SpaceX spectrum license hammers shares of AT&T, Verizon and T-Mobile

EspaceX announced a deal Thursday to purchase a nationwide spectrum portfolio as it deepens its Starlink service in the U.S. telecommunications market. Actions of AT&T, Verizon And T-Mobile fell during extended trading.

The deal involves the acquisition of a portfolio of spectrum from Grain Management, which specializes in digital infrastructure, and is subject to approval by the Federal Communications Commission. SpaceX said in a statement that this is a “licensing portfolio of up to 14 megahertz of paired spectrum in the 800 MHz band.”

“This prime low-band spectrum fills one of the key remaining technical gaps that will pave the way for Starlink Mobile to become a major mobile operator in the United States,” SpaceX said.

In an article on X, SpaceX CEO Elon Musk called it a “very big deal.”

Last week, T-Mobile, AT&T and Verizon formed a joint venture “focused on expanding coverage in underserved areas” via satellite and direct-to-device (D2D) services, and Starlink was noticeably absent. T-Mobile also previously removed mention of Starlink from its T-Satellite promotions.

SpaceX appears determined to fight the US telecom giants and provide its own services without them.

“This adds fuel to the fire in the battle between SpaceX and the mobile operators,” said Tim Farrar, an industry expert at TMF Associates. “But this is still a very limited amount of spectrum and to achieve reliable building penetration in urban areas, SpaceX would need to deploy towers on the ground.”

The announcement comes a day after the FCC said it would vote on a proposal to auction 25 megahertz of “preferred spectrum” to support D2D services from satellites to smartphones. The FCC also said it will vote on October 29 to take public comment on a proposal to make additional 482 MHz spectrum available for additional coverage from space and to modernize the FCC’s rules for D2D services in licensed spectrum.

Both proposals could benefit SpaceX as well as Amazon, which has also decided to create a service with satellite networks.

SpaceX, which went public in June in a record IPO and is now valued at more than $2 trillion, has relied on Starlink as its cash cow and only profitable business segment to date.

The service is available in 205 countries and had 12 million subscribers as of June 30, according to SpaceX’s second quarter report. The connectivity business generated $1.66 billion in operating profit over the period on revenue of $4.29 billion. Starlink is the world’s largest satellite communications network with more than 11,000 satellites in orbit.

Analysts at Deutsche Bank, who recommend buying SpaceX shares, estimated in a report this week that Starlink’s global subscriber base reached 13.5 million by the end of September, including 4.1 million based in the United States.

In its rocket business, SpaceX has reduced its planned launch cadence for next year. The company is now looking to make its massive Starship rockets reliable and fully reusable in order to abandon the use of its smaller Falcon rockets. SpaceX is also developing a cloud computing business and aims to one day build orbital data centers. For now, its space and artificial intelligence units are losing money.

SpaceX did not immediately respond to a request for further information, including when its new services could come online if approved by regulators. If cleared, the additional spectrum will help SpaceX combine satellite and ground coverage once it builds out a network of towers.

SpaceX shares rose about 2.5% in extended trading after falling 4% during regular market hours.

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