Musk accelerates building of the "fourth-largest U.S. carrier"! SpaceX (SPCX.US) plans to acquire 80,000 cellular base stations, creating new opportunities for telecom tower companies.

SpaceX (SPCX.US) plans to acquire at least 80,000 cellular base station sites in the United States and is currently in negotiations with at least one major cellular infrastructure company to achieve this goal, according to people familiar with the matter. The agreements would further solidify the rocket and satellite giant's path to building the fourth-largest nationwide wireless carrier in the U.S., the people said. One of the companies in talks with SpaceX is Crown Castle Inc. (CCI.US), which ranks alongside American Tower (AMT.US) and Vertical Bridge (VRT.US) as one of the largest owners of cellular communications towers in the United States. Mobile communication networks rely on antennas deployed on communication towers across the country to transmit wireless signals. Carriers typically lease equipment installation space on tower sites because it is more cost-effective than owning and maintaining towers themselves, partly because these facilities can be shared by multiple carriers. Deals with SpaceX could be worth billions of dollars. On Wednesday's earnings call, when asked whether Crown Castle Inc. was in discussions with SpaceX, Amazon.com, Inc. (AMZN.US), or other satellite-based telecom service providers about leasing arrangements, Crown Castle Inc. CEO Chris Hillabrant said: "You can assume we are in conversations with all relevant parties." He declined to disclose specific customer information. After the negotiations were reported, Crown Castle Inc. shares rose as much as 10% in after-hours trading. Shares of AT&T (T.US), Verizon (VZ.US), and T-Mobile US (TMUS.US) each fell about 5% on concerns that a new entrant would intensify competition. SpaceX CEO Elon Musk has been unabashed about his intention to build an independent wireless carrier from scratch, which would expose the existing dominant carriers to greater competitive pressure from a well-funded and politically influential new rival. Although the plan requires substantial investment, Musk is pressing ahead. SpaceX recently acquired low-band spectrum, which will help the company integrate Starlink satellites and other elements to create what Musk describes as "a major mobile operator." The Federal Communications Commission (FCC) has approved the company to launch 15,000 satellites dedicated to providing direct-to-cell mobile communication services. Wireless tower sites are another key piece of infrastructure SpaceX must build to establish reliable connections with ground-based users. "We're going to build the terrestrial network to enable broad coverage so that anywhere SpaceX and Starlink are licensed to operate, we can have full connectivity," Musk said this week on SpaceX's earnings call. He said satellite launches combined with spectrum acquisitions "will pave the way for Starlink Mobile to become a major mobile operator in the United States." Crown Castle Inc. CEO Hillabrant said SpaceX's acquisition of low-band spectrum is a "major milestone" toward achieving widespread mobile coverage. Earlier this month, after news of SpaceX's latest spectrum acquisition was announced, shares of tower companies all rose, signaling that the market expects these tower companies to gain substantial business as SpaceX seeks to build larger-scale infrastructure to deploy its newly acquired spectrum. SpaceX has previously said it plans to use its home internet devices to transmit mobile communication signals around customer terminal installation locations. However, research firm MoffettNathanson LLC said these sites are located where users are but are not necessarily in the positions needed to provide consistent and reliable coverage across the entire network.