U.S. telecom stocks wobble after report SpaceX in talks for cell sites for fourth wireless carrier

U.S. telecom stocks declined on Friday after a report that SpaceX was seeking thousands of cell sites for a fourth wireless carrier, fuelling concerns over fresh competition.

Elon Musk’s rocket and space technology company was in talks to access at least 80,000 cell sites to build its wireless carrier from scratch, Bloomberg News reported late on Thursday, citing sources familiar with the matter.

AT&T T-N fell 5.6 per cent to a more than three-month low, Verizon VZ-N lost 1.6 per cent and T-Mobile TMUS-Q shed 5 per cent.

Germany’s Deutsche Telekom DTEGY, which holds an over 50-per-cent stake in T-Mobile, lost 3.2 per cent.

“The competitive impact may still be years away, but anticipation alone, reinforced by each successive spectrum and infrastructure move, is likely to remain an overhang on sector sentiment,” Bernstein analysts said in a note.

Tower operators and SpaceX did not immediately respond to requests for comment.

The report comes weeks after SpaceX acquired low-band spectrum to advance its carrier plans, mounting a direct, orbital challenge to legacy wireless giants in the U.S. and sending AT&T and Verizon shares to their worst one-day falls in more than two decades.

Bernstein analysts said that an MVNO (mobile virtual network operator) deal with SpaceX may not appeal to telecom operators, but a unified stance against one has done little to lift sentiment, leaving carriers to reassess their options.

SpaceX’s Starlink has been generating revenue from internet services in sparsely populated and rural areas, but becoming a true rival to major carriers will require years of work and a terrestrial network.

Tower operator Crown Castle CCI-N, however, surged 11.6 per cent after the report identified it as one of the cellular infrastructure companies SpaceX was in talks with.

Other operators also rose, with American Tower AMT-N up 4.9 per cent and SBA Communications SBAC-Q adding 4.6 per cent.

Shares of SpaceX SPCX-Q rose 1.7 per cent.