Musk Opens the Door to a SpaceX Telecom Takeover, but AT&T and T-Mobile Reportedly Threaten to Cut Off Boost
Elon Musk has signaled that SpaceX could buy an established telecom company as it chases a U.S. wireless market worth $235 billion, but the biggest carriers are reportedly preparing to fight back.
Musk told billionaire investor Ron Baron on Friday that he would be open to acquiring a leading telecommunications company, MarketWatch reported, as SpaceX looks to challenge T-Mobile and Verizon.
Musk said SpaceX can “get very far” in that race with the spectrum licenses it has already bought, MarketWatch said. He did not name a target or announce an offer.
The remarks followed a Washington Post report that SpaceX has held talks with EchoStar about buying its discount carrier Boost Mobile or gaining access to the network Boost leases from AT&T and T-Mobile.
Musk personally met with EchoStar Chairman Charlie Ergen last month, the Post reported, citing two people familiar with the negotiations. Verizon, T-Mobile and AT&T had all rejected SpaceX when Musk sought access to their networks, the paper said.
Equity research firm MoffettNathanson estimates the U.S. wireless market is worth $235 billion, according to the Post. Verizon and EchoStar declined to comment, and SpaceX did not respond.
“Veterans of the cellular industry look at the chess board of existing pieces and don’t see a solution,” Musk said recently, the Post reported. “They don’t understand that SpaceX is developing entirely new pieces that fundamentally alter the strategic landscape.”
Carriers Hold the Keys to Boost
The Boost route has a catch. Executives at AT&T and T-Mobile “have separately discussed” removing Boost from their networks if SpaceX buys it, according to a post by Semafor reporter Rohan Goswami citing people familiar with the discussions, Benzinga reported.
Those talks do not mean either carrier has decided to end its agreements, Benzinga noted. Boost leases capacity rather than running its own nationwide network, and its contracts may require carrier approval before transferring to a new owner.
EchoStar reported 7.19 million wireless subscribers across its Boost Mobile and Gen Mobile brands as of Sept. 30, according to Benzinga, down from 7.38 million at the end of the second quarter.
When the Boost talks first surfaced Nov. 2, EchoStar shares rose about 3.4% in premarket trading while T-Mobile slipped 2%, Reuters reported.
SpaceX is also building its own ground network. On Wednesday, it signed a multiyear deal with Qualcomm to supply technology for tens of thousands of cell sites for Starlink Mobile, with a rollout planned to begin next year, CNBC reported.
Starlink accounted for 36% of SpaceX’s revenue and 85% of its operating profit in the third quarter, CNBC said. Financial terms of the Qualcomm deal were not disclosed.
The bill could be steep. Telecommunications expert William Webb has estimated SpaceX could need another $120 billion to $130 billion to approach established carriers’ capabilities, Benzinga reported.
After Verizon CEO Dan Schulman said building that infrastructure would take four to six years, Musk estimated about half that, the Post reported. The paper noted Musk “has been known to provide overly optimistic timelines.”
Some investors are taking the threat seriously. Drew Cupps, a portfolio manager at Polen Capital, said the carriers “are right to be spooked and agitated at the same time,” according to the Post.
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