SpaceX has agreed to buy a nationwide block of phone airwaves, and shares in AT&T, Verizon and T-Mobile fell on the news. The deal covers all of Grain Management’s 800 MHz spectrum, according to Grain’s announcement on Thursday, October 8. Terms were not disclosed, and the sale needs FCC approval. Reuters reported that the Wall Street Journal put the price at about $8 billion in cash, citing people familiar with the matter. Neither company has confirmed that figure.
What SpaceX gets
Spectrum is the radio space that phone signals travel on. Reuters says low-band signals can pass through walls and tree cover, which bears on indoor coverage. Forbes reports that the deal gives Starlink Mobile, SpaceX’s phone service, wider coverage, especially inside buildings, and that SpaceX says it fills “one of the key remaining technical gaps” in its plans. Reuters adds that Grain bought the airwaves from T-Mobile earlier this year. In the same week, the FCC approved SpaceX’s plan for 15,000 new Starlink Mobile satellites, according to Reuters and Forbes.
How the market reacted
Shares in AT&T, Verizon and T-Mobile fell about 6% in extended trading on Thursday. In premarket trading on Friday, Reuters had T-Mobile, Verizon and AT&T down between 5.5% and 7.4%. Reuters also reported that Deutsche Telekom fell 6.5% and Vodafone 4.1%. Verizon spokesman Rich Young was dismissive: “It’s just empty airwaves.”
Our take: spectrum is a license, not a network. SpaceX still needs FCC approval, and Verizon’s reply shows how the carriers see it. Forbes reports that AT&T’s chief executive, John Stankey, has said satellite is about solving the last 2%. Even so, the shares fell before any service exists, which shows how seriously investors take the idea. The price, the approval and whether SpaceX builds anything on the ground are what to watch. For earlier coverage of the service, see our look at how Starlink changes how people see Musk.
