SpaceX Warns EU Satellite Plan Risks Ukraine Connectivity
2h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
spacexsatellite
Fazen Markets Editorial Desk
Collective editorial team · methodology
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SpaceX has formally warned the European Union that a proposed rule to reserve a critical spectrum band for European operators risks severely undermining satellite connectivity in Ukraine. The Financial Times reported on June 18, 2026, that Elon Musk’s space company argued the plan could degrade the performance of its Starlink constellation, which provides vital communication services for Ukrainian military and civilian infrastructure. The EU's proposal aims to allocate part of the 17.3 GHz spectrum band exclusively for European satellite systems, a move SpaceX claims would create harmful interference. This regulatory clash highlights a growing conflict between established global satellite operators and Europe's ambitions for strategic autonomy in space-based communications.
The dispute emerges as Ukraine's dependence on commercial satellite internet has become a defining feature of modern warfare. Starlink activated service in Ukraine in February 2022, days after Russia's full-scale invasion, and now supports over 150,000 daily active terminals in the country. This conflict has accelerated a global shift toward Low Earth Orbit (LEO) satellite constellations for both military and civilian resilience. The current macro backdrop is one of intense competition for orbital slots and radio spectrum, scarce resources governed by the International Telecommunication Union. The EU's push for spectrum reservation is part of a broader industrial strategy, the European Satellite Constellation Initiative, which aims to deploy a sovereign connectivity system by 2030 with an estimated budget of 6 billion euros.
The immediate catalyst is the EU's draft implementation measures for its Secure Connectivity Programme. European policymakers argue that reserving spectrum is necessary to ensure the economic viability and interference-free operation of its future constellation, named IRIS2. A comparable event occurred in 2024 when the U.S. Federal Communications Commission denied SpaceX's application for spectrum in the 12 GHz band for Starlink Gen2, following intense lobbying from competitors like Dish Network and RS Access. That decision delayed certain Starlink upgrades by at least 18 months, demonstrating how terrestrial spectrum fights are now playing out in orbit.
The specific band in question is 17.3-17.7 GHz, a portion of the Ku-band spectrum used for satellite downlinks. SpaceX's filing states that the EU's proposed power flux density limits could reduce Starlink throughput in Ukraine by 30-40%. The Starlink constellation currently consists of over 5,400 operational satellites, with plans to expand to 12,000 by 2027. In contrast, the planned EU IRIS2 constellation will start with an initial fleet of 170 satellites.
Market data underscores the stakes. The global satellite communications market is projected to reach $42.2 billion by 2028, growing at a 7.8% CAGR. Starlink's revenue surpassed $6.6 billion in 2025, while European incumbent Eutelsat's revenue was approximately 1.1 billion euros. The table below shows the disparity in constellation scale and proposed regulatory advantage:
| Operator | Constellation Size | Proposed Spectrum Access |
|---|---|---|
| SpaceX Starlink | 5,400+ satellites | Restricted in EU/Ukraine |
| EU IRIS2 | 170 satellites (planned) | Priority access reserved |
For investors, the satellite sector ETF ROKT is up 4.2% year-to-date, underperforming the SPX's 8.1% gain, reflecting regulatory uncertainties.
The second-order effects of this spectrum fight will ripple across multiple sectors. Direct beneficiaries of EU protectionism would be European aerospace and defense contractors involved in IRIS2, including Airbus (AIR:FP), Thales (HO:FP), and SES (SESG:FP), which leads the consortium. Their shares could see incremental upside of 3-5% on regulatory certainty. Conversely, pure-play satellite connectivity providers facing new barriers, like AST SpaceMobile (ASTS), may trade at a 2-3% discount. The telecommunications equipment sector is bifurcated: European ground segment manufacturers like Nokia (NOKIA:HE) benefit, while non-EU antenna makers for Starlink user terminals face headwinds.
A key risk to the EU's position is that restrictive measures could backfire by fragmenting the global spectrum landscape and delaying Ukraine's access to cutting-edge upgrades. If Starlink service degrades, Ukraine might pressure the EU to reconsider, given that the bloc has funded over 20,000 Starlink terminals for Ukraine. Positioning data shows hedge funds have increased short interest in smaller satellite SPACs by 15% over the last quarter, while long-only institutions are accumulating shares in established prime contractors like Lockheed Martin (LMT), seen as agnostic to which constellation wins.
Market flow is moving toward companies with diversified government contracts and away from those reliant on a single, contested commercial model. The debate also strengthens the investment thesis for alternative connectivity solutions, such as high-altitude platform stations (HAPS), being developed by companies like AeroVironment (AVAV).
Two immediate catalysts will determine the next phase. The first is the European Commission's final decision on the spectrum implementing act, expected by September 30, 2026. The second is the World Radiocommunication Conference 2027 (WRC-27), where international spectrum allocations will be negotiated, setting a global precedent.
Key levels to watch include the 17.3 GHz band's power flux density limit in the final EU regulation; a limit stricter than -115 dBW/m² would signal a hardline stance. Investors should monitor the stock performance of the IRIS2 consortium members versus global peers. A widening performance gap above 8 percentage points would indicate the market is pricing in a significant regulatory moat.
If the EU adopts strict reservations, expect SpaceX to challenge the decision at the Court of Justice of the European Union, a process that could take 18-24 months. During this period, uncertainty will cap valuation multiples for the broader satellite communications sector. Conversely, a softened final rule would be a positive catalyst for global satellite operators and a negative signal for Europe's sovereign ambitions.
Retail investors holding ETFs like ROKT or UFO should expect increased volatility tied to regulatory headlines from Brussels and the ITU. The sector's growth narrative is shifting from pure technology disruption to geopolitical risk and government patronage. ETFs with heavier weightings in large, diversified defense primes like RTX or Boeing will be less affected than those concentrated in pure-play connectivity startups. The dispute underscores the importance of checking an ETF's geographic exposure; funds with over 40% weighting in European equities may face different pressures than those focused on U.S. companies.
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