Crown Castle rose about 9% after hours on a report that SpaceX is in talks to lease sites for a wireless network, while AT&T and T-Mobile fell 4% to 6%. The three national carriers are the tower companies' largest tenants.
SpaceX aims to secure access to at least 80,000 cell sites across the U.S. for a wireless network and is in talks with at least one major cellular infrastructure company, including Crown Castle, Bloomberg News reported, citing people familiar with the matter. The value of the deals could reach into the billions of dollars, the people said.
No agreement has been announced. American Tower declined to comment. SpaceX and privately held Vertical Bridge did not respond to requests for comment.
The report, published at about 5:31 p.m. Eastern on Thursday, split the telecom sector in two in after-hours trading. Crown Castle rose from its $78.83 close to $86.17 in the 5:30 p.m. trading window, a gain of 9.3%. AT&T fell 5.9% to $21.40 and T-Mobile US 4.1% to $152.26 over the same span. Early Friday, Crown Castle was indicated about 7.6% higher, AT&T about 3.7% lower and T-Mobile about 3.4% lower. Verizon was quoted about 3% down, and American Tower and SBA Communications were indicated higher. Extended-hours volume was thin.
The size of the ask
Eighty thousand sites would be about half of the roughly 158,500 purpose-built cell towers operating in the U.S. last year, according to the Wireless Infrastructure Association. Crown Castle operates about 40,000 U.S. towers, American Tower about 42,000 U.S. sites and Vertical Bridge about 18,000.
Crown Castle's chief executive was asked on the company's Oct. 21 earnings call whether it was discussing leases with SpaceX, Amazon or other satellite-based providers. "You can assume that we're talking to all parties," he said, declining to discuss specific customers.
SpaceX has recently acquired low-band spectrum and won approval from the Federal Communications Commission to launch 15,000 direct-to-phone satellites. Ground sites would let it build a network that combines both.
A tenant and a competitor at once
For tower owners, the appeal is plain. Their growth has depended on three national carriers. A well-funded fourth tenant adding equipment to existing towers would bring new rent on assets that are already built, which is typically high-margin revenue. Carriers lease rather than own sites because sharing is cheaper, and a new entrant has the same incentive.
For carriers, a new network means more competition for subscribers and potentially for pricing. That is the read the after-hours tape gave.
The two sides are linked, which is what makes the story more complicated than the price moves suggest. AT&T, Verizon and T-Mobile are the tower companies' biggest customers. If a fourth network pressures their pricing or capital budgets, the landlords feel it. The question for tower investors is whether a new tenant is worth more than the strain on the existing ones.
There is also a timing gap. The carriers had risen 3.3% to 3.8% during Thursday's regular session before the report, so part of the after-hours decline reversed that gain. Talks may not lead to leases, and the number of sites, rents and terms are all unknown. A network that leans on satellites may also need fewer ground sites over time.
What to watch
Friday's regular session, the first full test of the reaction. Any confirmation or denial from SpaceX, Crown Castle or American Tower. Verizon's quarterly results on Monday, Oct. 26, where management will likely be asked about a new competitor.