Telecom stocks in Australia, NZ slide after SpaceX spectrum deal

Telecom stocks in Australia and New Zealand tumbled on Monday after SpaceX's acquisition of a nationwide spectrum portfolio in the US stoked fears that satellites could challenge legacy telecom firms and their network coverage.

Australia's top telecom firm Telstra shed 2.5% to finish at a six-week low, while no.3 operator, TPG Telecom, lost nearly 5% in its worst day since early June. Spark New Zealand slipped 1.8%.

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SpaceX last week struck a deal to buy a nationwide low-band spectrum portfolio, moving Elon Musk's satellite venture closer to mounting a direct, orbital challenge to legacy wireless giants across the United States.

That sent telecom stocks in the U.S. and Europe tumbling on concerns over growing competition from satellite-based mobile services.

Low-band spectrum can travel longer distances and penetrate buildings and other obstacles more effectively than higher-frequency airwaves.

"Investors fear the U.S. is just the first market, and that incumbents' biggest advantage, coverage, is losing its value," said David Tuckwell, CIO at ETF Shares in Sydney.

Tuckwell sees coverage-reliant Telstra as most exposed, though the near-term threat is to regional pricing power, not subscribers.

Citi analysts said, "While SpaceX's spectrum purchase is likely to weigh on Telstra's share price, it also shows the importance of having terrestrial spectrum".

Citi reiterated their "buy" call on Telstra citing upside to 2027 financial earnings guidance.

Australia's mobile market is dominated by Telstra, Singapore Telecommunications-owned Optus, and TPG Telecom, with Superloop and Aussie Broadband jostling at the fringes.

Superloop shed 2.4%, while Aussie Broadband lost nearly 2%.