Shares of major U.S. wireless providers moved lower after SpaceX (NASDAQ:SPCX) revealed plans to develop a fully integrated mobile service, raising concerns that Starlink could eventually become a direct competitor to Verizon (NYSE:VZ), AT&T (NYSE:T) and T-Mobile (NASDAQ:TMUS).
The announcement follows SpaceX’s acquisition of 65 megahertz of wireless spectrum from EchoStar in two transactions completed last year, worth a combined $19.6 billion. The additional spectrum provides the company with the capacity to expand beyond satellite connectivity into terrestrial mobile services.
Starlink targets traditional wireless carriers
Speaking during the company’s post-earnings conference call, SpaceX President Gwynne Shotwell outlined the group’s ambitions for its mobile business.
“The spectrum that we purchased from EchoStar does have terrestrial components, so we definitely intend to build out terrestrial,” Shotwell said.
She added that SpaceX plans to develop the infrastructure needed to transform Starlink into “a true mobile service” and believes the company can attract “quite a few” customers currently served by the three largest U.S. wireless operators.
Following the comments, Verizon and AT&T shares fell by more than 2% in pre-market trading, while T-Mobile declined 1.3%.
Strategy expands beyond satellite connectivity
The announcement represents SpaceX’s strongest indication yet that it intends to combine its satellite network with traditional ground-based mobile infrastructure.
The company currently offers direct-to-device satellite connectivity for areas without conventional cellular coverage, but the latest strategy points toward a broader consumer mobile offering capable of competing directly with established telecom providers.
SpaceX outlines ambitious growth plans
The mobile expansion plans were announced alongside SpaceX’s first quarterly earnings report since becoming a public company.
During the presentation, Chief Executive Elon Musk outlined several long-term objectives, including launching data centres into space in 2027 and eventually building the business into a company capable of generating $1 trillion in annual revenue.
SpaceX reported second-quarter revenue of $7.8 billion, representing year-over-year growth of 92%.
Although losses narrowed during the period, investment spending remained elevated, with capital expenditure rising to $18.4 billion from $2.8 billion in the same quarter last year.
SpaceX shares remain under pressure
Despite the company’s ambitious outlook, SpaceX shares fell more than 10% in pre-market trading.
After debuting on the stock market at $135 per share and climbing above $225 shortly after its initial public offering, the stock has since fallen below its IPO price, wiping out more than $1 trillion in market value from its peak.
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