Telecom stocks fell sharply at the start of this week. They reacted negatively to SpaceX buying wireless spectrum licenses from EchoStar (SATS). The deal is worth around $17 billion.
SpaceX wants the spectrum to build, deploy, and upgrade its laser-connected satellites. The firm said that its cell network capacity would increase by more than 100 times. If successful, the company would put an end to mobile “dead zones” all over the world.
AST SpaceMobile (ASTS) fell by nearly 4% on Monday. The stock peaked in July at over $60 and closed at $40.77. Verizon (VZ) and AT&T (T) fell by around 2%. T-Mobile (TMUS), which trades at a relative premium, dropped by around 4% to close at $242.90.
Income investors dumped Crown Castle (CCI) and American Tower (AMT). SBA Communications (SBAC) fell by more. SBAC stock fell throughout this month and is down by 14.25% in the last month. SpaceX’s investment will heighten competition and drive profit margins lower for companies in the telecom space.
SPAC stock accelerated its decline after AT&T announced it would buy certain wireless spectrum licenses from EchoStar. SPAC faces multi-year churn from Sprint. In addition, churn risks increase with the AT&T/EchoStar deal.
In Canada, Telus (TU) and Rogers (RCI) were steady, while BCE (BCE) fell slightly.
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