Deutsche Telekom CEO says investors are pricing in SpaceX

Tim Höttges has said Deutsche Telekom has to assume SpaceX will enter the U.S. mobile market, and that investors are already pricing in lower long-term profitability for established wireless operators. He spoke to reporters on Thursday, November 5.

He said the company has to assume the entry is coming. Höttges, Deutsche Telekom's chief executive, said the company had to assume SpaceX's entry into the U.S. mobile market would happen, even though building a nationwide network would require significant investment and time. "We have to assume that it is coming," he told reporters.

He tied weaker sector valuations to a new rival. Höttges said declining sector valuations reflected expectations that a new entrant would erode profitability and intensify competition. "If you look at the multiples that Verizon, AT&T and Deutsche Telekom have lost over the last six months, the expectation is simply that the three competitors in the market will be able to generate less profitability on a sustainable basis," he said. He added that investors also expected a new rival to gain market share and increase pricing pressure.

Satellite service does not replace a ground network. Höttges said SpaceX could pursue a different business model from traditional telecom operators. He said satellite services alone could not replace terrestrial mobile networks, particularly in cities and for indoor coverage.

Deutsche Telekom wants more than one satellite option. The report says T-Mobile was Starlink's first direct-to-cell partner. Höttges said Deutsche Telekom wanted alternatives and did not want a monopoly in satellite services.

He did not give a date or a cost. The comments do not say when a SpaceX mobile network would launch, what it would charge, or how much share it would take. They also do not say how far the cited valuation change ran, only that Höttges described multiples lost over the last six months.