SPCX Stock Rises Premarket – JPMorgan Says SpaceX May Need Ground Network To Compete With Telecom Giants
JPMorgan said SpaceX would likely need to deploy a ground network using large cell towers.
KeyBanc called SpaceX’s acquisition of spectrum a positive for tower operators.
Despite falling stock prices, JPMorgan believes near-term competitive risk for U.S. wireless carriers is limited.
SpaceX (SPCX) may need to build a ground-based mobile network to compete with established U.S. telecom operators following its latest spectrum acquisition, JPMorgan said Friday.
The company maintained its “overweight” rating on SpaceX, saying the deal makes Starlink Mobile’s long-term opportunity more credible, although building a competitive network would require significant investment, according to TheFly.
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The stock rose 3.7% in pre-market trading, while SPCX was among the top trending tickers on Stocktwits at the time of writing.
SpaceX buys Grain portfolio
On Thursday, SpaceX announced an agreement to acquire Grain Management’s national portfolio of 800 MHz wireless spectrum licenses, covering up to 14 MHz of coupled spectrum. Grain confirmed that SpaceX would acquire its entire portfolio, subject to approval from the Federal Communications Commission (FCC).
SpaceX said the frequencies fill an important technical gap in Starlink Mobile’s efforts to become a major mobile operator.
This acquisition follows SpaceX’s earlier purchase of higher frequency spectrum from EchoStar and supports its ambition to combine satellite connectivity with traditional mobile infrastructure.
Wall Street sees tower operators winning
JPMorgan said SpaceX would likely need to deploy a ground network using large cell towers unless it enters into a virtual mobile network operator agreement, which would allow it to use an existing carrier’s network.
This brings tour operators into play. KeyBanc analyst Brandon Nispel called the acquisition a positive for tower operators, saying SpaceX’s strategy appears to be moving toward traditional cell towers rather than smaller cellular equipment. The company also suggested that SpaceX could potentially take over some existing DISH Network tower leases.
Goldman Sachs echoed that sentiment, saying it expects SpaceX to deploy 800 MHz spectrum via cell towers in major cities and other urban areas to boost its mobile network coverage.
Tower operators surged Friday in premarket trading. American Tower (AMT), Crown Castle (CCI), and SBA Communications (SBAC) rose about 8% each.
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