SpaceX Might Eye T-Mobile Acquisition Amid Expansion Plans

Analysts suggest that SpaceX, led by Elon Musk, could consider acquiring T-Mobile if it doesn’t secure a wholesale network arrangement necessary for expanding its Starlink service into consumer mobile. This move aims to rival major players like Verizon and AT&T.

In its recent IPO filing, SpaceX laid out its ambitions for wireless services, highlighting Starlink Mobile as a competitor to significant U.S. telecommunications firms. According to TD Cowen analyst Gregory Williams, T-Mobile stands out as the most sensible target for acquisition, should negotiations for a wholesale network fail or if Musk opts for ownership over partnership in the wireless sector.

There’s also an alternative Williams mentioned, which involves SpaceX potentially buying AT&T. He proposed that the funding for such an acquisition could come from issuing more of SpaceX’s shares, a strategy that might not overly dilute the current shareholders’ stakes.

Williams noted that beyond wireless companies, SpaceX could also look at acquiring cable providers, naming Comcast and Charter Communications among those that could be appealing due to their existing agreements with Verizon.

A closer look at the financial dynamics within SpaceX sheds light on this focus on connectivity. In the first quarter of this year, Starlink accounted for a significant 69 percent of the company’s total revenue, making it the sole revenue-generating division. Meanwhile, the space sector reported a loss of $619 million, and the artificial intelligence division faced a staggering deficit of $2.5 billion.

SpaceX’s IPO documents hinted at a $740 billion market potential for Starlink Mobile, although they offered limited specifics regarding product timelines, only stating intentions to broaden the Starlink Mobile offerings.

Additionally, there are circulating speculations about a merger between SpaceX and Tesla, which have garnered favorable reactions from some Tesla investors. Notably, Wedbush Securities analyst Dan Ives, a long-time proponent of Tesla, has predicted such a merger could happen next year, potentially affording Musk enhanced influence over the AI landscape.

Ross Garber, an investor in Tesla who has critiqued Musk, showed support for the idea of a merger. He remarked on the attention SpaceX is receiving compared to Tesla, which he feels could be subtly detrimental for Tesla shareholders. “Are they better together or apart? I think they’re better together,” he stated.