Britain at War: The “Sleeper Supplier” critical to British defence and SpaceX’s Starlink

War in the United Kingdom is a possibility that no one wants to admit is possible.

After all, we know how these things end. And it never ends well. As General HR McMaster recently warned the UK government, “it’s a lot cheaper to prevent a war than have a fight.”

In the autumn of 1939, Britain stood on the brink of war. It was the most recent time that war on British soil was imminent.

According to the Mass Observation archive at the University of Sussex, on Sept. 3, 1939, Tilly Rice wrote, “I myself have felt all along that war would be possibly averted at the last moment…I haven’t felt swayed by the alternate waves of pessimism and optimism that affect those around me.”

 Shortly after, at 11:15am Prime Minister Chamberlain broadcast over the BBC,

“This morning the British Ambassador in Berlin handed the German Government a final Note stating that, unless we heard from them by 11 o’clock that they were prepared at once to withdraw their troops from Poland, a state of war would exist between us.

I have to tell you now that no such undertaking has been received, and that consequently this country is at war with Germany.”

After the declaration of war, Ellen Porter in London heard an air-raid siren over the capital, and wrote, “I go to the basement, where I have previously been working with four others. Some of us try on our gas masks and adjust straps…We sit there keeping perhaps rather self-consciously calm and cheerful.”

It’s hard to consider Prime Minister Starmer coming over the BBC at some point in the next year to say something like,

“Good evening.

This afternoon, the Government was informed that a Royal Navy vessel — engaged in a NATO joint-protection mission in the North Atlantic — came under unprovoked and sustained attack by Russian forces. This follows a coordinated series of strikes on undersea communication cables, offshore energy installations, and allied naval assets over the past week.

Let me be clear. The pattern is no longer deniable. This was not an accident. It was not a miscommunication. This was an act of war.

And so, I must inform you tonight that the United Kingdom, in conjunction with our NATO allies, is now in a state of armed conflict with the Russian Federation.”

AI generated image

For modern generations, raised in an era of relative peace, the idea of such preparations feels like a distant relic. But what if it is not that far away?

More importantly if conflict escalates, be it into full blow war or even right to the edge of it…is Britain ready?

According to reports in The Telegraph, no, it’s not.

But the government is now putting plans into place to ensure it is.

According to the report,

Britain is secretly preparing for a direct military attack by Russia amid fears that it is not ready for war.

Officials have been asked to update 20-year-old contingency plans that would put the country on a war footing after threats of attack by the Kremlin.

A classified dossier will set out how the Government would respond to a declaration of war, including bunkers to protect the Cabinet and the Royal family, public service broadcasts and the stockpiling of resources.

The government is keenly aware of the urgent need to level up defences from cyber security to missile technology, the possible creation of an “Iron Dome” right through to digital backups and failsafe for critical infrastructure.

It’s a program that is going to need billions of pounds invested, and call on British companies to help get Britain ready for war…or at least to get Britain armed well enough that no one is going to want to start a war.

That means the British aerospace and defence industry is set for a massive injection of capital, fast-tracking of approvals and government support to re-arm Britain. Of course that puts a company like Rolls Royce in good stead, and we have already got that stalwart of British aerospace and defence in our portfolio.

It also means there’s a massive opportunity for smaller, lesser-known British companies deeply entrenched in aerospace and defence to make a name for themselves and for their investors.

Today we’re adding a new company to the portfolio which is exactly one of those smaller unknown companies with huge opportunity.

This relative unknown with just a £245 million market cap has a deep involvement already with British defence companies, and a fast-growing partnership with SpaceX to provide critical technology to their Starlink global network.

More on the company shortly…

The changing nature of warfare

Britain’s move to prepare for conflict in 2025 are unmistakable. Along with the preparations for direct military attack from Russia, the recent escalation in war between India and Pakistan also will no doubt reverberate through the halls of Westminster.

In February this year, the government published the following:

Source: British Government

On top of this is the impending Cyber Security and Resilience Bill currently moving through government, previously announced in last year’s King’s Speech.

This aims to protect critical infrastructure, designating “critical suppliers” and providing an evolving and innovative adaptability to all cyber threats facing the UK.

This approach reflects a stark reality; modern warfare is as likely to involve hackers as missiles.

This defence levelling up is going to include things like missiles, submarines, warships, military equipment, radar and radio equipment, security of semiconductors, robotics, AI and autonomous systems, satellite technology and yes even space technology.

As this plays out over the coming years, I’m expecting an increasing number of contracts to fall the way of this small, £245 million company that’s the focus of today’s recommendation.

They’ve already won a contract to provide key technology for a new radar system used for land, sea, and air applications, built by QinetiQ.

They’ve got another deal with a UK prime defence contractor for the development of advanced radio-frequency (RF) modules that they’re not even halfway through yet.

They’ve got a deal with BAE Systems to provide RF modules to BAE’s Maritime Services division.

But biggest of all, announced in July 2024, is a deal with SpaceX to provide power modules for Starlink. As the company said, “our cutting-edge technology…plays a crucial role in the deployment of SpaceX’s Starlink constellation.”

Starlink, with its constellation of over 7,135 satellites is fast becoming the backup to Western, allied nation connectivity risks.

We have seen in recent times the benefit of Starlink, from providing reliable connectivity during natural disasters in the US, to backup connectivity to the military in the Ukraine, it is arguably the most important connectivity network in the world.

However, in the last couple of years the military version of Starlink, known as Starshield has begun further testing and penetration into the US military system.

It’s not a stretch to think that Starshield becomes the Allied-nations communications network during periods of war. A reliable, global, secured network that can handle the load of military communication as well as critical infrastructure.

Now due to its classified nature, we can’t say for sure if this small British supplier to Starlink also provides to Starshield, but it’s a plausible conclusion to think they do.

If we start to see further expansion, more and bigger contracts with Starlink (through SpaceX), along with what I believe will be a listing on the government’s “critical suppliers” as per the Cyber Security and Resilience Bill then we could be looking at the early stages of one of Britain’s most important defence companies.

So, who are they and how can you invest in them?

Your latest recommendation: Filtronic Plc (LSE:FTC)

Founded in 1977, Filtronic is a British technology company headquartered in Sedgefield, County Durham. It designs and manufactures advanced radio frequency (RF) communications equipment, specialising in microwave and millimetre-wave components.

Historically, Filtronic served communications and defence markets, but in recent years, it has pivoted toward aerospace and low earth orbit (LEO) space sectors. This has included a contract with the European Space Agency (ESA) in 2023, and more recently the contract with SpaceX to supply the Starlink constellation with power modules.

Filtronic has carved out a niche in high-frequency technology. Its products power everything from military radar systems to satellites and semiconductor packaging making it one of those small, quiet achievers critical to the operation and reliability of some of the world’s most critical infrastructure and defence systems.

I’ve been following the Filtronic story going back to early 2022 when they were a proper microcap stock.

They were able to notch up contract win after contract win, but nothing seemed to radically shift the company’s trajectory higher.

Until April 2024.

Off the back of several contract wins and momentum finally building behind the stock, Filtronic announced $19.7 million (£15.8 million) contract and “Strategic Partnership” with SpaceX.

The contract supplies E-band solid-state power amplifier (SSPA) modules for the Starlink constellation. These modules amplify signals for high-speed, low-latency internet from space, forming the backbone of Starlink’s ground-to-satellite links.

As per the announcement, “SpaceX has committed to ongoing orders for the next five years to ensure Filtronic remains a key part of its supply chain.”

Things progressed strongly when SpaceX placed a $9 million order in July, and then in August they announced another follow-on order from SpaceX.

And in March this year, they announced an expansion of the “Strategic Agreement” which is, “to enable an increased allocation of business to Filtronic, deepening the collaboration between the two companies.”

This expansion also gives SpaceX some skin in the game.

“In recognition of the increased business levels, the Company has issued a total of 10,949,079 warrants to SpaceX at an exercise price of 92.8 pence, which enables SpaceX to subscribe for up to a maximum of 5% of the Company’s existing share capital, with such warrants expected to vest, on a variable basis, based on the receipt of irrevocable purchase orders.”

What’s clear is that Filtronic is becoming a favoured supplier of tech to SpaceX and Starlink. Along with ongoing deals with the ESA and their partnership with ViaSat (a US telecommunications company) Filtronic is strongly placed to benefit from ongoing expansion of SpaceX and Starlink systems, along with their foothold already in the UK defence supply chain.

Going forward, I’m expecting more deals from SpaceX (for Starlink) but also ongoing deals to flow on from British defence companies, like BAE and QinetiQ, but also as mentioned, for Filtronic to end up as a “critical supplier” for the UK defence agencies cementing their role in the acceleration of funding for British defence.

In short, without Filtronic tech some of the most critical defence and communications networks in the world become useless. For me, this makes Filtronic one of the most important British defence companies that most people have never heard of.

From financial battles to profits in the blink of an eye

Filtronic’s financials reflect its rising star. Their half year results for the six months ending 30 November 2024 show, revenue at £25.6 million, up 201% from the same period in 2024.

Furthermore, they reported a £6.7 million profit and 3.08p earnings per share. The same period in 2024 was a £500,000 loss and (0.24p) loss per share.

This is a company that in 2024 completely turned the business around and has entrenched themselves on an international scale for critical infrastructure in the future.

Since those results, there have been more contract wins and expansion of the relationship with SpaceX. This prompted the company to put out a trading update this week saying,

“Filtronic plc (AIM: FTC), the designer and manufacturer of products for the aerospace, defence, space and telecoms infrastructure markets, is pleased to announce the outlook for both FY2025 and FY2026 is expected to exceed current market expectations.

“Investments in manufacturing capacity during the financial year are fully online allowing the Company to meet increasing customer demand. This will deliver stronger revenue and adjusted EBITDA in H2 of FY2025 and result in us beating current market expectations for the current year.”

They also expect this to carry into 2026.

Risks

Now, there’s a lot to be bullish and positive about with Filtronic. That much is clear to see. But there also comes a few risks you’ll need to consider before investing.

Customer concentration is clearly an issue here. SpaceX accounts for a huge chunk of Filtronic’s revenue. A shift in SpaceX’s supply chain, a breakdown in the relationship or simply the expiry and non-renewal of contracts would see their stock price return to 2023 levels around 18p.

Furthermore, they’re dealing with an Elon Musk company. That alone adds risk, as tensions over Starlink’s dominance have meant regions like Europe have begun to look at alternatives.

Also, a reluctance internationally to deal with a SpaceX so tightly intertwined with Trump’s administration could mean there’s a knock-on effect to smaller related companies like Filtronic. That could see contracts go to competitors, with the expectation of not being linked with SpaceX.

Filtronic is also not the only RF and satellite tech provider. The space is crowded with others like Qorvo, MACOM and Teledyne, all far bigger and better funded than Filtronic. Filtronic must keep innovating to stay relevant.

General market conditions too will see the price swing wildly. The recent positive announcement regarding the latest trading update sent the stock 10% higher. And increased news coverage will see the stock swing, if news flow turns negative that will be a handbrake on the stock.

Also, one more thing I should mention, while not necessarily a risk, I consider it one as it may mean exiting the position sooner at a lower valuation than hoped for….

Filtronic now looks to be a potential takeover target by SpaceX. With the warrants issue and potential ownership structure, this skin in the game also means SpaceX may look to increase its stake and even take over the entire company.

I believe that Filtronic has the potential to continue as one of the UK markets best performers this year and next. An early takeover by SpaceX could scupper that potential profit for investors by taking the whole company off the table.

I’ve seen it before where a massive company swallows up a cheap one, and all the benefit goes to the conglomerate, not the shareholders. It would be a great result for Filtronic, but a risk of potential profit lost to investors.

Buying Instructions

Britain’s wartime past teaches us that preparation is survival. Today, as the government bolsters defences against cyber threats and leans on allied resources like Starlink, and what I expect to be Starshield, Filtronic emerges as a linchpin. This unassuming British tech sleeper is helping build out British defences, and global communications. With a foothold in the UK defence industry, a tight partnership with SpaceX, ambitious plans and a financial trajectory pointing towards bigger profits, Filtronic offers investors a rare chance to tap into a critical technology and huge market opportunity.

Action to take: BUY Filtronic Plc (LSE:FTC) on the London Stock Exchange. Filtronic is available through most major UK brokers and broking apps.

Current price: 113.20 GBP
Buy up to: 120 GBP
Stop exit: 70 GBP

Sam Volkering
Editor, Southbank Growth Advantage