Verizon Shares Tumble on SpaceX Spectrum Deal

Verizon (NYSE: VZ), the US wireless carrier, is down almost 11% today after SpaceX said it will buy a nationwide block of low-band spectrum. SpaceX said the deal addresses a key technical gap on the way to Starlink Mobile becoming a major US carrier. The announcement came late yesterday, after the US close.

At about 2:30pm New York time Verizon was at $41.295, down 10.91% from yesterday’s close of $46.35, after a low of $40.81 on volume of 71 million shares. The shares sit about 20% below their September high close of $51.45, set on the 15th of September. AT&T was down 11.28% and T-Mobile US 12.81%.

SpaceX signed a definitive agreement to buy Grain Management’s nationwide 800 MHz low-band spectrum, up to 14 MHz paired, subject to approval from the Federal Communications Commission (FCC), the US regulator. It adds to SpaceX’s purchase of EchoStar’s 2 GHz spectrum.

SpaceX plans a mix of a satellite-to-mobile constellation and an advanced terrestrial deployment. The FCC also approved 15,000 Gen2 Starlink Mobile satellites this week.

Analysts doubt the threat is close. Kutgun Maral, an analyst at broker Evercore, said the news undercut the carriers’ main defence, but called it a coverage fix rather than a capacity solution.

The carriers’ best argument just got weaker,

Kutgun Maral, Evercore

Evercore noted SpaceX would hold about 79 MHz against 280 to 380 MHz for each of the big three, and sees full 5G-quality service possible from the first half of 2028. TD Cowen puts a terrestrial network build at upwards of $80bn. JPMorgan’s Sebastiano Petti sees limited near-term risk given the time, infrastructure and capital required.

TD Cowen’s Gregory Williams thinks SpaceX wants a wholesale deal renting capacity on existing networks first, and so could be bluffing. The nearer cost may be bigger spectrum-auction bills: JPMorgan’s base case is about $40bn through 2028, rising to $53bn in its upside case.