Telecommunications giants Verizon, T-Mobile, and AT&T saw their stock prices plummet on Friday following Elon Musk’s SpaceX announcement of acquiring a nationwide spectrum portfolio to expand its Starlink mobile internet services.
Verizon experienced its worst day since 2002, while T-Mobile and AT&T also hit multi-year lows, driven by fears of increased competition. Despite the market reaction, FCC Chair Brendan Carr hailed the move as “really good news for American consumers” due to enhanced competition in the spectrum market.
Telecommunications stocks experienced a dramatic sell-off on Friday following the announcement that Elon Musk's SpaceX had agreed to acquire a nationwide spectrum portfolio, signaling its intent to expand Starlink internet into mobile services.
Verizon, a leading cell provider, bore the brunt of the market's reaction, closing down a staggering 8.75%. This marked its worst single-day performance since July 2002. Not alone in its decline, shares of T-Mobile plummeted by 13.27%, achieving its lowest point since 2013, while AT&T saw a significant fall of 9.81%, recording its biggest drop since 2000.
In stark contrast to the widespread telecom slump, SpaceX's stock edged up slightly, gaining around 1% for the day, reflecting investor optimism for its expanded ventures.
The strategic deal involves the acquisition of a spectrum portfolio from Grain Management, comprising a license for up to 14 megahertz of paired spectrum in the 800 MHz band. This move is seen as a significant step for SpaceX's Starlink Mobile aspirations.
FCC Chair Brendan Carr, whose agency is tasked with approving such deals, expressed enthusiasm for the development during a CNBC interview. He stated that increased competition in the spectrum market was "really good news for the American consumers." Carr further elaborated on the dynamic nature of the market, noting, "We're probably going to bring over $100 billion of spectrum into the market over the next two years, so we're seeing a lot of competition... People are going to try to out-compete, out-innovate, and I think that's great. We're going to see how this plays out. It's not for us ultimately to pick winners and losers."
Financial analysts echoed some of this optimism regarding SpaceX's move. Evercore ISI suggested that the rocket maker "now has the outline of a real network" to complement its existing satellite infrastructure. JPMorgan also weighed in, stating the acquisition makes Starlink Mobile's long-term prospects "more credible." However, analysts cautioned, "That said, we continue to see limited near-term risk to U.S. wireless incumbents given the time, infrastructure and capital required to build a competitive terrestrial network."
Verizon, AT&T, and T-Mobile stock chart.
