SpaceX has agreed to acquire nationwide low-band spectrum in the United States from private equity firm Grain Management for approximately $8 billion in cash, in a move to expand the coverage of its Starlink satellite-to-cell service.

Following the announcement, the three major US communications tower operators American Tower, Crown Castle and SBA Communications rose 3% to 4.5% in after-hours trading, while the three major telecom carriers AT&T, Verizon and T-Mobile fell 5% to 7%.

Analysts at Bernstein believe the acquisition raises the likelihood that SpaceX will build a ground-based communications network in the future, giving tower operators the prospect of new business demand.

$8 Billion Low-Band Spectrum Purchase, SpaceX Advances Satellite-to-Cell Business

The core goal of SpaceX's acquisition is to improve the signal coverage of its Starlink satellite-to-cell service.

Compared with other frequency bands, low-band spectrum generally offers stronger building penetration and broader coverage, helping to alleviate signal transmission problems for satellite-to-cell services when blocked by buildings and other obstacles.

SpaceX CEO Elon Musk said the acquisition is the last key piece of spectrum SpaceX needs to achieve nationwide mobile communication coverage in the United States.

By obtaining this spectrum, SpaceX will further enhance Starlink's ability to provide communication services directly to ordinary mobile phones and expand the potential scale of its business in the US mobile communications market.

Satellite Communications May Still Require Ground Base Stations; Tower Operators Rise After Hours

SpaceX has advanced satellite-to-cell technology in recent years, which had once sparked market concerns that demand for traditional communications towers could decline.

Because low-earth-orbit satellites can provide communication coverage directly to mobile phones, investors worried that this model could weaken mobile carriers' reliance on ground-based communications infrastructure.

However, the spectrum acquisition has refocused the market on the possibility that SpaceX will build a ground-based communications network.

Bernstein analysts believe that SpaceX's purchase of low-band spectrum means its option to build a ground network in the future remains realistically viable.

Although buying spectrum does not mean SpaceX has decided to build new communications towers, this spectrum is precisely the key resource that makes a ground network build-out more credible and lower in cost.

Even if SpaceX provides wide-area communications coverage via satellite, further improving network capacity and service quality may still require support from ground infrastructure.

If the company decides to expand ground network coverage, it may need to lease or build more communications towers.

US communications tower operators typically charge rent based on the number of tenants at each site.

After entering the mobile communications market, SpaceX is expected to become a new customer for these companies, bringing additional revenue to the industry.

As a result, shares of American Tower, Crown Castle and SBA Communications rose 3% to 4.5% after hours.

Three Major Telecom Carriers Fall 5% to 7% After Hours; Market Worries About Intensified Competition

In sharp contrast to the gains in tower operator shares, major US mobile communications service providers were sold off.

Shares of AT&T, Verizon and T-Mobile fell 5% to 7% after hours, reflecting investor concerns that SpaceX will push further into the traditional mobile communications market.

SpaceX shares rose 2.3%.

As SpaceX obtains more spectrum resources, its Starlink satellite-to-cell service is expected to expand coverage in the future and strengthen its ability to compete with traditional telecom carriers.

This shift also gives SpaceX a two-sided impact on the US communications industry: on one hand, satellite-to-cell service could intensify competition in the mobile communications market and pressure existing carriers; on the other hand, if SpaceX chooses to build or lease ground network facilities, tower companies could actually benefit.

At present, SpaceX has not explicitly committed to expanding the scale of ground communications tower construction, but the spectrum acquisition has already made its ground network plan more feasible.