SpaceX Just Made Investing in Telecom Stocks Riskier. Here’s Morningstar’s Top Pick
Why we think the satellite giant is buying wireless spectrum and what it could mean for the three major US telecoms.
On the Oct. 19, 2026, episode of The Morning Filter podcast, host Dave Sekera sat down with director of communication-services equity research Michael Hodel to answer viewer questions about SpaceX’s SPCX purchase of wireless spectrum infrastructure. Here is an excerpt from the show.
Could SpaceX Really Take On the Wireless Giants?
David Sekera: Mike, thank you very much for joining us. As you can imagine, we’ve gotten a lot of questions on The Morning Filter regarding what SpaceX is doing following the reports that they started buying some wireless spectrum. The first question I have for you is what do you think they’re doing in the wireless space, and how does that then relate to their satellite network and some of the coverage they’re already able to provide there?
Michael Hodel: I think it’s important first to distinguish what Starlink is doing on the broadband side versus the wireless side. On the broadband side, that’s where the company’s probably gotten the most attention. It’s where you’re putting a dish on a house or on a portable RV, and you’re getting broadband service from the satellite.
What we’re talking about here is something a little bit different. This is direct to the cell, direct to your cellphone, your smartphone, your iPhone, what have you, service from a satellite. What this service has been marketed as traditionally is infill for places where terrestrial networks don’t reach, so a national park or somewhere in the wilderness. There’s been a lot of talk that SpaceX wants to offer a more comprehensive wireless service, and to do that, they need network coverage in more densely populated areas. A satellite service doesn’t have the capacity to serve lots of people in a small space, and it also doesn’t have the ability to penetrate walls.
If you’re indoors, that signal from a satellite’s going to have a hard time getting to you. What this latest move is intended to do is to provide Starlink with the spectrum that it would need to build a network to get that in-building coverage in particular. And this isn’t likely to be spectrum that’s used from satellites. It’s more likely, and SpaceX has said as much, that they’ll build an actual network with towers and rooftops and that sort of thing to use this spectrum, again, to provide that coverage layer that can reach consumers in buildings or in rural areas.
Why that’s interesting is we think Starlink has most likely been trying to negotiate a wholesale agreement with one of the wireless carriers, AT&T T, T-Mobile TMUS, or Verizon VZ, because that would be a much more efficient way for Starlink to fill in where its satellites can’t reach. The prospects of building a wireless network from scratch are extremely daunting. You’re talking billions of dollars for more spectrum, more than what SpaceX has already purchased, billions, tens of billions of dollars to actually build the network, and then billions upon billions of dollars to acquire customers, provide them with phone financing, and the sorts of things that customers expect today. We think right now SpaceX is most likely trying to build up assets to make itself a credible entrant into the wireless market as a way of negotiating aggressively with one of the existing wireless carriers for capacity in those areas where its satellite can’t reach.
Sekera: Do you think this is actually just more a negotiation ploy than it is necessarily them really looking at going head-to-head against the incumbent wireless providers and build out their own complete network?
Hodel: It could be a little bit of both. I think for Starlink and SpaceX, they need to have some sort of fallback plan if they can’t get an agreement with one of the major wireless carriers. And the reason why that’s important is that all three of the major US carriers, again, AT&T, Verizon, and T-Mobile, have formed a joint venture for dealing with satellite providers where they’ve basically said, “We’re not going to negotiate independently and provide network access to somebody like Starlink who can then just turn around and compete with us.” By collaborating in that way, they’ve ensured that one of the companies, one of the carriers, doesn’t break off and sign an agreement with Starlink and leave the other two behind. And so, SpaceX and Starlink need to have some kind of credible fallback plan to enhance their negotiating position and also to potentially go it alone if the telecom companies don’t ultimately come to the table and agree to some sort of wholesale arrangement for Starlink.
AT&T, Verizon, and T-Mobile: Which Stock Is Most Attractive Today?
Sekera: Thinking about where AT&T, Verizon, and T-Mobile are trading today, and based on your view that this is most likely going to be them collaborating with Starlink as opposed to competing directly head-to-head, any of those stocks look interesting to you today? And if so, why?
Hodel: So, the big thing we did in light of Starlink’s latest spectrum purchase, and it does make the company much more credible as a fourth entrant into the wireless market, is we increased our
When I look at the three carriers today, T-Mobile actually looks the most interesting to me. It’s trading at about a 35% discount to our fair value estimate, which is a wider discount than AT&T or Verizon. The stock’s actually offering a decent yield for the first time in its history, above 3%, and they have the financial capacity to buy back stock pretty aggressively as well. And I like T-Mobile’s position in the fixed-line business a little bit more than most people might expect. I think some of the investments that AT&T and Verizon are making to expand their fiber networks actually will struggle to generate attractive returns on capital. But again, I don’t think T-Mobile is quite yet at a large enough margin of safety to really pound the table on it, but it’s the one that I think looks the most attractive here.
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