MW AST SpaceMobile and Starlink may prove friend, not foe, to these wireless stocks

By William Gavin

Are new satellite developments a worrying sign for traditional broadband operators? Not so fast, say Citi analysts who see a 'win-win' situation on the horizon.

T-Mobile U.S. has led the charge to incorporate low-Earth-orbit satellites in its business. It first began working with Elon Musk's SpaceX on a partnership in 2022.

Some new players are entering the broadband arena, and that could actually be a good thing for established telecommunications companies.

Citi analysts recently took a look at developments at SpaceX's Starlink, AST SpaceMobile Inc. (ASTS) and others, as the companies make progress on satellites capable of beaming high-speed internet to customers and start to commercialize them.

The developments might seem concerning to telecommunications investors, since "broadband remains among the few growth areas" for the sector. But the Citi team sees only mild competitive risk - and more likely the chance that satellite-internet advancements prove a "win-win" for incumbent players like AT&T Inc. $(T)$ and T-Mobile U.S. Inc. $(TMUS)$

Commercial satellite companies increasingly are developing constellations operating in low-Earth orbit $(LEO)$, or at an altitude of no more than about 1,200 miles. The total addressable market for that segment could be about $200 billion, Bank of America analysts said earlier this year.

The analysts said that incumbents and new entrants have a few reasons to work together, including so that commercial satellite firms can avoid the hassle of winning over global regulators. Each country has their own regulations and licenses that govern telecommunications services, which can be tricky and time-consuming to navigate.

Partnerships could help LEO broadband operators more easily enter markets and begin generating revenue.

Satellite operators could also help wireless providers bring service to rural or remote areas that have been historically unprofitable for service expansions. According to T-Mobile, some 500,000 square miles of the U.S. are unreachable by terrestrial cell towers.

That's why T-Mobile in July commercially launched a direct-to-device service in partnership with Starlink and its 650 satellites, giving customers coverage across previously unreachable land.

Amazon.com Inc. (AMZN) plans to begin some commercial services in early 2026, while AST SpaceMobile plans to give Verizon Communications Inc. $(VZ)$ customers space-based cellular broadband next year. On Friday, AST SpaceMobile said it will launch the largest commercial phased array in LEO in December, expanding its network.

"Our next-generation satellites will soon enable ubiquitous cellular broadband coverage direct to everyday smartphones from space," AST SapceMobile Chief Executive Abel Avellan said in a statement.

Traditional internet providers probably don't have to worry much about satellite service supplanting core broadband offerings in the eyes of consumers. Fiber broadband and other terrestrial broadband options provide a "simply superior" service, Citi analysts noted, adding that the infrastructure involved also has a much longer shelf life than satellites.

There's also the matter of cost. Access to Starlink and other services comes at a premium compared to fixed-line fiber or 5G fixed wireless access, according to Citi. In the U.S. and Europe, those services can cost two or three times more than terrestrial options, or as much as five times more in emerging markets.

But LEO satellites have their advantages. While unit costs are far more expensive, satellites offer much cheaper coverage for larger areas. And interest has grown over the years: Starlink says it has more than 8 million global subscribers, at least 2 million of which are based in the U.S.

And while broadband is a big focus, commercial satellite operators could come to compete with established providers in the wireless market, Citi said.

One likely scenario would involve companies with their own spectrum adopting a direct-to-consumer model and selling a complementary satellite service. Citi noted that consumers may still prefer their current providers and merely tack on satellite services to their bills, like through the $10 monthly amount T-Mobile charges customers for Starlink use.

Another option would be to establish a mobile virtual network operator (MVNO) model, meaning satellite companies would become the face of their own brands that both leverage terrestrial networks and offer in-house satellite capabilities. But the economics of that "may not be so great," Citi added.

There's been speculation that SpaceX might pursue that route, especially after the company agreed to buy almost $20 billion worth of spectrum from EchoStar Corp. $(SATS)$ earlier this month. However, Citi believes that spectrum wouldn't be enough to create a disruptive and competitive product.

Jonathan Freier, who leads T-Mobile's consumer division, said a MVNO structure "might make a lot of sense" for Starlink - but added that he's not too worried about the possibility.

Starlink is a "nice addition to some of those areas where you need coverage," Freier said at a Wells Fargo conference on Wednesday, according to a transcript. "As a mainstream kind of replacement for wireless, I don't see that happening at all. Nice complement, though, to our overall business."

-William Gavin

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November 22, 2025 09:30 ET (14:30 GMT)

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