"A revolution in the communications segment": why an analyst saw a threat to AT&T in Starlink satellites

Oppenheimer analyst Timothy Horan downgraded AT&T shares, triggering their biggest one-day drop in eight months on June 3 - by more than 4%. According to the expert, investors are underestimating the threat Elon Musk's SpaceX poses to the telecom giant's broadband business. AT&T depends on the home Internet segment, but the company's position in this area may be shaken: SpaceX's satellite project - Starlink - due to the rapid cheapening of technology is becoming an increasingly affordable alternative to provide fixed wireless access to the network, Horan believes, writes MarketWatch.

Timothy Horan downgraded AT&T shares from "above market" (outperform - corresponding to the recommendation to buy) to "at the market level" (perform - neutral recommendation). The expert explained his position by the fact that investors underestimate "the revolution that SpaceX is able to make in the communications industry".

The point is that the broadband market, Marketwatch explains, is already undergoing a structural change: wireless carriers (including AT&T itself) are aggressively promoting fixed wireless access (FWA), a technology that uses the spare capacity of mobile networks to connect customers to the home Internet. This has already increased pressure on traditional ISPs, which use wired connections (cable or fiber) to provide customers with Internet access. But even bigger problems for companies in the communications sector, according to Horan, could come from Starlink's satellite internet service.

"Prices for Starlink services are now on par with traditional cable internet, but they will start to fall rapidly with the launch of the V3 version satellites, whose bandwidth is 10 times higher," the analyst said. Musk's aerospace company plans to begin deploying these satellites in 2026.

"In our opinion, SpaceX will turn over the entire $1.6 trillion communications industry," Horan emphasized in this regard. "The single largest source of revenue that [Musk's company] can tap right now" lies precisely on the telecom plane, the analyst noted. SpaceX, he believes, "will eventually build its own terrestrial [telecom infrastructure] network, integrating cell towers and antenna equipment with satellite links." In his opinion, Elon Musk's company may go for a direct purchase of a classic cellular operator or a virtual provider leasing someone else's infrastructure.

"We were among the first to point out the risks that FWA posed to classic operators. The industry underestimated them then, just as it underestimates the satellite threat now," Horan writes. AT&T, he estimates, has a larger presence in the broadband market than its competitors. At the end of the first quarter of 2026, net additions to AT&T's home Internet subscribers totaled 512,000, including corporate customers - the company then increased the number of connections to its Internet (Advanced Connectivity division) by 584,000. AT&T's quarterly operating profit for this segment increased 14.8% year-over-year to $6.9 billion.

Amid the downgrade from Oppenheimer, AT&T shares fell 4.4% the day before - according to Dow Jones Market Data, it was their worst one-day performance in the last eight months, since October 6, 2025. In trading on June 4, the company's shares added 1%.

According to MarketWatch, the consensus forecast of Wall Street analysts on AT&T shares remains positive: 14 experts recommend buying the company's shares (Buy and Overweight ratings), the same number of experts recommend holding (Hold). There are no recommendations to sell AT&T shares.

According to the prospectus filed by SpaceX ahead of the IPO, the telecommunications business of the aerospace company, including Starlink and related services, brought SpaceX almost $11.4 billion in revenue in 2025 - this is about 50% more than a year earlier. The bulk of revenues in this segment provided the doubling of Starlink subscriber base (99.9% growth). As of Ma. 31, Starlink's satellite internet subscribers reached about 10.3 million. "By clearly demonstrating Starlink's superior speed, minimal signal latency and ease of installation, we expect to deliver significant customer growth," SpaceX said in documents prepared for its IPO, due June 12.

This article was AI-translated and verified by a human editor