Stocks for investors to watch as SpaceX aims to become a major U.S. mobile carrier

SpaceX is in talks to gain access to tens of thousands of cell towers in the U.S., Bloomberg reports. The potential deal is seen as a bid by the space company to mount a serious challenge to the country’s largest wireless carriers, AT&T, Verizon, and T-Mobile. 

SpaceX aims to secure access to at least 80,000 cell sites across the U.S., sources familiar with the matter told Bloomberg. To reach that goal, Elon Musk’s company is in talks with at least one major cellular infrastructure company, they said.

Musk has made no secret of his intention to build a standalone mobile carrier from scratch, threatening the dominance of the market’s three largest players. SpaceX recently acquired low-band spectrum that will allow it to combine its Starlink satellite system with other elements of telecommunications infrastructure. After releasing its quarterly earnings this week, SpaceX stated that satellite launches, combined with spectrum purchases, “will pave the way for Starlink Mobile to become a major mobile carrier.”

SpaceX shares rose 1.5% in early trading in New York on Friday. Buying spectrum was a significant step in itself, but committing to 80,000 towers “could be a point of no return,” Bernstein analyst Laurent Yoon reckons. The reported scale suggests a serious commitment to building a nationwide terrestrial wireless network, he believes. Whether SpaceX ultimately leases anything close to that number of sites remains uncertain.

SpaceX’s entry into the wireless market could create new opportunities for cell tower operators, including American Tower and Crown Castle, Morgan Stanley previously noted. American Tower and Crown Castle shares jumped 7% and 9%, respectively. Crown Castle is among the companies in talks with SpaceX, according to Bloomberg’s sources. The potential deals could be worth billions of dollars.

Shares of AT&T, Verizon, and T-Mobile fell 4% or more. The arrival of a well-funded, politically influential rival could shake the dominance of the big three U.S. carriers, Morningstar warned. The telecom giants’ stocks have reacted sharply to each report about the potential competitor: they had already fallen this week after SpaceX reaffirmed its plans to enter the wireless market when it released its quarterly earnings.

For now, Starlink Mobile remains a long-term question given the size and profitability of the wireless market, Bernstein’s Yoon noted. Its competitive impact may still be years away. “The competitive impact may still be years away, but anticipation alone, reinforced by each successive spectrum and infrastructure move, is likely to remain an overhang on sector sentiment,” he said, as quoted by Yahoo Finance.