now about future disruption. For the time being, though, Iridium Communications looks like one of the better ways to invest in the growing space economy.