Musk’s $19 billion spectrum deal turns heat up on telecom companies

Elon Musk’s Starlink struck a $19 billion deal Monday for EchoStar’s spectrum licenses, edging out T-Mobile and positioning it as a potential competitor to the big three wireless carriers.

Shares of T-Mobile, AT&T and Verizon all slipped in Monday trading, reflecting investor concerns over Musk entering the wireless oligopoly. Spectrum is a finite asset and licenses for big blocks, like those Charlie Ergen had been sitting on for years, don’t come up for sale that often. AT&T agreed last month to buy $23 billion worth of EchoStar’s spectrum, and Starlink is buying much of the remainder.

Musk’s deal came as a surprise to some industry observers, even after Semafor reported Starlink’s and T-Mobile’s interest. As recently as last week, telecom executives were privately dismissive that the billionaire was serious about building a wireless competitor.

T-Mobile’s US executives were keen and still bidding as recently as last week, but their corporate bosses in Germany — the carrier is owned by Deutsche Telekom — tapped the brakes, people familiar with the matter said. Instead, the company will rely on SpaceX’s network for direct-to-satellite capabilities. Verizon, meanwhile, considered making a play for EchoStar’s licenses, a person close to the company said, but felt the company’s spectrum supply was adequate for now.

A spokesperson for Verizon declined to comment. “We are excited that our partner in direct-to-cell services, Starlink, has made a long-term investment into satellite-to cellular-technology,” a T-Mobile spokesperson said.

The carrier is in talks to lease some of the spectrum that SpaceX bought, The Wall Street Journal reported.

That spectrum will allow Starlink — and by extension, T-Mobile — to deliver faster, more powerful service over satellite. It also makes Charlie Ergen’s EchoStar a major shareholder in SpaceX, one of the most valuable private companies, which could bring retail investors to its stock.