Telecom stocks fall after SpaceX signals push into mobile service

Investing.com -- U.S. wireless stocks tumbled Tuesday after SpaceX signaled plans to build a full-fledged mobile service, raising the prospect that Starlink could eventually compete directly with Verizon (NYSE: VZ), AT&T (NYSE: T) and T-Mobile (NASDAQ: TMUS).

SpaceX acquired 65 megahertz of wireless spectrum from EchoStar for a combined $19.6 billion across two deals announced last year, giving Starlink the airwaves needed to expand into mobile.

"The spectrum that we purchased from EchoStar does have terrestrial components, so we definitely intend to build out terrestrial," SpaceX President Gwynne Shotwell said on a post-earnings call. She said the company plans to build the infrastructure to make Starlink "a true mobile service" and expects to pull "quite a few" customers away from the Big Three carriers.

Shares of Verizon and AT&T fell more than 2% in premarket trading Wednesday, while T-Mobile slid 1.3%.

It was SpaceX’s clearest signal yet that it intends to combine its satellite network with ground-based infrastructure, extending beyond its current direct-to-device offering for areas without cellular coverage.

The comments came alongside SpaceX’s first earnings report as a public company. Elon Musk laid out sweeping targets for the company, including launching data centers in space in 2027 and reaching $1 trillion in revenue, in his first address to investors since the IPO.

Second-quarter revenue for the rocket launcher and satellite-internet provider totaled $7.8 billion, up 92% year-over-year. Losses narrowed, but heavy spending weighed on operations, with capital expenditures surging to $18.4 billion from $2.8 billion a year earlier.

SpaceX shares fell more than 10% in premarket trading. The stock had priced at $135 in its IPO and climbed above $225 in the days that followed, but it has since fallen below the IPO price, erasing more than $1 trillion in value from its peak.

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