US telcos shed $60bn in value after SpaceX announces spectrum purchase

SpaceX has taken a big step towards launching a Starlink mobile service for US consumers, announcing its acquisition of a low-band spectrum portfolio and wiping more than $60bn from the combined market cap of the country’s biggest telcos.

The company is buying licences for up to 14 megahertz of paired spectrum in the 800MHz band, it said in a statement on Thursday afternoon.

A sell-off in shares of US mobile providers accelerated on Friday afternoon in the wake of SpaceX’s announcement. Verizon Communications, which has the most mobile subscribers in the country, was down 10.8 per cent. AT&T fell 10.8 per cent and T-Mobile US tumbled 12.8 per cent.

The move into retail contracts would mark one of SpaceX’s most significant commercial expansions since launching Starlink, which has now made high-speed internet connections available in more than 160 countries via the group’s constellation of satellites.

“Very big deal,” SpaceX chief executive Elon Musk said in an X post. Shares in his AI-to-rockets group were up 0.3 per cent on Friday afternoon, increasing the company’s valuation by $6.8bn, but had gained as much as 3.6 per cent earlier in the day.

Shares of operators of mobile network infrastructure jumped. Crown Castle was up 12.8 per cent, American Tower gained 7.2 per cent and SBA Communications rose 6.1 per cent.

Ahead of its record-breaking initial public offering in June, SpaceX executives told investors the company was considering launching a Starlink retail product.

SpaceX laid some of the groundwork to expand its services in the US last year, when it agreed to pay $17bn to buy wireless spectrum licences from embattled operator EchoStar.

SpaceX has already offered more limited direct-to-consumer services in the US. It has given telcos such as T-Mobile access to its satellites so they can augment their existing network coverage in rural areas.

But the acquisition of the low-band spectrum and a subsequent direct-to-consumer mobile offering would give SpaceX access to a much bigger market than its satellite broadband alone and could also result in it reducing its reliance on telecoms partners.

SpaceX said that following final approval from the Federal Communications Commission, which sells the spectrum licences, it will combine its satellite-to-mobile services with a terrestrial network that can “connect devices everywhere”.

The low-band spectrum will provide a “coverage layer” that would allow Starlink Mobile signals to penetrate obstacles such as walls, thereby allowing customers to use their devices while inside buildings.

“Buying spectrum is not a commitment to build a nationwide network. But this is the spectrum we thought SpaceX needed to make that option more credible— and less expensive,” Bernstein analysts wrote in a note following SpaceX’s announcement.