A new major player, coming straight from space, is preparing to shake up the global telecommunications market.
With an $8bn deal to acquire spectrum in the 800 MHz band from Grain Management, SpaceX is preparing to enter the US mobile market. The move brings Elon Musk’s company a step closer to winning subscribers from traditional operators, extending Starlink’s ambitions beyond satellite internet.
According to Reuters, the deal covers Grain Management’s entire nationwide portfolio of licences in the 800 MHz band, which it acquired from T-Mobile earlier this year. The transaction is subject to approval by the US Federal Communications Commission (FCC). The price has not been officially disclosed, but the Wall Street Journal puts it at about $8bn.
As Reuters explains in a separate background report, SpaceX is preparing a hybrid network for Starlink Mobile, combining satellite connectivity with terrestrial equipment and antennas on towers and rooftops. The 800 MHz spectrum, with up to 14 MHz of paired spectrum, offers greater range and better penetration inside buildings, while higher frequencies can carry more data.
Reuters also reports that the FCC has approved the launch of up to 15,000 next-generation Starlink Mobile satellites, designed to use the 2 GHz band internationally.
For users, the main change SpaceX is seeking is connectivity in areas where there is currently no mobile signal, with terrestrial infrastructure supplementing satellite coverage and improving reception inside buildings. According to Reuters, most existing mobile phones already support the 800 MHz band, making them easier to use on the planned network.
Forecasts of 160m subscriptions
Against this backdrop, Pivotal Research sees scope for SpaceX to emerge as the fourth-largest mobile operator in the US. Jeffrey Wlodarczak, the firm’s lead analyst, estimates in a report presented by Seeking Alpha that Starlink Mobile could reach 160m subscriptions worldwide by 2036: 50m in the US and 110m in international markets. The forecasts equate to a market share of about 13% in the US mobile market and 1.5% internationally, excluding China.
Wlodarczak expects the service initially to attract existing Starlink satellite internet subscribers in rural and suburban areas, offering them the option to bundle home internet and mobile service. He expects subscriber additions to begin in late 2027 or in 2028, while seeing more limited prospects in densely populated cities, where traditional operators have more spectrum and greater network capacity.
The announcement sparked a market sell-off, with sharp falls in the shares of telecommunications operators in the US and Europe. Reuters reported on 9 October that T-Mobile US fell 13.2% in afternoon trading and Verizon dropped about 10%, while AT&T also posted losses. In Europe, Deutsche Telekom fell 7.9%, Orange 2.5% and Telefónica 4.6%.
Analysts’ reservations
By contrast, Morgan Stanley analysts said in a note cited by the Wall Street Journal that investors may have overestimated the competitive threat from SpaceX. They believe it could take years for Starlink Mobile to establish a meaningful presence in the market and that, even after the new deal, the company will not have enough spectrum to be a viable standalone competitor.
They acknowledge better prospects in rural areas, but point out that competing in densely populated cities requires significantly more spectrum and investment in terrestrial infrastructure.
JPMorgan analysts take a similar view, with the Wall Street Journal reporting that they see a limited threat to existing mobile operators in the US in the short term. They say SpaceX will need time and significant investment in terrestrial infrastructure to build a competitive network.