Telecom Stocks Fall as SpaceX Reveals Plan for Mobile Network

Shares of major U.S. wireless carriers, including Verizon and AT&T, fell in premarket trading Wednesday after SpaceX signaled its intent to build a full-fledged mobile service, positioning its Starlink division as a new competitor in the wireless market.

SpaceX's Mobile Ambitions

The announcement came during SpaceX's first post-earnings call as a public company. President Gwynne Shotwell said the company plans to build the infrastructure to make Starlink "a true mobile service." She stated that SpaceX expects to pull "quite a few" customers away from the established carriers.

These plans are underpinned by SpaceX's acquisition of 65 megahertz of wireless spectrum from EchoStar in two deals totaling $19.6 billion. "The spectrum that we purchased from EchoStar does have terrestrial components, so we definitely intend to build out terrestrial," Shotwell said on the call. This move marks the company's clearest signal yet of its plan to combine its satellite network with ground-based infrastructure.

Market Reaction

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The prospect of a new, well-funded competitor sent ripples through the telecom sector. In premarket trading on Wednesday, shares of both Verizon and AT&T fell more than 2%, while T-Mobile stock slid 1.3%.

However, SpaceX's own shares also tumbled, falling more than 10% in premarket trading. The drop followed an earnings report that, while showing strong revenue growth, also revealed a massive surge in spending. The company's capital expenditures soared to $18.4 billion from $2.8 billion a year earlier, weighing on investor sentiment.

Earnings and Outlook

SpaceX reported second-quarter revenue of $7.8 billion, a 92% increase year-over-year, as losses narrowed. During the call, CEO Elon Musk laid out ambitious long-term goals for the company, including launching data centers in space by 2027 and eventually reaching $1 trillion in revenue.