US, European telecom stocks slide as SpaceX spectrum deal rattles sector

US and European telecom stocks tumbled on Friday ​after SpaceX's acquisition of low-band spectrum heightened ​concerns over growing competition ‌from satellite-based mobile ​services. T-Mobile US, Verizon and AT&T fell between 5% and 6% in premarket trading, while the STOXX Europe 600 Telecommunications index ‌dropped 3.3% to its lowest level since February.

Deutsche Telekom, Europe's largest telecom operator by market value, fell 8%, while Britain's Vodafone dropped 4.5%, France's Orange lost 3.4% and Spain's Telefonica slipped 3.3%. The ‌slide came after reports that SpaceX had agreed to acquire private-equity firm Grain Management's ‌nationwide 800 MHz spectrum portfolio in a deal valued at about $8 billion, bolstering the company's ambitions in satellite-to-cellular connectivity.

"We believe the Grain transaction is a clear sign that SpaceX is going to be a more aggressive ⁠acquirer of ​spectrum," Morgan Stanley analysts ⁠said in a note, adding that any threat to established carriers is likely to materialize gradually, starting in ⁠rural markets. Low-band spectrum can travel longer distances and penetrate buildings and other obstacles more effectively than higher-frequency ​airwaves, enabling SpaceX's Starlink Mobile push.

While the companies did not share financial terms of ⁠the deal, the Wall Street Journal reported, citing sources, that it is worth $8 billion. SpaceX shares rose 3.6% after ⁠announcing ​the acquisition, which remains subject to regulatory approval.

TOWERS BUCK SELLOFF Telecom tower operators bucked the sector-wide selloff, as investors bet SpaceX's wireless ambitions could ultimately drive demand for additional terrestrial ⁠infrastructure.

American Tower, Crown Castle and SBA Communications advanced between 5% and 6%. Morgan Stanley said the ⁠transaction was "incrementally constructive" for ⁠tower operators, noting that even a satellite-centric network could require deployments of towers, rooftops and small cells, while broader urban competition would require ‌substantially more ‌terrestrial infrastructure and spectrum.