This is an audio transcript of the FT News Briefing podcast episode: ‘Are Musk’s ties jeopardising Starlink?’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, March 25th and this is your FT News Briefing.

China is considering even more economic subsidies. And there’s a new corporate top dog in Europe. Plus, Starlink is doing really well but are Elon Musk’s ties to the government jeopardising its success??

Rafe Uddin
Starlink effectively has become the sort of golden goose for Musk — it’s the strongest source of his net worth.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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Beijing is considering billions of dollars in subsidies on China’s services sector. The subsidies would make things like travel, tourism and sports cheaper and encourage people to spend more money on them. Now, Beijing has tried stuff like this before to boost consumer spending but economists say it mostly helps producers to sell goods instead of getting consumers to open their wallets. A source said the programme could launch in the second half of the year if consumption continues to lag.

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SAP has become Europe’s most valuable company. On Monday, the German software giant leapfrogged Danish drugmaker Novo Nordisk to take the top spot. Here with me is the FT’s Florian Müller, who’s been covering this. Hey, Florian!

Florian Müller
Hi, thanks for having me!

Marc Filippino
So first off, tell me about SAP, who are they, exactly?

Florian Müller
Sure. So SAP has already been Europe’s largest tech company and software developer for a while. So basically, if you buy a chocolate bar or a car, the likelihood is quite big that this was engineered using SAP software. And they’re also big, for example, when it comes to HR software. So if you, for example, claim expenses, a large share of companies worldwide is using their software.

Marc Filippino
And as I mentioned yesterday, SAP became the most valuable company in Europe, how did they do it?

Florian Müller
So basically, SAP is now reaping the benefits of changing the business model, which is that in the past, they used to sell software licenses to companies running the software on their own computers, on their own infrastructure. But now they are trying to move most of their customers to the cloud, which means for SAP itself, that they can sell far more lucrative package deals to them, also including newly developed artificial intelligence applications. And they have lower costs, which overall, investors really like. And that’s why their share price is soaring right now. And it has increased more than 40 per cent over the course of the last year.

Marc Filippino
Now let’s compare this to Novo Nordisk. Is this a story of SAP doing really, really well recently, or just Novo Nordisk sliding? Or is it both?

Florian Müller
So I guess it is a story of both. So overall SAP shares have performed really well. Whereas for Novo Nordisk they used to be super successful with their anti-obesity drugs, but they are now fighting with more competition in that field and at the same time have struggled to find a follow-up to this blockbuster. So that’s why their shares have come down.

Marc Filippino
What do analysts predict for SAP going forward?

Florian Müller
So analysts predict that SAP will continue to reap the benefits of the shift to the cloud business. Overall, the cloud business is projected to grow more than double than their overall revenues. But overall revenues are also supposed to grow more than 10 per cent this year.

And so going forward, they also think that the boom surrounding artificial intelligence will also benefit the company because SAP essentially has not developed their own AI model. But what they want to do is use different models from different companies and then use the data and sort of become the best platform for companies to analyse their own data, but also third-party data using third-party artificial intelligence models.

Marc Filippino
Florian Müller is the FT’s Frankfurt correspondent. Thanks so much, Florian.

Florian Müller
Thank you, bye-bye!

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Marc Filippino
BYD had itself a stellar 2024. Yesterday, China’s electric vehicle darling said that its annual sales hit a new record of $107bn, blowing past analysts’ expectations. That’s more than Tesla, which hit $98bn for anyone keeping score. BYD’s results put a feather in the cap of a remarkable year.

The Shenzhen-based carmaker recently introduced new driver technologies and an aggressive international expansion. Plus, it now claims that its batteries can charge in five minutes. Shares of BYD have soared more than 50 per cent this year.

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Marc Filippino
SpaceX — the company founded by Elon Musk — is riding high in the extraterrestrial race. The best example of that might be Starlink. A big chunk of the world relies on the satellite internet service but there are growing concerns over Musk’s closeness to US President Donald Trump and whether that’s now a liability for Starlink.

The FT’s Rafe Uddin has been looking into this, and he joins me now. Hi, Rafe.

Rafe Uddin
Hi, Marc.

Marc Filippino
Let’s hear the good news first, just how well has Starlink been doing in recent years?

Rafe Uddin
So I mean, effectively Starlink is the dominant provider for sort of what we call low-earth orbit constellation systems — these sort of satellite networks that provide broadband to hard-to-reach areas. The company has about 7,000 satellites up in space at the moment. And then beyond that, it has a raft of federal government contracts. And then you get a span of private contracts — so a number of telecom providers, major airlines that also plays a critical role in Ukraine on the front lines. So really it’s the leading player in this space.

Marc Filippino
Now Starlink has been around for a bit. But you know Musk’s relationship with Trump is kind of new. How has the business benefited from that relationship?

Rafe Uddin
Yeah. So good way to think about this is how was Starlink impacted by the previous administration. So under the Democrats, the Federal Communications Commission chair Jessica Rosenworcel had raised concerns about Starlink’s dominant position in the market when she was asked about why Starlink had been sort of blocked from a major rural broadband contract.

Now, what we’re seeing under Trump is that narrative around Starlink is shifting. The FCC is making overtures and we reported last week that the head of that rural broadband programme had been told to consider Starlink. So what we’re seeing is that effectively under Trump, Starlink could start to play a more prominent role in terms of US federal contracts that had previously been barred or excluded from.

Marc Filippino
Now, how big of a boon is this for Musk personally? Like how much of his wealth is tied to Starlink and SpaceX?

Rafe Uddin
So what we’ve been seeing is that amid all of the protests and uproar about Musk, he’s been impacted most at Tesla — the EV carmaker sales have slumped in Europe. And during this period, what was left is that SpaceX — the rocket maker that operates Starlink and owns Starlink — effectively has become a sort of golden goose for Musk. It’s the strongest source of his net worth. Roughly half of his net worth is now tied to SpaceX. And so as it goes from strength to strength in the US, more of his wealth is going to be tied to this one company.

Marc Filippino
So then what are the downsides that you’re seeing from Musk’s relationship to Trump?

Rafe Uddin
So Starlink’s role in a number of European countries means that it’s seen as an easy target, given Musk’s proximity to Trump. There are also fears about a peace settlement between Russia and Ukraine that could see Starlink either turned off or pulled back, and that could impact services there.

And so we’ve seen a number of European providers — primarily Eutelsat OneWeb — looking to basically replace Starlink on the front line. And so what we might see is that rivals in Europe start to leverage this proximity that Musk has to Trump to try and gain contracts and wins.

Marc Filippino
In the end, do you think that Musk is worried enough about Starlink to distance himself from Trump?

Rafe Uddin
I think ultimately the benefits tied to being close to Trump far outweigh the negatives here. So we’ve seen in recent weeks that Starlink has been able to negotiate contracts or reach deals in places like India. And I’m told by officials in Bangladesh that they’re also close to licenses there — that has nothing to do with his proximity to Trump but there doesn’t seem to be any concerns there.

And then we’ve spoken about how, you know, the US administration is considering making some overtures. So that’s a commercial boon for SpaceX and Starlink and it’s one that’s tied to Trump and only Trump.

Marc Filippino
Rafe Uddin covers tech for the FT, he’s based in San Francisco. Thanks, Rafe.

Rafe Uddin
Thanks, Marc.

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Marc Filippino
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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