SpaceX announced a deal to acquire a nationwide spectrum license, pushing its Starlink service deeper into the U.S. telecommunications market and causing shares of AT&T, Verizon, and T-Mobile to tumble. This strategic acquisition of 14 megahertz in the 800 MHz band is crucial for Starlink Mobile to become a major mobile carrier, intensifying competition with established providers. The move aligns with recent FCC actions to make more spectrum available for satellite-to-device services, potentially benefiting other players like Amazon as well.
In a bold move signaling its deeper foray into the U.S. telecommunications market, SpaceX announced a significant agreement on Thursday to acquire a nationwide spectrum portfolio. This strategic maneuver immediately sent shares of established telecom giants AT&T, Verizon, and T-Mobile tumbling in extended trading, highlighting the potential disruption Starlink Mobile poses to the industry.
The deal, which awaits approval from the Federal Communications Commission (FCC), involves the acquisition of a crucial spectrum portfolio from Grain Management, a firm specializing in digital infrastructure. SpaceX confirmed in a statement that the purchase includes a "license portfolio of up to 14 megahertz of paired spectrum in the 800 MHz band."
According to SpaceX, this "prime low-band spectrum addresses one of the key remaining technical gaps that will pave the way for Starlink Mobile to become a major mobile carrier in the US." The importance of this acquisition was underscored by SpaceX CEO Elon Musk himself, who referred to the agreement as a "very big deal" in a post on X (formerly Twitter).
This announcement intensifies an already brewing rivalry. Just last week, T-Mobile, AT&T, and Verizon unveiled a joint venture aimed at expanding coverage in underserved areas through satellite and direct-to-device (D2D) services, notably without Starlink's involvement. T-Mobile had also previously removed any mention of Starlink from its own satellite-related promotions, signaling an independent competitive path.
Industry expert Tim Farrar of TMF Associates commented, "This adds fuel to the fire in the battle between SpaceX and the mobile operators." However, Farrar also cautioned that while significant, "it's still a very limited amount of spectrum and to get reliable building penetration in urban areas SpaceX would have to deploy towers on the ground." This suggests SpaceX's ambition to become a major mobile carrier may necessitate a hybrid approach combining its satellite constellation with ground-based infrastructure.
For further insights into how Starlink could impact terrestrial broadband, watch this discussion with MoffettNathanson’s Craig Moffett.
The timing of SpaceX's announcement is particularly noteworthy, coming just one day after the FCC indicated its plan to vote on a proposal to auction 25 megahertz of "prime spectrum" to support D2D services. The FCC also plans a public comment vote on October 29 for a proposal to allocate an additional 482MHz of spectrum for supplemental coverage from space and to modernize D2D rules. These regulatory developments could benefit not only SpaceX but also Amazon, which is actively developing its own satellite network for similar services.
SpaceX, which saw a record IPO in June and is now valued at over $2 trillion, has largely relied on its Starlink service as its primary cash generator and profitable business segment. As of June 30, Starlink boasted 12 million subscribers across 205 countries, generating $1.66 billion in operating income from $4.29 billion in revenue during the second quarter. With over 11,000 satellites in orbit, Starlink stands as the world's largest global satellite communications network. Deutsche Bank analysts, who maintain a 'buy' rating on SpaceX stock, estimate Starlink's global subscriber base grew to 13.5 million by the end of September, with 4.1 million users residing in the U.S.
While Starlink thrives, SpaceX's rocket division is re-evaluating its launch cadence for the upcoming year, focusing on making its massive Starship rockets reliable and fully reusable to eventually phase out its smaller Falcon rockets. The company is also exploring a cloud computing business, with aspirations to build orbital data centers. Currently, both its space and artificial intelligence units are operating at a loss.
SpaceX has not yet responded to inquiries regarding the potential timeline for its new services to launch, pending regulatory approvals. If cleared, this additional spectrum would be instrumental in enabling SpaceX to offer a combined satellite and ground-based coverage solution, once it establishes a network of towers.
Following a 4% dip during regular trading hours, SpaceX shares rebounded, rising approximately 2.5% in extended trading.
For a broader perspective on alternatives to Starlink, watch the MDA Space CEO discuss other options.
