Research Firm Reveals SpaceX’s $17 Billion Starlink Deal Connected to Apple and iPhone Success

This article does not constitute investment advice. The author holds no positions in the stocks referenced herein.

In a surprising turn of events, SpaceX has made headlines with its substantial $17 billion offer to acquire EchoStar’s spectrum. This acquisition has resulted in a significant 17% uptick in EchoStar’s stock value during today’s trading session. Industry analysts at TMF Associates suggest that this move is strategically aimed at positioning SpaceX to compete with Apple.

The agreement is set to provide SpaceX with an additional 50MHz of S-band spectrum in the United States, along with Mobile Satellite Service (MSS) spectrum globally for its Starlink internet service. The overarching goal is to encourage Apple to collaborate with Starlink instead of relying solely on its ongoing partnership with GlobalStar, through which it intends to develop its own satellite internet constellation.

Impact on Carrier Stocks Following the Spectrum Acquisition

Following the announcement of the deal, SpaceX solidifies its position as a dominant force in the direct-to-cellular or direct-to-device (D2D) market. This is largely due to its vast satellite internet constellation and impressive frequency in launching rockets. As a consequence, major telecommunications players—T-Mobile, Verizon, and AT&T—have seen their stock prices decline by 2.4%, 2.4%, and 3.7%, respectively. Investor concerns are mounting about these carriers’ competitiveness in this emerging and potentially lucrative market. Notably, T-Mobile may feel the impact more severely, as they could face challenges if SpaceX manages to secure support from smartphone manufacturers for its Starlink service, thereby reducing the necessity for T-Mobile’s spectrum.

TMF Associates emphasizes the importance of device manufacturer support for Starlink’s success. In a recent blog post, the firm speculated that SpaceX is keen to leverage Apple’s iPhone to bolster the Starlink network.

Apple, meanwhile, is pursuing its own satellite constellation in concert with GlobalStar, though the specifics of their plans appear murky. Recent developments have seen Apple integrating Starlink capabilities into the iPhone 13; however, the situation has been complicated by a delay in GlobalStar’s launch. TMF suggests that there may be a connection between these events, hypothesizing that SpaceX might have assured Apple a future launch slot for GlobalStar under the condition that it supports the Starlink service.

While the stakes for competition are high, the success of SpaceX’s $17 billion spectrum acquisition is contingent upon Apple’s willingness to collaborate in terms of device compatibility. TMF notes, “Support from device manufacturers will be needed to get the new capabilities enabled by this spectrum into consumers’ hands in the near term.”Should Apple hold back, SpaceX may pivot by introducing a “Starlink phone” that offers direct-to-satellite connectivity, distinguishing itself from competitors.

The hefty $17 billion investment by SpaceX is noteworthy; in fact, this sum surpasses the total expenditure allocated for the development of the Starship program. SpaceX’s vision will rely heavily on its ability to successfully launch the next-generation Starlink satellites via Starship, which is critical to maintaining control over this spectrum. According to SpaceX, their second-generation Starlink direct-to-cell satellites are set to deliver 100 times more capacity than the current platforms in operation.

In their announcement, SpaceX stated, “Starlink Direct to Cell’s next-generation service will deliver unparalleled performance to standard, unmodified cell phones and IoT devices – helping to close coverage gaps and ultimately eliminate mobile dead zones around the world.”

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