SpaceX Reportedly Seeks 80,000 Cell Sites, Sending Crown Castle Up 10% and Carriers Down 4%-6%

AT&T (T), Verizon (VZ) and T-Mobile (TMUS) fell 4% to 6% in after-hours trading on Thursday after Bloomberg reported that SpaceX (SPCX) is in talks to secure access to at least 80,000 cell sites across the United States, a step toward becoming a fourth nationwide wireless carrier. Crown Castle (CCI) is the only tower company named in the reports, according to Investing.com, and it rose about 10% after hours. Potential leasing agreements could reach into the billions of dollars, but no terms or timeline have been reported.

After-hours moves

The prices and moves are from the summary supplied, and the carriers' declines reversed gains from the regular session, according to the same summary. Investing.com, citing Bloomberg, said Crown Castle rose nearly 10% and SpaceX about 1% in after-hours trading, and suggested the small SpaceX move reflected investors having largely priced in the news. The summary supplied also shows American Tower higher in sympathy; American Tower was not named in the Investing.com account of the report.

What was reported

Crown Castle CEO Chris Hillabrant declined on Wednesday's earnings call to discuss specific client negotiations, but said the company is talking with all major satellite-based telecom providers about ground-level deployment, according to Investing.com.

How this builds on the spectrum deal

On Oct. 9, SpaceX said it agreed to buy Grain Management's nationwide 800 MHz spectrum, up to 14 MHz of paired low-band spectrum that SpaceX described as a coverage layer for indoor signal. The price was not disclosed, and the Wall Street Journal reported about $8 billion in cash. The purchase requires FCC approval. The FCC authorized SpaceX's 15,000-satellite direct-to-device system on Oct. 6. On the day of the spectrum announcement, Crown Castle rose more than 13%, American Tower more than 8% and SBA Communications more than 6%, while Verizon fell nearly 6% and AT&T and T-Mobile each fell more than 6%, according to Wireless Estimator.

Analysts at the time called the spectrum an option rather than a commitment. Bernstein said the deal keeps a ground-network build "very much alive," having estimated in an Aug. 31 note that a standalone U.S. network would cost $50 billion to $130 billion. Tim Farrar of TMF Associates said reliable in-building coverage in cities would require SpaceX to place equipment on towers, which is the demand this week's report points to.

The Dish precedent

Dish Wireless was once meant to be the fourth nationwide carrier, and its network went dark after EchoStar sold its spectrum to AT&T and SpaceX. Crown Castle, American Tower and SBA are pressing roughly $7.6 billion of lease claims in Dish Wireless's Chapter 11 case in Houston, with mediation running to Nov. 4, according to Wireless Estimator. Whether any SpaceX leases would prove more durable than Dish's remains an open question.

Sources: Bloomberg's Oct. 22 report, as relayed by Investing.com; Wireless Estimator (Oct. 9) and Blockspace (Oct. 9) on the Grain spectrum purchase and the tower and carrier reaction. After-hours prices and percentage moves are from the summary supplied and will differ from Friday's open. This is informational, not a recommendation to buy or sell.