Following discussions with T-Mobile US Inc (NASDAQ: TMUS) Chief Technology Officer John Saw and executives from US communications infrastructure REIT Crown Castle (NYSE: CCI), Bank of America suggests that SpaceX's plans to enter the mobile communications services market could actually benefit T-Mobile US, communications tower operators, and spectrum values.
According to previous reports, leveraging its established dominance in satellite-to-smartphone direct communication services, SpaceX is preparing to enter the mobile carrier market. The steady revenue generated from mobile operations would help fund ambitious projects like SpaceX's Mars colonization vision. As it expands its share of the $740 billion market, it poses a potential threat to existing carriers, including T-Mobile US.
For T-Mobile US, Bank of America noted that SpaceX's limited cellular spectrum resources and the massive infrastructure required to build a nationwide terrestrial network would constrain its ability to directly compete with existing mobile carriers. Consequently, satellite connectivity will likely serve as a complement to terrestrial networks rather than a replacement.
This perspective from Bank of America implies that competition between SpaceX and T-Mobile US may not be as intense as some investors anticipate. Meanwhile, analyst Matthew Griffiths and his team highlighted significant obstacles SpaceX would face in constructing a nationwide terrestrial mobile network, including scarce cellular spectrum resources and the need to build thousands of cell towers and small cells, while also addressing zoning, power, fiber, and leasing requirements.
The analysts also noted that a network model relying primarily on customer-installed home base stations is impractical. John Saw estimated that to achieve outdoor coverage comparable to T-Mobile US, SpaceX might need to deploy between 500 million and 1.5 billion home base stations across the US. At an estimated cost of roughly $1,000 per unit, the total expense would be staggering.
Crown Castle also indicated that home base stations are better suited for filling small coverage gaps, whereas cell towers can provide power, fiber, and permitting support for larger-scale network deployments. The analysts stated that while SpaceX's ample financial resources could accelerate the deployment of terrestrial sites, reaching the coverage, capacity, indoor signal performance, and mobility capabilities of established carriers would still require significant spectrum and capital investments, along with years of construction and execution.
The analysts added that satellite direct-to-device services are likely to remain a complement to terrestrial networks, particularly in very remote rural regions.
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