Charter Communications NASDAQ:CHTR jumps on SpaceX partnership speculation, but analysts said the potential competitive impact on the U.S. wireless market may be limited, according to a Monday research note from BNP Paribas.
The report follows media coverage that Charter Communications NASDAQ:CHTR and Space Exploration Technologies NASDAQ:SPCX have discussed a possible arrangement that could allow Starlink mobile traffic to use Charter's terrestrial internet infrastructure. Investors viewed the talks as a possible step toward expanding SpaceX's wireless ambitions, sending Charter shares higher while major wireless carriers declined.
Even so, BNP Paribas said Charter Communications NASDAQ:CHTR would still face structural limitations under such a partnership. The firm noted Charter's mobile business relies on a mobile virtual network operator agreement with Verizon Communications (VZ), limiting its ability to provide nationwide wireless access to SpaceX customers. While Charter's Wi-Fi hotspots and small-cell network could improve urban coverage, they would not replace a full cellular network.
BNP Paribas added that Space Exploration Technologies NASDAQ:SPCX would likely still require a partnership with a major wireless carrier to build a competitive nationwide service. The firm also said developing an alternative network could take years and require more than $100 billion in spectrum and infrastructure investment.