Key Points

• SpaceX seeks to connect with 80,000 cellular sites in the United States
• AT, Verizon, and T-Mobile fall due to concerns about competition
• Crown Castle rises due to market expectations of increased infrastructure demand

It is reported that SpaceX is in negotiations to connect with at least 80,000 cellular sites in the United States, which has heightened concerns that Elon Musk's company may become a direct competitor to AT, Verizon, and T-Mobile.

This news caused the major U.S. wireless communications stocks to decline on Friday (October 23), while the stock prices of companies holding cell tower assets rose due to investors' expectations of new infrastructure leasing opportunities.

It is reported that SpaceX is in discussions with major tower operators, including Crown Castle, regarding potential agreements. However, these negotiations have not yet resulted in a publicly confirmed agreement for 80,000 sites.

Why Does the Plan for 80,000 Sites with SpaceX Drag Down Telecom Stocks?

During Friday's morning trading, the stock price of AT fell by about 5.5%, Verizon fell by about 3%, and T-Mobile fell by nearly 3.8%.

Previously, the transaction in which SpaceX acquired nationwide wireless spectrum for approximately $8 billion had already triggered a round of selling off in telecommunications stocks.

This transaction provides a potential pathway for SpaceX to combine satellite connectivity with traditional terrestrial mobile networks.

The latest proposal will significantly expand the land-based component of this strategy.

According to Reuters, 80,000 sites account for about half of the 158,500 dedicated cell towers in the United States last year.

This development has further exacerbated market concerns about the competitive threat posed by Starlink. Previously, the stock price of T-Mobile fell by more than 10% in a single trading day due to related news.

However, obtaining site access is just one of the requirements. SpaceX still needs to deploy ground equipment, ensure connectivity, and establish a network that can compete with existing operators.

Why have Crown Castle and American Tower risen?

The market reaction has shown an unusual degree of divergence.

When mobile operators face potential competition, companies that possess these infrastructures may acquire another major customer.

During morning trading, the stock price of Crown Castle rose by over 13%, and American Tower also saw an increase following reports on related negotiations.

Crown Castle operates approximately 40,000 towers in the United States, while American Tower manages around 42,000 sites. The private operator Vertical Bridge controls about 18,000 of them.

These companies typically generate revenue by leasing out their infrastructure space to wireless operators.

Therefore, SpaceX's entry into this market may increase the demand for towers, even though its new services could threaten companies that are already using these facilities.

This differentiation corresponds to the market reaction on October 9th, when the stock prices of tower owners rose, while those of operators fell.

Starlink Will Become the Fourth Largest Wireless Operator in the United States?

The ambitions of SpaceX go beyond merely providing satellite internet and emergency connectivity.

The company hopes to combine its satellite constellation with ground infrastructure, potentially providing broader mobile coverage under the name of Starlink Mobile.

This will also reshape the existing cooperative relationships.

T-Mobile has already been using Starlink technology to provide satellite connectivity, while AT &T has established a partnership that competes with Amazon Leo for corporate and government clients.

The potential scale of capital investment is enormous. TD Cowen estimates that building a nationwide terrestrial network could cost over $80 billion and require several years of investment.

SpaceX's continuously expanding ambitions in infrastructure are reflected in its broader capital-intensive business strategy, which includes satellite communications and artificial intelligence infrastructure.