When T-Mobile and Sprint completed their merger in 2020, one of the conditions the company agreed to was to sell its 800 MHz spectrum portfolio. It took a while, but that sale was finalized in August.
Company officials didn’t realize it at the time, but the deal opened the door to the emergence of a major new competitor: SpaceX. And it’s hitting the stocks of not just T-Mobile, but all cell phone carriers, hard.
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T-Mobile shares have fallen 10% since SpaceX announced Thursday that it agreed to buy the spectrum portfolio from Grain Management, which purchased the rights from T-Mobile. The deal still requires approval from the Federal Communications Commission. Verizon and AT&T shares are both down 8% over the same period.
An unexpected twist
The sale of spectrum was supposed to be trivial. The 800 MHz waves were used by Sprint to power its push-to-talk phones in 2004, which had features similar to a walkie-talkie. Dish, initially, was going to buy the spectrum, but couldn’t raise the funds. This opened the door for Grain, who initially planned to sell it to utilities for private networks, Aakash Gupta, product management leader, creator and educator, posted on X.
But SpaceX has seen better use, he added.
“Starlink’s 2GHz satellite signal can reach your phone outdoors, but it dies at the first wall,” he wrote in a social media post. “800 MHz goes into buildings. Most phones already have that band built in. So the satellites handle the open sky, that low-band layer handles the indoors, and suddenly Starlink Mobile covers everywhere a normal carrier goes without the tower network.”
Learn more: Vanguard reveals what’s coming for US stocks – and it could be bad news for this group of investors
What’s next?
Assuming SpaceX gains FCC approval for the purchase, the company says the addition of low-band spectrum “will pave the way for Starlink Mobile to become a major mobile operator in the United States.”
Importantly, SpaceX eliminates the need to build a costly and complex network of repeaters across the country and the world. Once it deploys an architecture that combines the satellite-mobile capabilities it already has with the spectrum it has acquired, it will be able to offer what it says is reliable service not only indoors and outdoors, but also in so-called “dead zone” areas where cellular coverage is spotty.
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