SpaceX Spectrum Deals Spook Telecom Investors Despite Record Results

AT&T added a record 769,000 internet connections in the third quarter, reported October 21, and its shares still fell. Verizon and T-Mobile declined with it. Investors, three industry analysts said Wednesday on a Broadband Breakfast Live Online panel, are now pricing Elon Musk's SpaceX into every telecom stock.

The trigger came earlier in October, when SpaceX agreed to buy 800 MHz of low-band spectrum licenses from investment firm Grain Management. Low-band airwaves carry cellular signals through walls, and the licenses would underpin SpaceX's effort to turn its Starlink Mobile phone-to-satellite service into a major U.S. carrier.

"This is the quarter where the results seem not to matter so much," said David Barden, head of U.S. communication services at New Street Research.

What does SpaceX change for telecom valuations?

The carriers' investment appeal rested on predictability, Barden said. A dividend yield of about 4 percent suited a business with stable long-term prospects. SpaceX has introduced what he called a "cone of uncertainty" around their terminal value — the estimated worth of earnings beyond analysts' detailed forecast horizons.

Investors now price in the wireless and broadband business SpaceX could take while giving the carriers little credit for growth, he said. Even strong results in 2027 would not settle the question, and each new SpaceX spectrum purchase or tower deal will revive it.

The spending gap is stark. SpaceX spent $19.6 billion on capital projects in the third quarter, most of it on AI computing, against AT&T's $5.1 billion. Last year SpaceX also agreed to acquire spectrum licenses from EchoStar, owner of Boost Mobile, for about $17 billion.

Tim Farrar, president of TMF Associates, predicted further SpaceX deals before year-end, most likely a takeover of the rest of EchoStar. Its remaining spectrum and tower leases could let SpaceX assemble a network designed for 20 million to 40 million subscribers — far faster than the six years some carriers have suggested. Barden expects SpaceX to pursue more airwaves in the 600 MHz and 3.5 GHz bands and to bid in the Federal Communications Commission's planned upper C-band auction. Amazon, which runs the competing Leo constellation, could respond by acquiring Viasat for its spectrum, Farrar said.

Is Starlink a low-cost threat today?

Not yet, according to Farrar. Starlink charges national prices from $55 a month for 100 Mbps downloads to $130 for its top tier, while cable and fiber providers can adjust prices market by market. A large share of Starlink customers already pay $130 month to month, so cutting prices would push existing subscribers down to cheaper plans.

His estimate: about 5 million U.S. Starlink subscribers, of whom only about 2 million have a realistic wired or cellular home internet alternative. The rest are portable-dish users or households that previously relied on older satellite providers Viasat and Hughes. The terrestrial leaders remain far larger: Comcast ended September with 28.3 million residential broadband customers, Verizon reported 17.4 million broadband connections, and AT&T had 16.2 million.

How are carriers defending themselves?

Through convergence bundles. Among households with AT&T fiber or fixed wireless internet, 42.8 percent also take AT&T wireless. About 18 percent of Comcast residential broadband customers subscribe to Xfinity Mobile.

"We're back in the days of triple play," said Jeff Heynen of Dell'Oro Group, predicting "quadruple play and quintuple play" packages with additional consumer services. Longer phone payment plans let carriers attach perks such as Netflix or Apple TV discounts, he noted, citing T-Mobile's mix-and-match offers. Satellite operators could eventually copy the model — a free year of Amazon Prime with Leo service, or a Starlink discount for Tesla owners. For now, carriers hold the advantage because SpaceX has no ground-based mobile network to bundle.

The quarter's fiber numbers show where competition actually stands:

• AT&T: 442,000 fiber additions, 327,000 fixed wireless additions
• Verizon: 155,000 fiber additions, 159,000 fixed wireless additions
• Comcast: 144,000 residential broadband losses, against 91,000 a year earlier

Fixed wireless helped carriers win back customers who left for cable during the pandemic, but Heynen called the service "vulnerable." Carriers have slowed equipment orders and are unlikely to exceed subscriber targets. AT&T treats fixed wireless as interim until fiber arrives; T-Mobile is expected to keep expanding fiber joint ventures. Cable faces pressure from fixed wireless at the low end and fiber at the high end.

Could AI demand favor satellites?

Barden argued investors fixated on subscriber losses may miss SpaceX's larger aim: connecting a coming wave of devices to AI systems, a market big enough for satellite and terrestrial providers both to gain. Farrar was skeptical. If data consumption rises a thousandfold, fiber and ground-based 5G would carry that traffic far more efficiently, he said.

Heynen drew the same line. AI agents running continuously in homes would generate sustained uploads and downloads that favor fiber and upgraded cable over capacity-limited satellites. He expects terrestrial networks to carry most traffic, with low-Earth orbit satellites serving particular uses.

"I don't think that this is an existential threat to the terrestrial broadband community or the mobile community," Farrar said. The next test comes as SpaceX's expected year-end deals and the FCC's upper C-band auction define how quickly a fourth national competitor takes shape.