Key Highlights

● T-Mobile US (TMUS) fell about $22.76 to close at around $148.58 on Friday, one of the S&P 500's biggest drops.

● SpaceX reportedly agreed to buy Grain Management's nationwide 800 MHz low-band spectrum for about $8 billion in cash.

● SpaceX is currently T-Mobile's satellite-coverage partner, and investors fear Starlink Mobile could compete directly for customers.

● AT&T and Verizon also tumbled, and the three carriers lost about $39 billion in combined market value.

T-Mobile US (NASDAQ:TMUS) crashed on Friday, falling about $22.76 to close at around $148.58. It was the steepest decline among the three national wireless carriers and one of the biggest drops in the S&P 500. During the session the stock traded between $148.42 and $156.89, and it touched its lowest level in more than 33 months in early trade.

The move followed news from SpaceX (NASDAQ:SPCX). SpaceX has agreed to buy Grain Management's nationwide 800 MHz low-band spectrum for about $8 billion in cash, according to a media report. SpaceX said the purchase "will pave the way for Starlink Mobile to become a major mobile carrier in the US." The deal requires approval from the Federal Communications Commission.

From partner to potential rival

What made the news especially significant for T-Mobile is that SpaceX is currently its partner. The two companies work together to provide satellite coverage for T-Mobile customers in dead zones where there is no cell signal. Investors now fear that relationship could turn into competition, with Starlink Mobile Marketing its own service directly to consumers. One market commentary described SpaceX as a close ally that may soon become a fierce competitor.

Evercore ISI analyst Kutgun Maral said "The carriers' best argument just got weaker" and "This strategic shift places SpaceX in a stronger negotiating position." Scotiabank (NYSE:BNS) analyst Maher Yaghi cut his price targets on all three carriers.

The whole sector sold off

AT&T (NYSE:T) and Verizon (NYSE:VZ) also tumbled, and together the three carriers lost about $39 billion in market value, according to market data. Cable operator Charter Communications (NASDAQ:CHTR), which sells mobile service, fell too, and satellite-to-phone company AST SpaceMobile (NASDAQ:ASTS) slid. Communication services was the worst-performing sector in the S&P 500. The pain spread to Europe, where Deutsche Telekom, T-Mobile's largest shareholder, fell sharply, according to a media report.

The winners were tower companies. Crown Castle (NYSE:CCI) led the S&P 500, while American Tower (NYSE:AMT) and SBA Communications (NASDAQ:SBAC) also jumped, as investors bet a new national operator would need to rent space on towers.

Market context

Away from telecoms, the market was firm. The S&P 500 rose 46.18 points to 7,811.54, the Dow gained 423.31 points to 51,654.95, and the Nasdaq Composite added 172.83 points to 27,366.17. Software stocks rebounded after Thursday's AI selloff, and health care and real estate led the sector rankings.

Wireless carriers are often viewed as defensive stocks, valued for steady cash flows and, in many cases, dividends. Friday's move showed how quickly that perception can shift when a well-funded new competitor appears. The 10-year Treasury yield, meanwhile, held near a 24-year high, which adds pressure on companies that carry large amounts of Debt to fund their networks and spectrum.

FCC Review and Verizon's October 26 Call Hold the Next Clues for T-Mobile

Monday is Columbus Day: stocks trade, the Bond Market is closed. On the macro side, September consumer prices are released on Wednesday, October 14, with producer prices and retail sales on Thursday. Bank Earnings run from October 13 to 16, and the Fed meets on October 27 and 28. The FCC review of SpaceX's spectrum purchase will be closely followed, along with any details from SpaceX about Starlink Mobile's pricing and launch plans. Verizon's third-quarter call on October 26 may offer the first carrier commentary on the competitive picture.