Shares of the three biggest US wireless carriers fell sharply Friday after reports that SpaceX has agreed to buy a nationwide portfolio of 800 MHz wireless spectrum from Grain Management, a deal reportedly worth roughly 8 billion dollars. T-Mobile US fell more than 13 percent, AT&T dropped nearly 11 percent, and Verizon lost just over 10 percent, as investors weighed the prospect of a stronger satellite and direct to phone competitor in SpaceX.
Grain Management confirmed on October 8 that it had reached an agreement to sell its nationwide 800 MHz spectrum holdings to SpaceX, subject to approval from the Federal Communications Commission and other closing conditions. The spectrum band in question is well suited to both wide area coverage and penetration through buildings, qualities that could support SpaceX's efforts to expand direct to cell satellite service in partnership with T-Mobile and, potentially, in competition with other carriers going forward.
While the major carriers sold off, companies that own and lease cell towers moved in the opposite direction. American Tower, Crown Castle and SBA Communications all gained Friday, as investors bet that new spectrum holders, including satellite operators, would still need ground infrastructure to build out coverage.
The deal lands at a moment when the wireless industry is already adjusting to satellite to phone services as a complement, and in some views a competitor, to traditional ground based networks. Regulatory approval is not guaranteed and is likely to take time, given the scale of the spectrum involved and its importance to existing carrier networks.
Watch for the formal FCC filing and review timeline, and for responses from the major carriers about how the spectrum sale could affect their own network plans.
Why did telecom stocks fall on this news?
Investors are weighing the prospect of SpaceX becoming a stronger competitor in wireless coverage, particularly for direct to phone satellite service, if it gains this spectrum.
Has the deal been finalized?
Grain Management confirmed an agreement on October 8, but the sale still requires approval from the Federal Communications Commission and other closing conditions.