Starlink's Mobile Push Jolts AT&T and Verizon Shares, Lifts Cell-Tower Stocks

SpaceX (SPCX) reached a definitive agreement on Thursday, Oct. 8, to buy Grain Management's nationwide portfolio of 800 MHz wireless spectrum, a step the company said could position its Starlink business to become a "major mobile carrier." SpaceX shares rose 2% in after-hours trading.

The news moved two groups of stocks in opposite directions. Shares of traditional wireless carriers fell sharply, according to MarketWatch: Verizon Communications (VZ) was down almost 6%, and AT&T (T) and T-Mobile US (TMUS) were each down more than 6%. Cell-tower owners rallied in the extended session, with Crown Castle (CCI) up 7%, SBA Communications (SBAC) up 6% and American Tower (AMT) up 5%.

What SpaceX is buying

Grain Management is a digital-infrastructure investment firm. Its 800 MHz portfolio consists of government-issued licenses that give the holder the exclusive right to transmit wireless data over specific low-band radio frequencies in designated geographic areas. Low-band spectrum travels farther than higher-frequency bands, so a network built on it needs fewer towers to cover the same area.

The deal requires approval from the Federal Communications Commission. Once approved, SpaceX plans to combine its constellation of satellites that connect directly to phones with the new ground-based network under the Starlink Mobile name. The service is slated to launch in 2027.

Why the carriers fell

SpaceX's own description of the goal, becoming a "major mobile carrier," puts Starlink Mobile in direct competition with Verizon, AT&T and T-Mobile for wireless customers.

Bernstein analyst Madison Rezaei cautioned in a Thursday note that the purchase does not by itself mean SpaceX will build a full network. "Buying spectrum is not a commitment to build a nationwide network," Rezaei wrote. "But this is the spectrum we thought SpaceX needed to make that option more credible — and less expensive."

Why tower stocks rose

The deal also shows that a satellite company with mobile ambitions still needs traditional cell towers, Rezaei wrote. That is a potential source of new demand for tower owners, whose valuations have fallen in recent years as wireless carriers cut spending after the first wave of 5G construction. Crown Castle shares have fallen almost 60% over five years.

"Tower multiples are deeply depressed, and the stocks are looking for a catalyst against a rising-rate backdrop," Rezaei wrote, adding that the deal "could put some wind back in the TowerCos' sails."

Bernstein's estimates show the potential scale. Depending on how much coverage SpaceX pursues, it projects a total network cost of $50 billion to $130 billion, requiring 30,000 to 120,000 tower locations. Local zoning rules, power and labor limit new U.S. tower construction to about 1,200 to 2,000 structures a year, so SpaceX would need to lease space on existing towers. Rezaei said that leaves American Tower, Crown Castle and SBA well positioned to collect new rental revenue.

The FCC review of the spectrum purchase

• The FCC's review of the spectrum purchase, which must be approved before SpaceX can use it.
• Any announcement from SpaceX on the scope of a terrestrial network, which Bernstein says the deal makes possible but not certain.
• Tower-leasing agreements between SpaceX and American Tower, Crown Castle or SBA.
• Carrier commentary in third-quarter earnings on competition from Starlink Mobile ahead of its 2027 launch.