SPAC merger born at-home fixed wireless telco provider Starry Group (US:STRY) had another disastrous week as management withdrew guidance and announced stark cost-cutting measures when providing a third quarter update to investors.

During the third quarter, Starry’s number of serviceable homes grew 18% over the year to 5.96 million as customer relationships rose exponentially growing 66% over the year to 91,297.

This growth drove the serviceable home penetration rate up 44 basis points to 1.53%.

Additionally, the digital equity program called Starry Connect is now being used by over 87,000 public and affordable housing units, growing 83% over the year.

Despite the continued growth and scaleup, Starry is struggling to find the capital needed to fund the business’s fast expansion and has decided to announce cost-cutting measures amidst the FED’s tightening monetary policy.

With the cost of funding skyrocketing off an almost zero base, Starry Group, like many peers are undertaking extreme measures to minimise cash burn and prove that a path to profitability is achievable.

This is being done to help conserve capital and improve the cash burn runway until management decides what strategic options will benefit shareholders most in the current environment.

The cost-cutting initiatives include: a ~50% reduction in its workforce (~500 employees), and a freeze on hiring/non-essential expenditures and will focus its efforts on penetrated areas where it already has a deployed network and it has invested capital.

In addition to the cost-cutting measures, Starry has also decided to withdraw its participation from the Federal Communications Commission’s (FCC), Rural Digital Opportunity Fund (RDOF).

Starry Group defaulted on winning bids the company won in the RDOF auction worth around $17 million and will forfeit the eligibility to receive $170 million in funding.

Starry’s CEO Chet Kanojia accompanied the press release with a statement saying “Today is a very tough day for our Starry team, but I want to be clear: Starry remains open for business. We, like so many others, are making the difficult calls now and taking steps that will allow us to be laser-focused on financing the business over the long-term and continue serving our markets.”

In the previous full financial result, Starry reported second quarter revenue of $7.8 million with a gross loss of -$13 million and a net loss of -$36.3 million. The result came in below consensus forecasts of above $9 million.

STRY’s interest expense equated to $8 million, rising from $4.9 million in the prior year. The interest expense was one of the core drivers of the widening group losses.

The firm’s debt balance widened by about $30 million over the year to $220 million, crippling cash flows with expectations to only get worse.

After the second quarter result, analyst Brett Feldman from Goldman Sachs cut his price target for STRY from $8 to $4 and kept his ‘neutral’ view on the stock.

Feldman in the report discussed how he believes the weak share price performance reflects investor concerns about STRY’s ability to fund its operating plan as it raised less capital than expected through the SPAC merger.

The issue now for the company will be to secure funding at an attractive price which will be difficult given the 85 cent share price giving the stock a mere ~$140 million dollar market cap.

Fintel’s platform analysis on STRY’s insider trading activity is bearish on the stock with an insider accumulation score of 27.30.

The low insider score has been driven by one net insider that has been selling the stock over the last 90 days.

The insider is hedge fund manager Tiger Global Management LLC. Tiger Global has been consistently selling down stock on market since the initial listing in early 2022.

The fund currently holds 18.6 million shares , down from 20.3 million in April of 2022.

This article originally appeared on Fintel

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