The idea that SpaceX might acquire one of the so-called 'Big Three' carriers in the US is getting fairly hackneyed, with a speculative report popping up seemingly on a weekly basis now.
Even so, the latest research note from TD Cowen differs from the recent speculative commentary in that it contains some meat, and lays out SpaceX's choices and the associated costs of acquiring T-Mobile in fairly stark terms.
Why SpaceX desperately needs additional terrestrial spectrum
SpaceX recently acquired around 65 MHz of nationwide, exclusive-use, contiguous spectrum for $19.6 billion, divided into three distinct bands:
- Around 15 MHz of unpaired nationwide Advanced Wireless Services-3 or AWS-3 spectrum band, which is already used by major carriers (like AT&T and Verizon) for their LTE/5G networks. This band is also supported by most premium and mid-range smartphones.
- Around 40 MHz of nationwide AWS-4 spectrum, with this band's propagation physics characteristics considered ideal for space-to-ground communication. However, it's not as widely supported by existing cellphones.
- Around 10 MHz of nationwide H-Block spectrum, which provides up to 20 times the data throughput compared to the low-band frequencies SpaceX previously leased from T-Mobile, but again remains unsupported by most existing cellphones.
Here's the rub, however. Apart from the relatively limited AWS-3, the bulk of SpaceX's existing terrestrial spectrum is not supported by most existing cellphones (AWS-4 and H-Block). What's more, OEMs like Apple, Samsung, and Google are unlikely to make the effort to bridge this compatibility gap unless SpaceX has substantial skin in the game, so to say.
To make matters clearer, do note that Apple iPhones currently use the L-Band Uplink (1610 MHz – 1618.725 MHz) and the S-Band Downlink (2483.5 MHz – 2495 MHz) for satellite-based direct-to-cell services. However, the AWS-4 operates at 2000–2020 MHz (Uplink) and 2180–2200 MHz (Downlink) frequencies, while the H-Block operates at 1915–1920 MHz (Uplink) and 1995–2000 MHz (Downlink) ones.
At the same time, AT&T, Verizon, and T-Mobile have refused to enter into a Mobile Virtual Network Operator (MVNO) agreement with SpaceX as they feel eminently threatened by the satellite giant's ambitions. Without an MVNO with one of these three carriers, SpaceX has no easy path to gaining access to the correct terrestrial spectrum in bulk quantities to power its planned direct-to-cell services.
In any case, SpaceX will also need access to an established terrestrial cell tower network to power its direct-to-cell services, especially in urban areas, where the physics of thousands of people trying to connect to limited satellite beams just does not work.
Finally, do note that under the FCC's Supplemental Coverage from Space (SCS) rules, if a ground tower is using an AWS-3 frequency nearby, a satellite that is using the same frequency must yield to the ground tower to prevent interference. This places AWS-4 at an advantage over the AWS-3, but the limited-compatibility problem persists.
SpaceX might eventually be forced to acquire T-Mobile for as much as $320 billion to break through the spectrum blockade imposed by the 'Big Three' carriers
This brings us to the core of today's topic. TD Cowen has just penned an interesting note, speculating on the most effective avenue available to SpaceX to break this impasse.
According to TD Cowen, T-Mobile might be the most direct path for SpaceX to break through its conundrum. After all, Starlink already powers T-Mobile's direct-to-device service in rural, coverage-dead areas.
What's more, T-Mobile's "momentum, maverick culture, [and its status as a] pure-play wireless provider" only makes it more attractive for SpaceX, according to the investment bank.
Execution would be tricky though. T-Mobile has a market cap of around $200 billion. Add in existing debt, and the acquisition cost might swell to $320 billion, higher if it's a hostile takeover.
We already know that SpaceX recently raised $86 billion from its IPO, and another $25 billion from the bond market. With its Cursor acquisition structured as an all-stock deal, SpaceX theoretically has $111 billion in cash at hand right now. This still leaves a $209 billion hole.
There'a no easy way out for SpaceX from this predicament. Perhaps it should give up on acquisitions and focus its efforts on urging mobile OEMs to start supporting AWS-4 and H-Block bands?
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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