Elon Musk might be forced to spend $320 billion to buy T-Mobile.
SpaceX, one of Musk’s many companies, has plans to launch its own mobile service for US consumers. However, it doesn’t have the spectrum to do that right now. SpaceX recently acquired around 65MHz of nationwide, exclusive-use, continuous spectrum for around $19.6 billion. But the kicker here is that this spectrum is mostly not supported by existing cellphones. As part of it is in the AWS-4 and H-Block. Which is why they need to either buy additional spectrum or buy a US carrier.
SpaceX has already tried to work with AT&T, T-Mobile, and Verizon on an MVNO agreement, allowing them to launch Starlink Mobile and use one of those networks along with its satellite service. Similar to US Mobile or Cricket Wireless.
So, their next plan is to build a terrestrial US mobile network. But in order to do that, they will likely need to purchase T-Mobile, which could cost as much as $320 billion.
SpaceX already raised $86 billion from its IPO
Getting that type of money to buy T-Mobile would be tough. SpaceX recently raised around $86 billion from its IPO, plus another $25 billion from the bond market. But that still leaves a huge chunk of cash they need to come up with to buy T-Mobile. Whose market cap is currently around $200 billion, and when you add in its debt, it’s going to cost close to $320 billion to purchase.
There’s no easy way out for SpaceX here, and it might just be easier to sell off the spectrum they bought last year from EchoStar, but that’s unlikely to happen. That spectrum is likely not as valuable to AT&T, T-Mobile, or Verizon, due to the fact that a good chunk of it is not compatible with existing smartphones.
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