BofA warns Starlink’s spectrum plans could pressure Apple

what happened

Barron's reports that SpaceX’s purchase of a portfolio of low-band spectrum licenses could create a risk for iPhone sales. Starlink Mobile aims to become a major U.S. carrier and compete with AT&T, Verizon Communications and T-Mobile US. Shares of all three companies dropped more than 10% on Friday after the deal was announced, as investors assessed how Starlink could eventually take market share from established operators.

BofA Securities analyst Wamsi Mohan said Starlink could seek customers by offering competitive service prices. That strategy could also mean smaller subsidies for new smartphones. Apple depends heavily on carrier promotions to sell iPhones, and Mohan described U.S. carriers as Apple’s largest structural marketing and financing partner.

If operators provide fewer incentives, fewer customers could upgrade their iPhones. Apple did not immediately respond to Barron's request for comment. Its shares rose 0.7% on Monday and are up 25% this year. The potential threat remains years away because building a competitive mobile network will take time. Mohan said much more work is needed, while Citi analyst Michael Rollins wrote on Oct. 9 that he does not expect SpaceX to materially affect the operating results of the three major telecom companies until at least 2029.

why it matters

Investors are focusing on how Apple and the carriers might respond, even though any material competitive impact appears distant. Mohan said heavier near-term promotions by carriers could support upgrades. He continues to rate Apple Buy with a $370 price target.

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