US and European telecom stocks tumbled on Friday (October 9) after SpaceX’s acquisition of low-band spectrum heightened concerns over growing competition from satellite-based mobile services.

T-Mobile US, Verizon and AT&T fell between 5% and 6% in premarket trading, while the STOXX Europe 600 Telecommunications index dropped 3.3% to its lowest level since February.

Deutsche Telekom, Europe’s largest telecom operator by market value, fell 8%, while Britain’s Vodafone dropped 4.5%, France’s Orange lost 3.4%, and Spain’s Telefonica slipped 3.3%.

The slide came after reports that SpaceX had agreed to acquire private-equity firm Grain Management’s nationwide 800 MHz spectrum portfolio in a deal valued at about $8 billion, bolstering the company’s ambitions in satellite-to-cellular connectivity.

”We believe the Grain transaction is a clear sign that SpaceX is going to be a more aggressive acquirer of spectrum,” Morgan Stanley analysts said in a note, adding that any threat to established carriers is likely to materialise gradually, starting in rural markets.

Low-band spectrum can travel longer distances and penetrate buildings and other obstacles more effectively than higher-frequency airwaves, enabling SpaceX’s Starlink Mobile push.

While the companies did not share financial terms of the deal, the Wall Street Journal reported, citing sources, that it is worth $8 billion.

SpaceX shares rose 3.6% after announcing the acquisition, which remains subject to regulatory approval.

Telecom tower operators bucked the sector-wide selloff, as investors bet SpaceX’s wireless ambitions could ultimately drive demand for additional terrestrial infrastructure.

American Tower, Crown Castle and SBA Communications advanced between 5% and 6%.

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