Major US based telecom stocks such as Verizon, AT&T, T-Mobile fell as much as 9% after the opening bell on Friday, October 9 after SpaceX finalised a deal to acquire a nationwide low-band spectrum portfolio.
Shares of major telecom operators were in red today, with T-Mobile dropping 8.7% trading at $156.41, AT&T trading 7.25% lower at $22.81 apiece, while Verizon remained 5.8% down at $42.96.
The decline in these shares come as SpaceX spectrum deal to push into the wireless market, raises fears of tougher competition for established operators. The space company will pay nearly $8 billion in cash for the assets to the seller, private-equity firm Grain Management, the Wall Street Journal reported, citing people familiar with the matter.
The financial details of the deal were not revealed. SpaceX Starlink Mobile satellite-to-cellular service includes global 2 GHz mid-band spectrum for high-bandwidth capacity. The new spectrum will allow the signal to pass through obstacles, Reuters reported.
Addressing a significant hurdle faced by satellite-based mobile networks, low-band frequencies can travel long distances and pass through dense structures including walls and trees. Through combining nationwide low-band airwaves with high-frequency space capacity, SpaceX is expected to position Starlink Mobile to cross conventional cell towers completely.
The agreement is expected to intensify competition for traditional telecom operators by turning satellite-to-phone connectivity from a backup option for areas with poor network coverage into a commercial service that could challenge conventional cellular networks.
The deal, which includes acquiring 100% of Grain Management's nationwide 800 MHz spectrum portfolio is subject to Federal Communications Commission (FCC) nod. Earlier this year, Grain acquired the airwaves from T-Mobile.
This week, the FCC approved Starlink Mobile's Gen2 constellation application, enabling SpaceX to launch 15,000 satellites that are optimized for 2 GHz spectrum across the globe.
The latest orbital fleet will function in very low Earth orbit, expected to provide expanded bandwidth and low-latency connections to standard handsets, the report said.
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