SpaceX Announces Entry into Mobile Communications Market; Analysts: Unlikely to Challenge U.S. Telecom Giants Within Five Years

SpaceX (SPCX-US) announced on Tuesday (4th) that it will use acquired wireless spectrum to build a full mobile communications service, signaling that Starlink could directly challenge U.S. telecom giants Verizon (VZ-US), AT&T (T-US), and T-Mobile (TMUS-US). After the news, the three companies saw their stock prices decline in after-hours trading.

Last year, SpaceX acquired the rights to 65MHz of wireless spectrum from EchoStar (ECHO-US) in two transactions totaling $19.6 billion, laying the foundation for Starlink’s expansion into the mobile communications market.

Gwynne Shotwell, President of SpaceX, stated during the earnings call: "The spectrum we acquired from EchoStar includes terrestrial communication rights, so we do intend to build a ground-based network."

She added that the company will deploy the necessary infrastructure to make Starlink a "true mobile communications service" and expects to capture a "significant number" of customers from the three major carriers.

This marks the first time SpaceX has clearly outlined plans to combine satellite networks with terrestrial base stations to deliver a complete wireless communication service, moving beyond its current Direct-to-Device (D2D) satellite-to-phone offering in remote areas.

Following the announcement, the after-hours stock prices of the three U.S. telecom giants dropped: Verizon fell about 4%, AT&T by 2.2%, and T-Mobile by approximately 3%.

Analyst: Replicating a Nationwide Telecom Network Is Not Easy

Starlink remains SpaceX’s primary revenue source and a critical cash flow supporting Elon Musk’s investments in AI, data centers, and next-generation rocket development. However, most analysts believe that transforming Starlink into a nationwide mobile service will require many years and substantial capital investment.

Over the past 30 years, the three major U.S. carriers have invested hundreds of billions of dollars to acquire spectrum, build and upgrade base station networks, and continuously spend heavily to acquire and retain customers. These advantages cannot be easily replicated by SpaceX in the short term.

Craig Moffett, analyst at MoffettNathanson, stated that unless Starlink enters into Mobile Virtual Network Operator (MVNO) agreements with existing carriers to gain basic coverage, it is difficult to envision a consumer-facing service competing effectively within the next five years.

An MVNO is a company that does not build its own nationwide network but instead leases network capacity from existing carriers to offer services under its own brand.

Regarding the cost of building a mobile network, Shotwell did not disclose specific figures but said SpaceX has "very novel" methods to construct the network in a more capital-efficient way.

David Barden, analyst at New Street Research, pointed out that the three major U.S. carriers collectively hold about 1,000MHz of spectrum, compared to SpaceX’s 65MHz. "Attempting to replicate a ground network built over 30 years is simply not reasonable."

Some Investors See Disruptive Potential

Despite widespread market skepticism, some investors believe the impact of SpaceX on the telecom industry is underestimated. David Wagner, portfolio manager at Aptus Capital Advisors, said Musk’s comment during the earnings call—that the market underestimates the value of this business—was one he “fully agrees with.”

Wagner believes SpaceX has stronger continuous innovation capabilities than traditional telecom operators and could rapidly reshape the industry’s competitive landscape in the future.

Currently, SpaceX has partnered with T-Mobile to use Starlink satellites for Direct-to-Cell service, providing compatible smartphones with satellite connectivity in areas beyond traditional base station coverage. However, this remains a complementary relationship rather than direct competition at this stage.