Elon Musk’s plan for SpaceX to “become a major wireless carrier in the United States” sent shares of the country’s three major wireless carriers down double digits on Friday, wiping out more than $50 billion in market value before lunch.
“Once we receive final approval from the FCC, Starlink Mobile will deploy a flexible architecture combining our satellite-to-mobile constellation in space with an advanced terrestrial deployment that can seamlessly connect devices anywhere,” the company said Thursday evening.
He also announced that the Federal Communications Commission had approved the launch of 15,000 new satellites, also under Starlink Mobile, a subsidiary of SpaceX.
Shares of AT&T and Verizon both fell 10% Friday morning, while T-Mobile’s U.S. stock plunged 14%.
Shares of Charter and Comcast, NBC News’ parent company, also fell throughout the day Friday. Both companies sell wireless services under their own brands using Verizon’s infrastructure.
Musk’s empire is growing
SpaceX’s announcement marked Musk’s latest step to expand his global tech empire. The world’s richest man and its first-ever billionaire, Musk’s net worth stood at around $990 billion as of Thursday.
Musk’s constellation of companies already includes electric vehicle maker Tesla, social media site X and xAI, which builds data centers and develops artificial intelligence.
SpaceX also includes several business segments. Starlink sells high-speed internet to businesses and consumers around the world, while Starshield does the same, but to governments.
But SpaceX’s biggest money maker is Starlink, which was worth $2.2 trillion as of Friday.
With more than 12 million paying subscribers, Starlink is also the only profitable part of SpaceX’s business, according to its latest earnings report.
The spectrum acquisition was “the final critical piece of the spectrum puzzle needed for SpaceX to provide comprehensive telephone coverage in America,” Musk wrote on nX.
SpaceX is also a major U.S. government contractor, building and launching rockets on behalf of NASA and several national security agencies.
Favorable rulings from government regulators and additional agency contracts are crucial to maintaining SpaceX’s high valuation.
White House VIP
As a close ally of President Donald Trump and a major donor to his 2024 election efforts, Musk is a frequent guest at White House events.
At a recent White House state dinner for Chinese President Xi Jinping, Musk was seated next to first lady Melania Trump.
Just this week, Trump presented Musk with an award for his scientific achievements.
As Republicans fight to maintain control of the House and Senate in November’s midterm elections, Musk is once again giving them tens of millions of dollars to help them.
As of Friday, Musk’s America PAC had spent more than $36 million supporting Trump’s Republicans in key battleground races, according to figures compiled by Wired and verified by NBC News.
Musk also appears to already have the support of FCC Chairman Brendan Carr for his deal.
“All of this is going to be very good news for the American consumer,” Carr said Friday morning on CNBC.
Skeptics in the streets
Wall Street analysts and Starlink’s potential competitors were skeptical Friday of SpaceX’s plan.
Absent a deal with an existing wireless carrier, “SpaceX will likely need to build a ground network using macro towers to provide a user experience comparable to traditional wireless carriers,” JPMorgan Chase analysts wrote.
“We continue to see limited near-term risk for U.S. wireless incumbents, given the time, infrastructure and capital required to build a competitive terrestrial network,” they added.
In other words, analysts believe SpaceX’s plan does not pose an imminent threat to established operators because it takes more than just satellites to provide reliable wireless service.
SpaceX would need ground-based infrastructure to bolster its satellite network because the radio waves it purchased would likely not be able to reach inside some buildings, UBS analysts wrote. “We still believe it will take time for SpaceX to expand its wireless ambitions.”
Like analysts, major telecommunications companies affected by Musk’s announcement also downplayed any risk Starlink could pose to their businesses.
“Spectrum acquisition alone does not provide the network or infrastructure needed to provide true nationwide coverage or to compete with wireless carriers,” Verizon said in a statement to NBC News. “A company can have billions of dollars of spectrum, but if they don’t have the network to use it, it’s just empty airwaves.”
John Saw, president of technology at T-Mobile wrote, “I have tremendous respect for what SpaceX has accomplished in space,” but building a network would take “years of engineering.”
“You can acquire spectrum in a single transaction. You can’t acquire a successful, nationwide wireless network overnight,” he wrote on LinkedIn.
AT&T did not respond to a request for comment Friday.
The big three cell phone companies have a complicated relationship with Starlink. In 2022, T-Mobile announced a partnership with SpaceX, but recently removed the company’s name from parts of its website.
And when the three cell phone companies recently announced a joint venture to “eliminate coverage ‘dead zones’ and expand satellite coverage,” no mention of SpaceX or Starlink was made.
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