US telecom stocks slide after SpaceX reportedly struck spectrum deal
XLC•U.S. telecom stocks fell premarket after SpaceX reportedly agreed to acquire a nationwide low-band spectrum license portfolio for about $8 billion in cash. T-Mobile shares fell 6.3%, AT&T 5.7% and Verizon 5.1%.
1. Spectrum deal
SpaceX agreed to acquire a nationwide low-band spectrum license portfolio from private-equity firm Grain Management, a deal that would enable Starlink Mobile to become a major U.S. telecom operator. SpaceX will pay about $8 billion in cash for the assets, the Wall Street Journal reported, citing people familiar with the matter; the firms have not disclosed financial terms.
2. Carrier shares fall
T-Mobile shares slipped 6.3% premarket, AT&T fell 5.7% and Verizon declined 5.1%. European telecom shares also fell, including Deutsche Telekom.
3. Competitive threat
The deal raises the stakes for legacy carriers by turning satellite direct-to-device connectivity from a supplementary safety feature for remote dead zones into a potential commercial rival to terrestrial cellular networks. Morgan Stanley said the threat was not entirely unexpected and was likely to start in rural areas.
