The deal

SpaceX said on Thursday, 8 October, that it had agreed to buy a nationwide low-band spectrum portfolio, a step meant to turn Starlink Mobile into a mobile operator in the United States. The deal covers 100% of private-equity firm Grain Management's nationwide 800 MHz portfolio, which Grain had acquired from T-Mobile earlier this year. The company did not disclose financial terms, but the Wall Street Journal reported, citing sources, that the spectrum is worth $8 billion. ANSA reports that the holdings include up to 14 MHz in the 800 MHz band, which would let signals pass through walls, concrete and urban buildings. The acquisition still requires approval from the Federal Communications Commission.

Infrastructure behind the plan

The FCC has also authorized SpaceX to launch 15,000 second-generation satellites optimized for 2 GHz spectrum globally, a decision Reuters reports came earlier this week. Most existing unmodified handsets already support the 800 MHz band, so consumers would not need proprietary satellite phones. At the Mobile World Congress in February, Michael Nicolls, vice president of Starlink Engineering, outlined a plan to integrate Starlink Mobile on most commercial smartphones in the US by mid-2027, according to ANSA. Elon Musk said the company would be able to provide connectivity across the whole US, including regions without mobile internet today, Deutsche Welle reports. Starlink currently requires a dedicated terminal with an antenna and a clear view of the satellite, which the new licences are meant to address.

Market reaction

Deutsche Telekom shares were on track for their worst trading day in more than three years on Friday, down 7% at 0919 GMT, and had already lost around a quarter of their value since a February high. Premarket, T-Mobile US, Verizon and AT&T fell between 5% and 6%, while the STOXX Europe 600 Telecommunications index dropped 3.3% to its lowest level since February. Bloomberg reported that Verizon's 6.05% note due in 2058 widened 22 basis points to 220 basis points. In Lisbon, NOS lost roughly 60 million euros of market value by 14:00 on Friday, a cut of about 2%, according to Diario de Noticias. SpaceX shares rose 3.6% after the announcement, while American Tower, Crown Castle and SBA Communications gained between 5% and 6%.

Deutsche Telekom-8%

Vodafone-4.5%

Orange-3.4%

Telefonica-3.3%

Deutsche Telekom

-8 %

Vodafone

-4.5 %

Orange

-3.4 %

Telefonica

-3.3 %

Data from the article text

Analyst views

Citi analysts wrote that the risk of SpaceX emerging as a facilities-based competitor has likely contributed to the recent poor performance of telecom and cable stocks. Morgan Stanley analysts expect any threat to established carriers to materialize gradually, starting in rural markets, and called the transaction incrementally constructive for tower operators. ODDO BHF analyst Stéphane Beyazian expects SpaceX to be a "big contender" at the FCC's 2027 auction of 160 megahertz of Upper C-Band spectrum, but said the company does not pose an imminent threat to Deutsche Telekom's business.

“Without a roaming agreement with a partner, it will take years before Starlink can build and sell a good quality product”

Regulatory next steps

William Blair analysts said they expect SpaceX to offer an attractive package of Starlink broadband and mobile service, and considered it possible that xAI's Grok assistant would be included. Brendan Carr, who heads the FCC, welcomed the purchase, according to N-tv.

“We will see more investment and more opportunities for a variety of providers, and America will lead the world in next-generation technologies, to the benefit of consumers across the country.”

The transaction remains subject to regulatory approval, and the company has not confirmed the $8 billion figure.