T-Mobile stock: Can dip buyers overcome the growing Starlink threat?

T-Mobile US shares edged up about 0.39% in overnight trading late Sunday after plunging more than 13% on Friday, October 9, in their steepest single-day decline since the company began trading in 2013. The selloff followed SpaceX’s move to expand its wireless ambitions, raising concerns about future competition for established telecom operators. (Sources: Stocktwits, Reuters)

Despite the sharp decline, retail investors continued buying T-Mobile shares, with Stocktwits reporting that sentiment had reached its most bullish level since July. Some investors viewed the selloff as an opportunity to buy at lower prices, although renewed optimism does not guarantee a sustained recovery.

SpaceX agreed to acquire spectrum in the 800 MHz band from Grain Management in a deal valued at about $8 billion. The low-band spectrum could help Starlink Mobile expand coverage and improve connectivity indoors, strengthening its ability to compete with traditional wireless operators. The transaction remains subject to regulatory approval.

The selloff spread across the US telecom sector as investors reassessed the competitive threat from Starlink Mobile. On Friday, AT&T shares fell about 9.9%, and Verizon dropped 8.8%, while T-Mobile lost more than 13%. The broad decline suggests investors are reassessing the industry's long-term competitive landscape, rather than reacting solely to company-specific developments.

Starlink's Direct to Cell service connects compatible existing 4G LTE phones to satellites in areas without conventional cellular coverage. Additional spectrum could help SpaceX broaden its reach and challenge established operators. However, regulatory hurdles, network deployment and the ability to compete at scale remain important uncertainties.

The sharp selloff has raised the question of whether traditional telecom stocks have fallen too far or are beginning to reflect a lasting competitive threat. A report by Barron's cited Citi's view that established carriers could retain earnings support from lower customer churn and longer device replacement cycles, while expecting a material impact from SpaceX on major telecom operators' results only from 2029.

T-Mobile's next quarterly earnings report is expected on October 28. Investors will be watching for updates on subscriber growth, customer retention, profitability and management's assessment of the competitive environment. The results could help determine whether the recent share-price decline reflects short-term fear or concerns about the company's longer-term outlook.

(Disclaimer: This slideshow is based on inputs from agencies. These do not represent the views of The Economic Times)