U.S. cell tower stocks rise on SpaceX spectrum buy

U.S. mobile tower stocks experienced a rise in after-hours trading on Thursday following SpaceX's agreement to purchase a nationwide block of low-band spectrum from private equity firm Grain Management, according to Investing.com. American Tower Corp, Crown Castle International Corp, and SBA Communications Corp all saw gains of 3% to 4.5% in the extended trading session.

The acquisition, expected to cost SpaceX around $8 billion in cash, aims to enhance SpaceX's Starlink satellite-to-cellular service by enabling signal passage through obstacles. This acquisition is the final piece needed for SpaceX to provide comprehensive phone coverage across America, as stated by SpaceX CEO Elon Musk. Bernstein analysts saw the move positively for tower operators, highlighting that the spectrum purchase keeps the option of building a terrestrial network viable and potentially less expensive.

While SpaceX's Starlink service has raised concerns about bypassing the need for cellphone towers, the Wall Street Journal reported that the company will still require some ground infrastructure, potentially necessitating additional tower installations. As SpaceX ventures into telecommunications, tower companies stand to gain new customers through this potential expansion.

However, shares of major telecommunications providers, including AT&T Inc, Verizon Communications Inc, and T-Mobile US Inc, declined between 5% and 7% in after-hours trading due to concerns over increased competition from Starlink.