AT&T won't need to worry about SpaceX for 'years,' analyst says

By William Gavin

However, that doesn't mean Starlink won't be an overhang on wireless stocks

AT&T's second-quarter earnings were a hit with investors, who cheered its strategy of selling both internet and mobile service.

SpaceX's Starlink business has cast a shadow over AT&T's stock recently, but a Wolfe Research analyst says investors are worrying prematurely - if they even have to be concerned at all.

"Starlink may bully its way into mobility, but it would take years to acquire and clear the right spectrum," Wolfe's Peter Supino wrote in a note to clients titled "Starlink Shmarlink!"

Supino had downgraded AT&T's stock (T) late last year as Starlink parent SpaceX (SPCX) prepared for an initial public offering. At the time, he worried about the outlook for pricing growth, and saw SpaceX and a foldable Apple (AAPL) iPhone as looming threats.

Most of those concerns are now firmly behind AT&T, Supino said, as he turned bullish on AT&T shares in his Thursday morning note.

AT&T on Wednesday reported a net of 432,000 new postpaid phone subscribers for the second quarter, well above expectations. Adjusted earnings per share also came in above expectations, and AT&T showed growth in both fiber and fixed-wireless internet customers.

AT&T's postpaid-phone churn for the quarter dropped just a single basis point compared to a year earlier, despite price hikes. The subscriber net adds across divisions, combined with fewer device upgrades, showed that the company's plan to sell both internet and mobile service to customers is working, Supino said.

"Positively, the industry is moving away from device subsidies, but is leaning into converged bundling, which likely dampens [average revenue per user] in exchange for volumes/churn," added Oppenheimer's Timothy Horan in his own note to clients.

Horan thinks AT&T has a "few solid quarters" before pressure from Starlink, SpaceX's satellite-internet division, becomes a major concern. However, he warned that the telecommunications industry is still downplaying the risk from satellite competitors, which in his view is a mistake.

"We continue to expect pressure on broadband from [SpaceX] in the medium term and eventually mobile," Horan wrote.

Last month, Horan downgraded AT&T's stock to perform, citing the risk of Starlink taking market share. BNP Paribas analyst Sam McHugh has said that the Starlink overhang on wireless stocks could persist until next year.

AT&T shares dropped 16.5% in June as analysts warned of the threat SpaceX poses to traditional telecom firms, according to FactSet. T-Mobile (TMUS) shares fell 10.6% last month, while Verizon Communications (VZ) shed 11.4%, per FactSet. All three stocks have somewhat clawed back those losses this month.

T-Mobile, currently a SpaceX partner, reported earnings earlier on Thursday. Verizon reports its second-quarter results on Friday.

It will take time and plenty of elbow grease for SpaceX to threaten wireless providers, according to experts. The company is reportedly discussing a mobile-phone partnership with Charter Communications (CHTR), which reports earnings on Friday.

"Any entry of SpaceX could be highly bearish for the wireless industry," TD Cowen's Gregory Williams wrote in a recent client note.

-William Gavin

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07-23-26 1357ET