Anyone who has seen their phone lose service on a long drive knows the frustration. One minute, your maps and messaging app works. The next, you’re staring at a screen with no bars.
AT&T (T) has spent decades building towers to continue keep its customers connected to the internet. Elon Musk thinks SpaceX (SPCX) can eventually offer another way.
Starlink, best known for bringing internet to homes beyond the reach of reliable broadband, reported 22 million monthly mobile users in Q3. Its connectivity business generated a massive $5.2 billion in sales, up 69% from a year earlier.
During SpaceX’s Oct. 20 earnings call, Musk outlined plans for a network combining satellites with ground-based equipment, putting traditional carriers more directly in his sights.
AT&T isn’t in imminent danger of losing a nationwide wireless war to Starlink, but the seeds are being planted for SpaceX to eventually put pressure on wireless pricing. For Americans paying monthly phone bills, that’s a rivalry worth watching.
SpaceX’s Starlink growth reveals a much bigger wireless ambition
The earnings numbers for Starlink have in many ways outgrown its original pitch.
SpaceX’s connectivity business brought in a whopping $5.2 billion in Q3, up 69% year over year as reported by CNBC.
Its home broadband service also finished September with 13.6 million consumer subscribers, which includes 1.6 million net additions. That was below analysts’ roughly 14.2 million forecast. Yet the mobile side is getting harder to ignore.
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Starlink Mobile surpassed 22 million monthly users, up 37% from the previous quarter. On those rounded figures, that works out to roughly 5.9 million additional monthly users in just three months.
It’s important to note that these 22 million are users of Starlink’s mobile service, including connections through carrier partnerships, and they underscore how Starlink can reach so many phones without owning their subscriptions.
Still, Musk made clear on Oct. 20 that he sees a much bigger opportunity. During the earnings call, he said he saw a path to “several hundred billion dollars a year in connectivity revenue.”
SpaceX President Gwynne Shotwell offered a nearer milestone. The company plans to deploy its next-generation mobile satellites through 2027 and use its expanded spectrum holdings to launch service in early 2028.
Its proposed network would combine satellites with equipment on the ground, potentially making Starlink more than a backup for dead zones.
For now, AT&T has nationwide towers, established customers, and a business producing substantial cash. But SpaceX is aiming at a market traditional phone companies have largely controlled for decades.
So where might AT&T feel the pressure first?
Wall Street sees SpaceX putting pressure on AT&T’s biggest advantage
Wall Street’s response begins what AT&T can charge customers.
Bernstein analyst Laurent Yoon downgraded AT&T to Market Perform from Outperform on Oct. 13, trimming his price target from $25 to $24. Yoon’s concern was what a more capable Starlink network could eventually do to prices across the telecom industry.
SpaceX’s plan goes well beyond beaming a signal to a phone stranded outside cell-tower coverage. Musk and Shotwell described satellites filling coverage gaps, lower-frequency spectrum helping signals reach inside buildings, and small ground-based radios adding capacity where people live and work.
Recently, SpaceX has agreed to acquire roughly $8 billion worth of low-band spectrum, an important step toward that vision, as reported by Reuters. Owning spectrum isn’t the same as operating a reliable nationwide cellular network, though, and the satellites, ground equipment, and regulatory approvals still have to come together.
For AT&T, the first pressure might arrive long before Starlink becomes a full substitute for its phone service.
More satellite broadband capacity could give rural households another option, forcing providers of fixed wireless and lower-cost home internet to compete harder on price. Those discounts could ripple through other plans, making it harder to retain price-sensitive customers.
AT&T isn’t standing still, either. It partners with AST SpaceMobile to connect ordinary phones directly to satellites.
And analysts are already rethinking that market’s economics. Piper Sandler cut its AST SpaceMobile (ASTS) target from $98 to $54, while lowering its assumed monthly service price from $15 to $12, a 20% reduction, as reported by Seeking Alpha.
AT&T’s latest earnings show how much Starlink still has to prove
AT&T also reported earnings on Oct. 21, which shows that Starlink is challenging a company with a ton of fight left.
AT&T added 379,000 postpaid phone subscribers, along with 442,000 fiber customers and 327,000 fixed-wireless customers. It generated $5 billion in free cash flow and raised its full-year adjusted earnings outlook to about $2.40 a share, Yahoo Finance noted.
Another big competitive edge is that customers who get both home internet and wireless service from AT&T have more reasons to stay. Switching phone providers becomes a bigger decision when several household services are bundled together.
SpaceX still has considerable ground to cover, literally.
Its mobile ambitions require more satellites, usable spectrum, ground equipment, and reliable signals inside buildings. It also needs the customer service and distribution network expected of a nationwide carrier.
TD Cowen estimates that building a national ground network could cost more than $80 billion, as reported by Reuters. And AT&T, T-Mobile, and Verizon aren’t waiting around: They’ve formed a satellite-connectivity venture of their own.
For Americans frustrated by dead zones or limited internet choices, more competition could be welcome. But a cheaper monthly bill isn’t guaranteed.
Starlink has shown it can grow quickly. What it hasn’t yet proved is that it can take on AT&T nationwide.
