❯ A day after SpaceX’s spectrum deal, Verizon has its worst day since 2002 and T-Mobile falls more than 13%

Three carriers slide togetherUS telecom stocks sold off across the board on October 9. According to CNBC, Verizon closed down 8.75%, its worst day since July 2002; T-Mobile dropped 13.27% and AT&T fell 9.81%, their worst days since 2013 and 2000 respectively. SpaceX shares rose about 1%.

A spectrum purchase set it offA day earlier, SpaceX announced an agreement to acquire a nationwide spectrum license portfolio from Grain Management, up to 14 megahertz of paired spectrum in the 800 MHz band, aiming to expand Starlink from satellite broadband into mobile service. The deal requires approval from the Federal Communications Commission. Chair Brendan Carr told CNBC that competition in the spectrum market is good news for American consumers and that more than $100 billion of spectrum will come to market over the next two years.

Analysts see limited near-term impactSeveral firms praised the deal’s significance for SpaceX. Evercore ISI wrote that SpaceX “now has the outline of a real network,” and JPMorgan said it makes Starlink Mobile’s long-term opportunity “more credible.” JPMorgan also wrote that building a competitive terrestrial network takes time, infrastructure and capital, so near-term risk to US wireless incumbents is limited.

Prices reflect expectationsThe three carriers’ subscribers and revenue did not change in a day; what changed was investors’ view of future competition. A satellite company that used to be a partner to carriers may now become a fourth rival. The question carriers face next is whether to lock in customers with price cuts and bundles before the newcomer has built its network.

▮ SIGNALOne spectrum deal wiped roughly a tenth off the market value of three carriers; markets often price in a new entrant well before its network exists.