Musk's next conquest? buying at&t, t-mobile, or verizon

Elon Musk, the man who disrupted electric vehicles and space travel, may be setting his sights on a new frontier: the US telecom industry. After facing a wall of resistance from AT&T, T-Mobile, and Verizon, who have all rebuffed attempts to establish a Mobile Virtual Network Operator (MVNO) partnership for Starlink, analysts are suggesting a far bolder move: a full-scale acquisition.

The unlikely solution: a telecom takeover

The roadblock from the 'Big Three' carriers isn't simply a matter of Business disagreement. Wolfe Research analysts, in a recent report released just before Starlink's anticipated stock market debut, argued that a fourth major player entering the US telecom market – particularly one as disruptive as Starlink – would fundamentally shift the competitive landscape, potentially squeezing profitability for existing giants. Their provocative solution? A direct acquisition of one of the major carriers.

Senior analyst Peter Supino laid out the logic: “If Starlink Mobile were to become a telecom operator, it would increase the number of players to four, thereby increasing competition and reducing profitability. A better outcome for everybody, from a profitability perspective, would be that that doesn’t happen and a way for that not to happen is to actually buy a network.”

T-mobile: the prime target

Supino believes T-Mobile presents the most compelling target for Starlink. The reasons are twofold. First, T-Mobile lacks a traditional wireline network, a legacy infrastructure Starlink wouldn't need. Second, acquiring T-Mobile would inherently mean acquiring its parent company, Deutsche Telekom, instantly granting Starlink a foothold in the lucrative German and Austrian markets.

But the possibilities don't end there. Musk, never one to shy away from audacious gambles – remember his acquisition of Twitter? – hasn't ruled out purchasing AT&T or Verizon either. While he initially downplayed the potential for Starlink to displace existing carriers, citing their vast spectrum holdings, he also acknowledged a willingness to explore any avenue to expand his reach.

The spectrum challenge remains, though. SpaceX currently holds a mere 65 MHz of mid-band spectrum, a relatively small amount. However, they are actively participating in the ongoing AWS-3 auction and could potentially acquire a package of licenses – including the sought-after 700 MHz spectrum – from EchoStar, a move that would significantly bolster their capabilities.

The analyst's prediction: a domino effect

Alex Besen, founder of The Besen Group, predicts Starlink could capture as many as 20 million US subscribers within its first five years. “There is no way Starlink Mobile is going to focus on the key niche segment,” Besen stated. “They're building this constellation, right? They will become the first global mobile satellite operator eventually.”

Analysts at Wolfe Research foresee a tipping point. “Once SpaceX expresses an intention to form an MNO [Mobile Network Operator] of its own, one of the Big Three will likely cave rather than let a new rival spring up,” stated Supino. “Once a fourth mobile network looks inevitable, an MNO will grant an MVNO in order to earn some money on the path to the inevitable.”

Roger Entner, founder of Recon Analytics, seems to believe Musk will opt for a ground-up build rather than an acquisition.