en.Wedoany.com Reported - SpaceX has held executive-level talks with Charter Communications to explore potential cooperation in the consumer mobile phone business. Elon Musk's SpaceX also told investors that it plans to launch a new Starlink Mobile service in the US, directly competing with AT&T, T-Mobile, and Verizon.
The three major US wireless carriers have each stated that they are not interested in reaching a Mobile Virtual Network Operator (MVNO) agreement with SpaceX. An MVNO deal with a mobile network operator would allow SpaceX's Starlink Mobile to access a terrestrial network to complement its satellite constellation, going beyond direct-to-device (D2D) services targeting cellular dead zones. This has sparked speculation about how SpaceX could expand its consumer influence in the mobile market: whether by accumulating enough spectrum to build its own network, purchasing an existing national network, or having a carrier change its mind and strike an MVNO deal with SpaceX.
A Bloomberg article suggests that Charter Communications could use its terrestrial internet infrastructure to carry some of SpaceX's mobile traffic, similar to its Spectrum Mobile service, helping SpaceX move toward becoming a more direct consumer mobile provider. Charter Communications declined to comment. Analysts doubt whether Charter's MVNO agreement with Verizon could withstand a change-of-control scenario. Sam McHugh, senior analyst at BNP Paribas Equity Research, wrote in a note to investors on Monday: "While Charter's urban hotspot and small cell network could help Starlink Mobile narrow the structural coverage gap associated with direct-to-cellular satellite networks, Charter cannot provide a solution to completely eliminate the gap because it cannot grant Starlink Mobile users access to Verizon's wireless network." Therefore, "unless SpaceX acquires Charter (and we are unsure if there are change-of-control clauses in the original cable MVNO), a partnership between Charter and SpaceX cannot eliminate the role of terrestrial cellular networks in the US connectivity market."
One view is that Charter will offer Starlink Mobile customers access to its predominantly urban Wi-Fi hotspots and Citizens Broadband Radio Service (CBRS) small cell network, with Starlink using satellites to provide mobile connectivity when customers are in remote areas. But McHugh said he would not be surprised if all this media coverage is Starlink's latest attempt to secure an MVNO deal with one of the three major carriers, "and we still see this as a low-probability success."
As for mergers and acquisitions, some analysts see T-Mobile as a potential target, given its lack of traditional cable business and its existing cooperation with SpaceX on T-Satellite. TD Cowen analysts said in a note to investors on June 25 that this could be why T-Mobile's owner, Deutsche Telekom, sought in April to fully own and control its US cash cow subsidiary. Analysts also suggested that, as a defensive move, T-Mobile could acquire a cable TV company. T-Mobile CEO Srini Gopalan again dismissed cable rumors during the first-quarter earnings call. TD Cowen analysts acknowledged that investors might roll their eyes at buying "yesterday's technology," which clearly contradicts T-Mobile management's messaging. However, acquiring a cable TV company could serve two purposes: address T-Mobile's convergence strategy and force SpaceX to back off and look for other acquisition targets.
Overall, analysts are cautiously optimistic that carriers will not give in and will unite against an MVNO agreement. But they note that SpaceX's looming presence has no end date, so despite the otherwise healthy wireless industry, this will continue to weigh on the stocks of the three major wireless carriers. These stocks all fell on Monday, while Charter Communications closed up about 9% at $146.17.
