What happened
SpaceX wants to bring satellite internet to the world. So do Amazon and OneWeb — and even they are not the only ones. Microsoft (MSFT 1.81%), too, wants a seat at the satellite internet table, and this morning, it announced a new partnership with satellite communications company ViaSat (VSAT 2.47%).
Microsoft stock is up 2.2% on the news, and ViaSat stock is up 2.5%, as of 11:50 a.m. ET.
So what
For the past five years, Microsoft has been quietly rolling out its Microsoft Airband Initiative to “close the digital divide and bring high-speed internet connectivity to unconnected communities around the world.” It’s not 100% clear how successful the program has been. Microsoft claims that it has “helped more than 51 million people globally” to get access to broadband internet services — but if I ask those who’ve heard of it to raise their hands, I doubt I’ll see a lot of raised hands.
Aiming to raise the profile of the project, and boost its effectiveness, this morning Microsoft announced it will partner with ViaSat to use the latter’s small constellation of high-capacity Ka band geostationary satellites to help a further 10 million people access satellite broadband. Access will expand in countries already served by Airband — the United States, Congo, Guatemala, Mexico, and Nigeria. Access will also be added for people in Angola, Egypt, and Senegal.
Now what
For a company of Microsoft’s heft — more than $200 billion in annual revenue and a market capitalization approaching $2 trillion — the addition of a few million web surfers, mostly in the developing world, may not sound like big news. It may not sound like big enough news to justify even a smallish 2% hike in share price. But Microsoft is actually bumping up its goals for Airband by a significant margin today — from a goal of reaching 40 million developing-world internet users by 2022 — to 100 million by 2025.
That’s a significant expansion, and a significant growth rate for the service, if Microsoft achieves it. Given that expectations for Microsoft’s future growth are pretty modest — just 11.5% average annual earnings growth over the next five years — the prospect of unexpected growth in Africa and Central America could be just what Microsoft stock needs to move the needle and reset growth expectations higher.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com and Microsoft. The Motley Fool has a disclosure policy.
Read More: Why Microsoft Stock Popped on Wednesday