AST SpaceMobile Inc. (NASDAQ: ASTS) is having a rough Friday, and the culprit is a familiar one: SpaceX. The rocket company, which also happens to run a growing satellite internet business, agreed to acquire up to 14 megahertz (MHz) of spectrum in the 800 MHz band from Grain Management, subject to regulatory approval. That's low-band spectrum, the kind that travels far and penetrates buildings, which makes it particularly useful for connecting ordinary smartphones directly to satellites.
Elon Musk didn't mince words, describing the deal as an "earthquake." SpaceX's Chief Operating Officer Gwynne Shotwell said the company plans to target existing wireless carrier customers. In other words, Starlink Mobile isn't just coming for the satellite-to-phone specialists. It's coming for the carriers themselves.
The low-band spectrum could help Starlink Mobile improve connectivity and compete directly with traditional mobile carriers and satellite-to-phone providers. For AST SpaceMobile, that's a problem. The company relies on partnerships with wireless carriers to deliver satellite connectivity to ordinary smartphones. If SpaceX can offer a similar service with its own spectrum and its own satellites, the value proposition for carriers to partner with ASTS gets a lot less obvious.
Investors are weighing the potential for SpaceX's expanding satellite network and spectrum holdings to put pressure on AST SpaceMobile's coverage, service economics and ability to differentiate its offering. That's a lot of pressure to put on a company that's still building out its constellation.
