SpaceX Is Entering the Telecom Business... Will South Korea's Big Three Carriers Go Bust? [Weekend Money]

Mirae Asset: "Limited impact... Overweight related equipment"

An analysis has found that the impact on South Korean telecom carriers will be limited as aerospace company SpaceX moves closer to entering the mobile communications market.

Choi Yujin, an analyst at Mirae Asset Securities, said, "Competition in the U.S. mobile communications industry may intensify, but we believe it is difficult to apply the same impact to South Korea's three telecom carriers."

On October 8, SpaceX announced an agreement to acquire Grain Management's portfolio of licenses for nationwide 800 MHz spectrum in the United States. After the announcement, shares of the three major U.S. carriers—Verizon, AT&T and T-Mobile—fell 8.8%, 9.8% and 13.3%, respectively. South Korea's three carriers—SK Telecom, KT and LG Uplus—also fell sharply, spreading concerns about intensifying competition to domestic telecom stocks.

According to Choi, the market is focused on the possibility that SpaceX could expand beyond using satellite communications to cover areas without service and become a mobile carrier combining satellite and terrestrial networks. "We believe the market reaction reflects concerns about weaker pricing power over the medium to long term and higher customer retention costs, rather than short-term subscriber losses," he said. "However, domestic stock price reactions should be distinguished from the actual impact on the business."

He said the impact on South Korea's three telecom carriers would be limited. "The effect of U.S. spectrum licenses does not extend to South Korea, and given domestic regulations, service quality and the economics of existing terrestrial networks, it is unlikely that satellite communications will replace core mobile services," Choi said. "Nor can we conclude that investment in terrestrial networks will necessarily decline, which means telecom equipment investment is unlikely to be affected."

Choi instead emphasized that an overweight strategy for related equipment remains valid, given existing carriers' investments in capacity and quality, as well as the infrastructure needed to combine satellite and terrestrial networks.

This content was produced with the assistance of AI translation services.