Three companies dominate U.S. wireless. Rocket maker Space Exploration Technologies Corp. (NASDAQ:SPCX) is now moving onto their turf.
The Elon Musk-led company agreed to buy a nationwide portfolio of up to 14 megahertz of paired 800 MHz licenses from investment firm Grain Management. The Wall Street Journal reported the price at about $8 billion in cash.
AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) and T-Mobile US Inc. (NASDAQ:TMUS) were all in the red when the stock market opened Friday morning. Together, the three carriers shed about $39 billion in market value — almost five times what SpaceX paid.
At those levels, AT&T is on track for its largest one-day decline since April 20, 2023. Verizon is on track for its largest since July 17, 2023.
Why The SpaceX Spectrum Deal Matters
Spectrum is the set of radio frequencies that carry phone signals. Low-band spectrum, such as 800 MHz, travels long distances and penetrates walls.
SpaceX already owns higher-frequency 2 GHz licenses. The company said the new licenses will complement its existing licenses and help Starlink Mobile reach phones inside buildings.
Musk described the purchase on X as the final piece SpaceX needed.
In addition, the Federal Communications Commission ruled this week that SpaceX does not need leasing agreements with ground-based carriers to offer the service.
What Analysts Are Watching
Deepwater Asset Management co-founder Gene Munster said a SpaceX-built phone running on its own network could undercut carriers on price and offer features they lack.
Wells Fargo analyst Steven Cahall told CNBC in September that SpaceX does not need to match the carriers’ networks. He estimated it could initially target roughly 2% of the U.S. population.
Even so, Cahall said a three-player market gaining a smaller fourth player is "still a net negative, for sure."
Bernstein said the deal keeps open the possibility that SpaceX builds a ground network.
For this reason, tower owners rallied. Crown Castle Inc. (NYSE:CCI) gained over 8% and American Tower Corp. (NYSE:AMT) rose nearly 7% at last check on Friday.
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