SpaceX agreed to pay $8 billion for 800MHz spectrum, doubling Calpers' money and shutting out AST SpaceMobile
The $8 billion deal doubles the largest US public pension's stake and leaves AST SpaceMobile, the listed loser of the auction, without the licenses it wanted. AT&T, Verizon and T-Mobile now face an owner of both satellites and terrestrial spectrum.
Richard Tangtwo-minute read
The price of Elon Musk's push into your phone carrier's business is on the record: SpaceX+0.90% — SpaceX, up 0.90 percent today agreed in October to pay $8 billion for Grain Management's full portfolio of 800MHz low-band spectrum, pending approval from the Federal Communications Commission, and the deal roughly doubles the money of its biggest backer, Calpers, the largest US public pension, which manages about $650 billion 1.
The sale cleared $2 billion above what Grain hoped for
SpaceX paid $2 billion more than Grain hoped for, and Calpers doubles out
Data
| Value | |
|---|---|
| Grain's hoped-for price | 6 |
| SpaceX agreed price | 8 |
| Calpers invested (more than) | 0.5 |
| Calpers gets back (at least) | 1 |
The auction premium shows how scarce the spectrum was
Grain initially hoped to get $6 billion from the licenses; it locked in $8 billion 1. That gap is a bidding contest priced in. Bloomberg previously reported both SpaceX and AST SpaceMobile−8.20% — AST SpaceMobile, down 8.20 percent today sought this exact portfolio 1, and AST, the listed satellite-to-cell company whose largest customers are AT&T+0.50% — AT&T, up 0.50 percent today and Verizon+0.48% — Verizon, up 0.48 percent as of its last quote, sank to a 52-week low of $39.02 twelve days after the deal was agreed 4. The loser is public; the winner's cost sits on private books.
Satellites own the sky; the bottleneck is now the ground network
The chain runs hop by hop. Low-band spectrum is the piece that reaches indoors, which satellites alone historically could not 1. SpaceX pairs it with more than 10,000 Starlink satellites 1 and, per Qualcomm's+1.38% — Qualcomm, up 1.38 percent as of its last quote chief executive Cristiano Amon on November 4, will power Starlink Mobile's nationwide terrestrial 5G network from 2027 3.
The next link is the expensive one. Analysts at TD Cowen estimate a nationwide terrestrial network would cost more than $80 billion, and SpaceX holds only a fraction of the big carriers' spectrum 2. T-Mobile's technology chief says the licenses alone cannot match established networks' capacity 2. Musk bought the license; the capex is the bottleneck, and it is measured in years.
The sellers cash out while the carriers carry the risk
Grain's investors and Calpers' more than 2 million members cash out at roughly twice their money, at least $1 billion on the more-than-$500 million stake 1. Qualcomm books the chip contract 3. Carrying the risk are AT&T, Verizon and T-Mobile+0.20% — T-Mobile, up 0.20 percent as of its last quote, plus AST, which wanted these licenses and lost them 14. The next markers are plain: FCC approval of the sale, and the 2027 start of the Qualcomm-powered rollout 14. When either lands, this story moves one hop further into the carriers' revenue.
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