Key Takeaways
-
The Washington Post reported that SpaceX is in talks to buy EchoStar's Boost Mobile or get access to its network. Boost had 7.38 million wireless subscribers at the end of the second quarter.
-
A deal would give SpaceX the customers and retail operation that Verizon's CEO counted in his four-to-six-year estimate, so its threat to Verizon's and AT&T's pricing would arrive sooner.
-
Analysts expect revenue at both Verizon and AT&T to grow less than 2% a year through 2028, which leaves little room to absorb a price war.
-
Boost's network leases may need AT&T's and T-Mobile's approval to change hands, so the terms of any deal are the thing to watch.
SpaceX ( SPCX:NASDAQ )may have found a shortcut past the timeline Verizon ( VZ:NYSE )set for it.
On Monday the Washington Post reported that SpaceX is in talks to buy EchoStar's Boost Mobile or get access to its network. The paper cited people familiar with the negotiations. Elon Musk talked about a deal with EchoStar Chairman Charlie Ergen himself last month.
Boost had 7.38 million wireless subscribers at the end of the second quarter. It serves them on capacity it leases from AT&T ( T:NYSE )and T-Mobile.
Four to six years, or two to three
Last Monday, on Verizon's third-quarter call, CEO Dan Schulman explained why SpaceX is no near-term threat. He said building a carrier network would take "a minimum of four to six years" and cost "somewhere between $300 billion and $500 billion." And the network was only part of it:
"Then they need to build retail, customer service, back office systems, et cetera."
Musk replied on X that it "will take 2 or 3 years."
Up to now, the argument over Musk's two-to-three-year timeline assumed SpaceX would build everything itself. With Boost, SpaceX could buy the second half of Schulman's list: a brand, millions of paying customers and the operation that already serves them.
TIKR tracks 39 analysts on SpaceX. How many say "Buy"?
See the full breakdown of Buy, Hold, and Sell ratings on SpaceX, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See SpaceX's Analyst Ratings
The rest of the board is filling in
SpaceX is assembling the network too. In October it agreed to an $8 billion spectrum deal, on top of EchoStar spectrum the FCC approved in May. Bloomberg reported last month that SpaceX is in talks for at least 80,000 cell sites, and TD Cowen put the cost of that network at more than $80 billion. That's well short of Schulman's range.
The Post also reported that SpaceX had approached Verizon, AT&T and T-Mobile about renting space on their networks and been turned down. The paper quoted Musk: "Veterans of the cellular industry look at the chess board of existing pieces and don't see a solution."
Boost is a piece that's already on the board.
I'd expect SpaceX to use Boost to start competing with Verizon and AT&T on price well before its own network is finished. On its October call, SpaceX said it expects its next-generation mobile service in early 2028.
Small, and its landlords get a say
So far these are only talks, and Boost's 7.38 million subscribers are a small base next to Verizon's and AT&T's.
The bigger problem is that Boost's leases may not pass to a new owner unless AT&T and T-Mobile approve. Those are carriers that just turned SpaceX down. And in an Oct. 28 letter to the FCC, SpaceX said incumbents, T-Mobile among them, oppose its proposed spectrum rules because they want to harm a competitor.
Money could also slow a deal. SpaceX had $89.9 billion of cash and marketable securities at Sept. 30, but it expects fourth-quarter capex of $35 billion to $40 billion, and most of this year's spending has gone to AI data centers. Nobody has reported a price for Boost.
Verizon and AT&T have little growth to give up
Analysts expect Verizon's revenue to grow from $138 billion in 2025 to $144 billion in 2028:
AT&T is in much the same position. Its revenue is expected to go from $126 billion in 2025 to $132 billion in 2028:
That's growth of less than 2% a year at both. A new rival competing on price by 2028 would show up right inside those estimates.
Verizon trades at 8.6x forward earnings. That's just under its five-year average of 8.8x and well below the 10.5x it reached in March:
Buying shortens the clock
Even with Boost, SpaceX would still be renting its network from AT&T and T-Mobile. But it would have paying wireless customers in far less than the four to six years Schulman described, and customers are what it needs to start a fight over prices.
The way I see it, Verizon at 8.6x is less of a bargain than it looks. When revenue grows less than 2% a year, there's little cushion if a new rival starts cutting prices by 2028.
Of course, these are only talks, and a deal may need AT&T's and T-Mobile's blessing. The terms of any deal, and what happens to Boost's network leases, will show us how fast SpaceX can really move.
So what is Verizon stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR's valuation model and see what Verizon could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It's free to use.
