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 5.5% and 7.4% in premarket trading, while the STOXX Europe 600 Telecommunications index dropped over 2% to its lowest level since January 30.

Deutsche Telekom, Europe's largest telecom operator ‌by market value, fell 6.5%, while Britain's Vodafone dropped 4.1%, France's Orange lost 2.3% and Spain's ‌Telefonica slipped 3.9%. 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 4% 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 6.7% and 8.3%. 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.