Key Highlights

● Charter Communications was one of the Nasdaq-100's weaker stocks on Friday, sliding as investors sold shares tied to wireless service.

● Charter sells broadband, television and phone service under the Spectrum Brand and has built a sizeable mobile business, Spectrum Mobile.

● If Starlink Mobile becomes a fourth national network, investors fear more pressure on wireless pricing across the industry.

● T-Mobile tumbled about $22.76, AT&T lost $2.41 and Verizon dropped $3.99, shedding about $39 billion in Market Value together.

Charter Communications (NASDAQ:CHTR) was one of the Nasdaq-100's weaker stocks on Friday, sliding as investors sold shares tied to wireless service. The selling had nothing to do with an announcement from Charter itself. It followed news from SpaceX (NASDAQ:SPCX), which agreed to buy Grain Management's nationwide 800 MHz low-band spectrum for about $8 billion in cash, according to a media report.

SpaceX said the purchase "will pave the way for Starlink Mobile to become a major mobile carrier in the US." Elon Musk described it on X as a "Very big deal." The deal still needs approval from the Federal Communications Commission.

Why a cable company cares about spectrum

Charter is one of the largest cable operators in the United States, selling broadband, television and phone service under the Spectrum brand. Over the past several years it has built a sizeable mobile business, Spectrum Mobile, which it sells mainly to its existing internet customers as part of a bundle. Mobile has been one of the bright spots for cable companies as their traditional TV businesses shrink and competition in home broadband intensifies.

That is where the SpaceX news bites. Charter's pitch rests on offering a cheaper, bundled alternative to the big carriers. If Starlink Mobile becomes a fourth national network with its own spectrum, investors fear more pressure on wireless pricing across the industry, and more competition for the same value-conscious customers Charter targets. The wider concern was competitive pressure across the sector.

The carriers took the heaviest hits

The biggest falls came at the national carriers. T-Mobile (NASDAQ:TMUS) tumbled about $22.76 to around $148.58, AT&T (NYSE:T) lost $2.41 to $22.17 and Verizon (NYSE:VZ) dropped $3.99 to $41.65. Together they shed about $39 billion in market value, according to market data. European telecom shares slid too.

"The carriers' best argument just got weaker," said Kutgun Maral, an analyst at Evercore ISI. He added that "This strategic shift places SpaceX in a stronger negotiating position." Scotiabank (NYSE:BNS) cut its price targets on AT&T, T-Mobile and Verizon.

The selling made communication services the worst-performing sector in the S&P 500 on Friday. At the other end, tower owners Crown Castle (NYSE:CCI), American Tower (NYSE:AMT) and SBA Communications (NASDAQ:SBAC) rallied, with Morgan Stanley (NYSE:MS) analysts calling the deal "incrementally constructive" for towers.

A firmer market elsewhere

Away from telecoms, stocks rose. The Nasdaq-100 gained 157.34 points to 30,883.15, the Nasdaq Composite added 172.83 points to 27,366.17 and the S&P 500 rose 46.18 points to 7,811.54, about seven points below Tuesday's record close. The Dow climbed 423.31 points to 51,654.95. Software, health care and real estate led the gains.

For a capital-intensive Business like cable, interest rates are a constant consideration. The 10-year Treasury Yield held near a 24-year high on Friday, and the Fed, which raised rates in September for the first time since 2023, has signaled more hikes may follow. Fed Governor Christopher Waller said Thursday he anticipates additional hikes to bring Inflation back to the Fed's goal.

The FCC Review Is the Key Catalyst for Charter and Wireless Stocks Alike

Monday, October 12 is Columbus Day, with stocks open and bonds closed. September consumer prices come on Wednesday, October 14, bank Earnings run from October 13 to 16 and the Fed meets on October 27 and 28. The FCC's review of the SpaceX deal is the key catalyst for cable and wireless stocks alike. Verizon's third-quarter call on October 26 will provide carrier commentary on the announcement.