Oct 9 (Reuters) – US and European telecom stocks tumbled on Friday after SpaceX’s acquisition of low-band spectrum heightened concerns over growing competition from satellite-based mobile services.
T-Mobile US, Verizon and AT&T fell between 5% and 6% in premarket trading, while the STOXX Europe 600 Telecommunications index dropped 3.3% to its lowest level since February.
Deutsche Telekom, Europe’s largest telecom operator by market value, fell 8%, while Britain’s Vodafone dropped 4.5%, France’s Orange lost 3.4% and Spain’s Telefonica slipped 3.3%.
The slide came after reports that SpaceX had agreed to acquire private-equity firm Grain Management’s nationwide 800 MHz spectrum portfolio in a deal valued at about $8 billion, bolstering the company’s ambitions in satellite-to-cellular connectivity.
“We believe the Grain transaction is a clear sign that SpaceX is going to be a more aggressive acquirer of spectrum,” Morgan Stanley analysts said in a note, adding that any threat to established carriers is likely to materialize gradually, starting in rural markets.
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.
While the companies did not share financial terms of the deal, the Wall Street Journal reported, citing sources, that it is worth $8 billion.
SpaceX shares rose 3.6% after announcing the acquisition, which remains subject to regulatory approval.
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 5% and 6%.
Morgan Stanley 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 in Bengaluru; Editing by Mrigank Dhaniwala)
