Elon Musk opens the door for a big SpaceX acquisition

By William Gavin

The rocket and satellite-internet company is looking to challenge telecom giants

Elon Musk's SpaceX is aiming to launch a wireless service that combines satellite and terrestrial connectivity in early 2028.

Elon Musk on Friday indicated he would be open to acquiring a leading telecommunications company as SpaceX looks to challenge major wireless providers like T-Mobile and Verizon.

Musk told billionaire investor Ron Baron that SpaceX (SPCX) will be able to "get very far" in its race to compete with telecom giants with the spectrum licenses the company has purchased. Those licenses give a company, such as SpaceX, the right to use specific radio frequency bands.

"At a certain point if we're able to make much better use of the spectrum than, say, a legacy telco is, we can just acquire that legacy telco and use their spectrum, you know, 10 times more effectively," the SpaceX CEO said in a fireside chat at the annual investment conference held by asset-management firm Baron Capital.

His comments will likely add to the debate over the future of AT&T (T), Verizon Communications (VZ) and T-Mobile (TMUS). SpaceX has been aggressively building up its capabilities to offer a rival national wireless service that combines terrestrial and satellite connectivity to power mobile phones and internet connections.

Initial wireless service is expected to be turned on in early 2028, according to SpaceX. With Starlink, the company currently offers satellite-based internet, as well as limited mobile connectivity as an add-on with established companies, such as T-Mobile.

In recent weeks, SpaceX has been reported to be in discussions to buy access to cell towers operated by companies like Crown Castle (CCI) and to have moved to acquire more spectrum. On Wednesday, SpaceX also said it would work with Qualcomm (QCOM) to power the ground-based infrastructure needed for its wireless network.

The visible push from SpaceX "suggests to us there is a clear strategy to try to ramp pressure on one of the Big Three to fold" on a deal to access their network, BNP Paribas analyst Sam McHugh said in a client note this week. He also speculated that SpaceX may be trying to make a potential acquisition "more accretive" by pressuring telecom stocks.

Buying a major U.S. wireless company would come with clear advantages, such as access to decades' worth of infrastructure and relationships. Citi analysts have said such an acquisition would give SpaceX the ability to launch a full-fledged Starlink Mobile service years ahead of current expectations.

T-Mobile is the "clear choice" among the Big Three given its existing relationship with SpaceX, TD Cowen's Gregory Williams has said.

SpaceX shares were up 9% when the market closed on Friday, after taking steep losses in Thursday's session. Shares of Verizon and AT&T were both down 1%, while T-Mobile's stock was up 1%.

While SpaceX has the ability to launch its satellites to orbit with its Falcon and Starship rockets, other satellite-internet operators don't have that luxury. One of them, AST SpaceMobile (ASTS), on Friday announced a plan to change that.

The company said it plans to build a 20-ton rocket to deploy its BlueBird satellites using engines supplied by Firefly Aerospace (FLY), a company working on reusable rockets. It will pay Firefly $800 million in cash and stock up front, plus another $500 million for delivery and engineering support services.

By late 2028, AST SpaceMobile said the rockets will allow it to launch five satellites per launch, which could help it catch up to competitors like SpaceX and Amazon.com (AMZN). The company has historically relied on partners to put its satellites in orbit but was set back after Blue Origin had a major incident on the launchpad earlier this year.

"This will accelerate our mission to build a new layer of global connectivity, extending connectivity beyond terrestrial networks and helping to bring AI-enabled services wherever people live, work and travel," AST SpaceMobile CEO Abel Avellan said in a statement.

AST SpaceMobile's stock gained 7% on Friday, while Firefly shares skyrocketed almost 37%.

-William Gavin

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11-06-26 1645ET