By Rashika Singh and Shashwat Chauhan
Oct 9 (Reuters) – US and European telecom stocks were among the top decliners on their respective benchmarks on Friday after SpaceX’s acquisition of low-band spectrum heightened concerns over growing competition from satellite-based mobile services.
With the deal, SpaceX aims to allow Starlink Mobile to bypass conventional cell towers where possible, and compete with the big wireless carriers on both broad coverage and reliable indoor service, potentially positioning satellite connectivity as a mainstream alternative to traditional cellular networks.
T-Mobile US slid 13.2% to its lowest level in over 33 months, AT&T dropped and Verizon lost about 10% — both stocks hitting their lowest in over two months.
All three were the biggest percentage decliners on the S&P 500 in afternoon trading.
“The implications for AT&T, T-Mobile, and Verizon are somewhat negative: their defenses against low-band spectrum claims are weakening,” said Kutgun Maral, media, cable & telecom equity research analyst at Evercore ISI.
In Europe, Deutsche Telekom, the largest telecom operator in the region by market value, fell 7.9%, France’s Orange lost 2.5% and Spain’s Telefonica slipped 4.6%.
The pan-continental STOXX 600 Telecommunications index dropped over 2.9% to its lowest level since January 30.
Shares in Airtel Africa, Vodafone and BT Group were the biggest losers on London’s FTSE 100 index, falling between 2.4% and 6.3%.
The slide came after SpaceX agreed to acquire private-equity firm Grain Management’s nationwide 800 MHz spectrum portfolio in a deal valued at about $8 billion, according to a person familiar with the discussions.
“This strategic shift places SpaceX in a stronger negotiating position and highlights an evolving competitive landscape in the telecom sector, reminding investors of the parallel trends seen in fixed wireless services over the last decade,” added Maral.
SpaceX shares rose 1.2% in afternoon trading.
Low-band spectrum can travel longer distances and penetrate buildings and other obstacles more effectively than higher-frequency airwaves, enabling SpaceX’s Starlink Mobile push.
“The agreement will allow SpaceX to use scarce low-band spectrum to support next-generation satellite direct-to-device services, enabling Starlink Mobile to reach customers from both the ground and space,” said Milbank, which represented Grain Management in the deal with SpaceX.
The acquisition remains subject to regulatory approval.
Grain Management and SpaceX did not immediately respond to requests for comment on the deal value.
TOWERS BUCK SELLOFF
Telecom tower operators bucked the sector-wide selloff, as investors bet SpaceX’s wireless ambitions could ultimately drive demand for additional terrestrial infrastructure.
American Tower, Crown Castle and SBA Communications advanced between 6.5% and 13.3%.
Morgan Stanley analysts said the transaction was “incrementally constructive” for tower operators, noting that even a satellite-centric network could require deployments of towers, rooftops and small cells, while broader urban competition would require substantially more terrestrial infrastructure and spectrum.
(Reporting by Rashika Singh, Shashwat Chauhan and Akash Sriram in Bengaluru; Editing by Mrigank Dhaniwala and Shinjini Ganguli)
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