T-Mobile Plunges 13% as SpaceX's Reported $8 Billion Spectrum Deal Rattles AT&T and Verizon

AT&T, Verizon and T-Mobile fell sharply Friday after SpaceX agreed to buy a nationwide portfolio of low-band spectrum, a move that gives its planned Starlink Mobile network a path to compete directly with the big three carriers. By about 1:20 PM ET, T-Mobile was down 13.24% at $148.63, AT&T was down 9.79% at $22.18 and Verizon was down 9.59% at $41.26. Cell tower owners moved the other way.

What SpaceX agreed to buy

SpaceX announced Thursday that it will acquire all of Grain Management's 800 MHz spectrum, up to 14 MHz of paired low-band licenses covering the United States. The companies did not disclose the price. The Wall Street Journal reported it at about $8 billion in cash. The deal needs FCC approval, and SpaceX has asked for an expedited review.

Low-band spectrum travels farther and passes through walls better than higher bands, which is what satellite-to-phone service has lacked indoors. SpaceX says most existing phones already support the band. The licenses complement the 2 GHz spectrum Starlink Mobile already holds, and SpaceX plans a hybrid network that combines satellites with terrestrial equipment on towers and rooftops once final approval comes.

The spectrum has a notable history. Grain bought it from T-Mobile in August in a swap worth about $2.9 billion, giving T-Mobile Grain's 600 MHz licenses. It was originally slated for EchoStar's Dish Network, but that deal fell through when Dish said it could not afford it.

How the stocks moved

The afternoon quotes reflect each stock's prior close. One estimate put the three carriers' combined market value loss at about $39 billion shortly after the open, almost five times the reported price of the deal. Premarket quotes are as reported earlier in the session and can differ from the afternoon figures.

Reports during the session did not give exact times for the tower figures, so treat them as approximate.

Why the carriers are exposed

Satellite service has mostly filled coverage gaps for the carriers, and T-Mobile has been a Starlink partner. Owning its own spectrum lets SpaceX move toward being a competitor in the broader mobile market. Analysts see T-Mobile as the most exposed, partly because it relies on Starlink for satellite connectivity. AT&T and Verizon keep advantages in dense urban areas, network capacity, enterprise customers and service. The three carriers also formed a joint venture to pool spectrum for satellite-to-device service the week before the announcement.

Analysts are divided on how big the threat is. MoffettNathanson's Craig Moffett says the spectrum alone is not enough and SpaceX still needs a wholesale deal with one of the big three to compete. New Street says SpaceX will "significantly lag" the big three on low-band spectrum and that the Grain licenses are not yet compatible with SpaceX's first two generations of direct-to-device satellites. Wells Fargo's Steven Cahall said in September that a smaller fourth player in a three-player market is "still a net negative, for sure."

Why tower stocks rose

Satellites alone are unlikely to deliver reliable indoor coverage across the country, so SpaceX would still need towers, rooftops or small cells. Bernstein estimates a full terrestrial build could take 30,000 to 120,000 sites and cost $50 billion to $130 billion, which makes leasing existing towers the more practical route. That would make tower operators potential major customers, though no company has confirmed any such arrangement.

What happens next

New Street expects the FCC approval to be fairly straightforward under the current administration, though SpaceX must show its deployment plans. The FCC also approved SpaceX's plan this week for a 15,000-satellite direct-to-device constellation, and it proposed auctioning 25 MHz of midband spectrum on Oct. 7. Some analysts say SpaceX could pursue more spectrum or network assets, including the legacy Dish Wireless network that is heading toward an auction.