SpaceX enters the mobile phone market

SpaceX wants to enter the thriving US mobile telecoms market as a fully-fledged operator. To this end, it has purchased a block of licences for the 800 MHz low-band spectrum from Grain Management. The price of the deal has not been disclosed, but it clearly illustrates Musk’s ambitions.

According to Mr Tesla, who wrote about it on X, this was the final piece of the jigsaw needed to provide comprehensive mobile coverage across the United States. This is partly because, unlike satellite connections (such as those used by Starlink), low-frequency signals pass through walls and reach devices inside buildings. What’s more, they are already supported by most smartphones on the market. The licences acquired cover almost the entire US population. And SpaceX now intends to complement Starlink’s satellite service with a terrestrial network. However, before this can happen, it needs the go-ahead from the Federal Communications Commission.

Clearly, the market reacted immediately. Shares in the major US (and European) telecoms companies took a hit. Against this backdrop, for SpaceX shareholders, the news comes in a week that appears to mark the end of a difficult period. The share price remained above $160 throughout the week, a level not seen since 6 July. And yesterday, too, it continued to climb. Since its low on 5 August, the share price has risen by 48 per cent. It is worth recalling that the IPO in June was a whirlwind, immediately shattering the offering price ($135) and breaking through the $200 barrier right from the start. Then, however, the decline began, reaching $108 by the end of July. In a way, the price’s resilience has proved wrong those who feared the expiry of the lock-ups – the restrictions preventing early investors from selling.

Several positive developments have emerged for the space giant. At the end of September, for example, Starship reached orbit for the first time. Nevertheless, the risks remain. The company is seeking $40 billion in debt to buy chips from Nvidia, with long-term Treasury yields close to their highest levels in decades.

The news caused the share price to fall by 6.6 per cent over two trading sessions and pushed the cost of five-year credit default swaps on its debt to a new high. Furthermore, another lock-up period expires this week, releasing 7 per cent of the shares. Then, in November, the company will publish its second quarterly results as a listed company. This will be a significant event, particularly for investors. On that occasion, all eyes will be on the figures – figures that usually provide the most effective indication of a company’s financial health.