Key Highlights

● T-Mobile US closed at about $148.58, down about $22.76, after trading between $148.42 and $156.89.

● Early in the session the shares hit their lowest level in more than 33 months, close to a three-year low.

● SpaceX is currently T-Mobile's partner for satellite coverage in dead zones, and investors worry the relationship could turn competitive.

● AT&T fell $2.41 to $22.17 and Verizon dropped $3.99 to $41.65 as the three carriers lost about $39 billion.

T-Mobile US (NASDAQ:TMUS) suffered the heaviest blow of the three national wireless carriers on Friday. The stock closed at about $148.58, down about $22.76, after trading in a range of $148.42 to $156.89. Early in the session, the shares hit their lowest level in more than 33 months, putting them close to a three-year low.

The move followed news from SpaceX (NASDAQ:SPCX). SpaceX agreed to buy Grain Management's nationwide 800 MHz low-band spectrum for about $8 billion in cash, according to a media report. The airwaves are meant to support Starlink Mobile, and SpaceX said in a statement that the purchase "will pave the way for Starlink Mobile to become a major mobile carrier in the US." Elon Musk called it a "Very big deal" in a post on X on Thursday.

A partner becomes a rival

The news stung T-Mobile in a particular way. SpaceX is currently T-Mobile's partner for satellite coverage in dead zones, the service that lets phones send messages where there is no tower signal. Investors now worry that relationship could turn into competition if Starlink Mobile emerges as a fourth national carrier with its own spectrum.

Kutgun Maral, an analyst at Evercore ISI, said "The carriers' best argument just got weaker" and that "The implications for AT&T, T-Mobile, and Verizon are somewhat negative." He added that "This strategic shift places SpaceX in a stronger negotiating position."

Scotiabank (NYSE:BNS) cut its price targets on all three carriers. AT&T (NYSE:T) fell $2.41 to $22.17 and Verizon (NYSE:VZ) dropped $3.99 to $41.65. Together, T-Mobile, AT&T and Verizon lost about $39 billion in market value, according to market data. Cable operator Charter Communications (NASDAQ:CHTR), which also sells mobile service, slid as well, and European telecom stocks fell in sympathy, with the STOXX 600 telecom index touching its lowest level since January 30, according to market data.

Winners on the other side

Not every telecom-linked stock suffered. Tower owners Crown Castle (NYSE:CCI), American Tower (NYSE:AMT) and SBA Communications (NASDAQ:SBAC) surged, as investors bet that a new national network would still need antennas on the ground. Morgan Stanley (NYSE:MS) analysts called the deal "incrementally constructive" for towers. Communication services was the worst-performing S&P 500 sector, while real estate led.

The deal still needs approval from the Federal Communications Commission.

Market backdrop

The broader market rose. The Nasdaq-100 gained 157.34 points to 30,883.15 and the S&P 500 added 46.18 points to 7,811.54, just shy of Tuesday's record close. The Dow climbed 423.31 points to 51,654.95 and the Nasdaq Composite rose 172.83 points to 27,366.17. T-Mobile's fall was one of the biggest drags on the Nasdaq-100.

Higher borrowing costs add to the pressure on capital-heavy carriers. The 10-year Treasury Yield held near a 24-year high, and the Fed, which raised rates in September for the first time since 2023, has signaled further hikes.

FCC Review, T-Mobile's Response and Verizon's Call Will Shape the Satellite-Partner Story

On the macro calendar, Monday, October 12 is Columbus Day, with stocks open and bonds closed. Consumer prices arrive Wednesday, October 14, bank Earnings run from October 13 to 16 and the Fed meets on October 27 and 28. Investors will follow the FCC review of SpaceX's spectrum purchase and any response from T-Mobile on its satellite partnership. Verizon's third-quarter call on October 26 will offer carrier commentary on the deal.