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SpaceX’s recent $17 billion deal to acquire EchoStar’s spectrum, which led to a 17% increase in EchoStar’s share price during today’s trading session, is part of its plan to compete with Apple. According to TMF Associates, the deal will unlock 50MHz of additional S-band spectrum for SpaceX’s Starlink internet service and incentivize Apple to work with Starlink instead of focusing on its partnership with GlobalStar. TMF believes that Apple aims to build its own satellite internet constellation through a partnership with GlobalStar but is uncertain about its plans, given past delays in launches. TMF suggests that SpaceX may have agreed to provide a future launch slot for GlobalStar if Apple supports Starlink on the iPhone 13.
SpaceX’s Spectrum Buy Leaves Carrier Stocks in Red
With this deal, SpaceX is positioned as a dominant player in the direct-to-device market. It not only operates the world’s largest satellite internet constellation but also the most frequently launched rocket family.
The announcement caused T-Mobile, Verizon, and AT&T shares to fall by 2.4%, 2.4%, and 3.7% respectively as investors worry about their ability to compete in this lucrative market. T-Mobile is particularly affected because SpaceX might not need its spectrum for direct-to-cell satellite services if it convinces smartphone manufacturers to support Starlink.
TMF Associates also notes that SpaceX will need device manufacturer support, especially from Apple, to enable the new Starlink capabilities quickly. If Apple is less cooperative, SpaceX could potentially announce a “Starlink phone” as its first direct-to-satellite connectivity offering.
The $17 billion price tag for EchoStar’s spectrum, half of which is funded by SpaceX’s stock, is more than what SpaceX has spent on the Starship program. SpaceX’s ability to hold this spectrum depends on the cadence of its Starlink launches aboard Starship. In a blog post about the deal, SpaceX stated that the next generation of Starlink direct-to-cell satellites will offer 100 times more capacity than the current constellation.
TMF Associates emphasized in its blog: “Starlink Direct to Cell’s next-generation service will deliver unparalleled performance to standard, unmodified cell phones and IoT devices – helping to close coverage gaps and ultimately eliminate mobile dead zones around the world.”
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