SpaceX gives wireless industry rude wake-up call

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14/09/2026 20:49

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Jennifer  Saba
NEW YORK, Sept 15 (Reuters Breakingviews) - Elon Musk is speed-dialing for dollars. The SpaceX SPCX.O boss has put a scare into AT&T T.N, Verizon Communications VZ.N and T-Mobile US TMUS.O with his fast-growing and profitable Starlink satellite business. Building a formidable fourth network would run up a hefty tab amassing wireless spectrum, among other expenses, but the billionaire also manages to make almost anything seem possible and presents a genuine threat to a lumbering telecom industry.
Starlink sells broadband and wireless services using some 10,000 satellites orbiting the Earth. It mostly covers customers who roam outside terrestrial tower coverage or live in rural areas, as well as keeping airplane and cruise-ship passengers connected during their journeys. Some 12 million people have accessed its phone and data capabilities at least once and the company counts another 12 million active internet users around the world.
The sums, including last year's $11 billion top line, are tiny compared to incumbent providers, which generate around $350 billion of revenue combined. Even so, the three U.S. giants grow less than 10% annually while Starlink has nearly tripled its subscriber tally since the end of 2024. Each one of its 9 million subscribers last year represented nearly $500 of operating profit on average, far higher than at Verizon, T-Mobile and AT&T. With ideas of dominating AI and colonizing Mars, mobile service may seem like a footnote for SpaceX. Other industries have made similar misjudgments, however, about lesser-capitalized interlopers.
Ahead of its June initial public offering, SpaceX indicated that it planned to move beyond its largely irrelevant direct-to-cell partnership with T-Mobile in the United States, and aims to start a transcontinental network that gives customers Starlink access when they travel overseas. The decision followed the acquisition of $17 billion in wireless spectrum licenses from Charlie Ergen's EchoStar ECHO.O last September, which erased some $50 billion of market value from its trio of telecom rivals. Musk's bravado came through loud and clear last month during the company's first financial disclosures since its market debut.
“It’s kind of hard for people to wrap their minds around this," he said, "but it’s not out of the question that at some point Starlink will deliver a majority of the world’s internet, at least in countries where we’re allowed to operate.”
The division where Starlink is housed represented more than half of SpaceX’s $12.5 billion of sales in the first six months of 2026 and it's the only profitable unit. With the company touting a $760 billion smartphone-connectivity market, it's no wonder investors in existing providers are starting to worry.
U.S. carriers spent decades building their networks, deploying more than $600 billion in capital expenditure between 2012 and 2025, according to Visible Alpha. The investments included buying access to stockpiles of government-controlled radio frequencies needed to deliver reliable coverage. SpaceX, for example, only holds about 65 megahertz mid-band spectrum, the mostly widely used variety, compared to more than 200 Mhz at Verizon and AT&T and T-Mobile's roughly 600 Mhz.
SpaceX could try to persuade Ergen to sell him more. It also could join the bidding for mid-band spectrum the Federal Communications Commission is set to auction next year. The agency is moving to open more of it for space-based broadband, too. Telecom incumbents, however, will probably use their lobbying and purchasing power to try and get in Starlink's way.
Traditional base stations hold an edge against satellites. A signal at 220 miles was about 48,000 times weaker than one at 1 mile, MoffettNathanson analysts calculated. Typical smartphone usage pings a tower just 200 feet away. T-Mobile Chief Financial Officer Peter Osvaldik emphasized the distinction in June. Starlink, he said, isn't restricted by money or satellites: “They're limited by the laws of physics.”
Musk runs toward, not away from, such scientific challenges. Starlink intends to deploy small stations attachable to homes and businesses along with new satellites. Handsets also would require modification to support the frequencies, a roughly two-year process, according to Musk, whose timelines are often optimistic. It all sounds like a long-shot, but Ergen’s Dish Network and rival DirecTV delivered television service this way for years before the economics of the business deflated.
A more robust partnership would be easier. Verizon did something similar with Charter Communications CHTR.O and Comcast CMCSA.O, giving the cable operators partial access to its network so they could sell cellular service to their customers. For now, none of the three telecom titans has signaled a willingness to let Starlink rent its airwaves, but everyone has a price. During an interview last year, Musk also alluded to the idea he could buy one of companies.
With a valuation now crystallized at $2 trillion, SpaceX is worth three times more than all three combined. Its balance sheet also carries net cash, a situation unlikely to last much longer as it spends heavily on terrestrial data centers while simultaneously trying to build them in outer space. Verizon, AT&T and T-Mobile already collectively hold nearly $400 billion in net debt.
Although Musk clearly prefers to go big, even the current trajectory poses trouble for established kingpins. Many of Starlink's new wireless customers are likely to come at the expense of Verizon and its peers. SpaceX also needn't worry about funding dividends and has room to undercut competitors on price while sustaining a roughly 40% operating margin. Its mobile business is on pace to grow 7 times faster than rivals, with $2.5 billion of projected revenue in 2031, MoffettNathanson analysts estimate.
Comcast and Charter used promotions and discounts to encroach on the mobile market. Their share of monthly subscribers climbed from zero to approximately 7% over 9 years, according to Bernstein analysts, while Verizon's dropped into the low 30% range from 40%.
Ignoring the risks would be foolhardy, especially considering recent developments. Not long ago, more than 100 million U.S. households watched TV provided by cable and satellite operators. Their reach has dropped by more than half over the past 16 years and media conglomerates are hiving off collections of niche channels. Time Warner's boss in 2010, Jeff Bewkes, dismissed Netflix as the "Albanian army," one that stood little chance of conquering Hollywood. Wireless executives can hardly afford to make the same mistake with Musk.
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CONTEXT NEWS
Verizon Communications CEO Dan Schulman said on September 9 that he sees no advantage to offering a mobile virtual network operator to satellite providers, including Starlink: "I do not see (satellite) as a viable competitor in the medium or even longer term."
At the same industry conference hosted by Goldman Sachs on September 10, T-Mobile US CEO Srini Gopalan said that Starlink is useful in specific cases but "it's nowhere near close to a substitute in the vast majority of America."
AT&T Chief Financial Officer Pascal Desroches said during a Citibank conference on September 10 that he believes his company's product, distribution and brand will enable it to maintain market share as competitors like Starlink ramp up their mobile and broadband offerings.

(Editing by Jeffrey Goldfarb; Production by Pranav Kiran)
((For previous columns by the author, Reuters customers can click on SABA/jennifer.saba@thomsonreuters.com))