AT&T (T), T-Mobile U.S. (TMUS), and Verizon (VZ), the three largest network providers in the U.S., on Thursday announced their preliminary agreement to form a joint venture. The goal is to jointly invest in satellite-based technologies to provide direct-to-device (D2D) network coverage to Americans, especially those in rural areas with more wireless dead zones, that is, lack of network coverage.
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New trading tool for ASTS bullsRoth Capital noted that the move “appears to be a Tier 1 shot across the Starlink D2D bow.” This suggests that the move might be a strategic countermove by the telco leaders against Starlink, the satellite internet unit of billionaire Elon Musk’s SpaceX aerospace company.
AST SpaceMobile Stock Soars 11% on JV Plans
Meanwhile, satellite telecom company AST SpaceMobile’s (ASTS) shares closed Thursday’s trading roughly 11% higher following the announcement. The plan by the network carriers comes weeks after AST secured the approval from the U.S. Federal Communications Commission to provide supplementary network coverage from space to ordinary mobile phones across the U.S.
In the joint statements, the telecom giants said they will work with satellite service providers to expand connectivity and deliver improved network performance to Americans living in rural areas and for use in emergencies. They believe that this will help to “nearly eliminate dead zones in the U.S. currently without mobile service, reaching previously unserved areas.”
‘A Key Enabler of This Transformation’
Already, AST partners with and has investments in Verizon and AT&T, alongside FirstNet, a public-private network provider, to achieve its goal of delivering a satellite-based D2D network. Yet, Roth Capital sees the JV as a win for AST, adding that it could lead to a business relationship with T-Mobile U.S.
AST, in a statement, also commended the proposed venture for working toward powering space-based cellular broadband connectivity for Americans. CEO Abel Avellan noted that AST plans to be “a key enabler of this transformation.”
However, AST dropped roughly 4% in early trading on Friday.
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TipRanks’ Stock Comparison tool shows that only T-Mobile U.S. has a Strong Buy rating from analysts. TMUS stock also leads with about 35% upside based on an average price target of $254.32.
