SpaceX has just declared war on U.S. carriers, and the market has clearly taken it seriously.
On Thursday, SpaceX $SPCX announced it is buying a nationwide block of 800 MHz spectrum. Shares of AT&T $T, Verizon $VZ and T-Mobile $TMUS fell 6.5–7% after the close.
Starlink Mobile has had one major problem so far: the satellite signal has trouble reaching indoors. Low frequencies are exactly those that travel far and can pass through walls.
Moreover, the FCC this week approved 15,000 next-generation satellites for direct-to-phone connectivity. And most regular phones support the 800 MHz band, so no one will need special equipment.
The U.S. mobile market is a saturated oligopoly of three players. Over the past decade, they have spent around $110 billion to keep low-band spectrum for themselves. That was their main competitive advantage.
I think the market fears that Starlink will soon lure away customers. It fears a price war. Carriers live off stable margins and dividends. A new player with virtually unlimited access to capital is exactly what will break their model fastest.
Do you hold telecom stocks for the dividend?