The signs were already in plain sight that Elon Musk’s Starlink was positioning itself to challenge the big three U.S. wireless operators: Verizon, AT&T, and T-Mobile.

One of the clearest signals was SpaceX's $17 billion deal for EchoStar wireless spectrum last year, followed by a recent trademark filing for "Starlink Mobile."

We noted in December:

Now, the Financial Times reports that SpaceX Chief Operating Officer Gwynne Shotwell told institutional investors during the IPO roadshow that the company is considering selling mobile contracts directly to consumers and may eventually build its own terrestrial U.S. mobile network.

"The move would require Starlink to build a new retail offering by selling mobile contracts to individual customers, competing directly with the three big US network operators Verizon Wireless, AT&T and T-Mobile," FT wrote in a note.

The plan follows SpaceX's $17 billion purchase of EchoStar spectrum licenses last fall, a deal that could be viewed as the foundation for a terrestrial mobile network.

"A direct-to-consumer mobile offering would give SpaceX access to a far larger market than satellite broadband alone, potentially reducing its reliance on telecoms partners that currently act as intermediaries between Starlink’s satellites and end users," FT wrote in the report.

Starlink has already signed a number of deals with carriers, notably with T-Mobile:

Pathways for Starlink:

TD Cowen analyst Gregory Williams told clients that if SpaceX/Starlink fail to secure an MVNO/retail mobile deal, then the next logical move would be to acquire T-Mobile.

Williams explained why:

Acquire a U.S. Wireless Carrier. Should SpaceX fail to reach an MVNO deal, or simply desires owners' economics and quickly, T-Mobile seems to us the clear choice given their momentum (HSD % growth), maverick culture, pure-play wireless provider, and existing Starlink partnership. Another thought would be to acquire AT&T. SpaceX could sell AT&T's fiber homes (LEO solutions will likely have a very difficult time succeeding in a Cable/Fiber overlapped footprint) at ~$2,500/home essentially paying for AT&T's wireless network at a far less expensive price compared to T-Mobile. As for financing, SpaceX could theoretically execute a secondary offering for only modest dilution to its current substantial market cap.

Williams noted that any Starlink entry into the wireless industry is bearish for legacy operators.

He continued:

Any entry of SpaceX could be highly bearish for the wireless industry. As such, we are hopeful but not convinced that no carrier will budge and cave on an MVNO agreement. As for M&A, SpaceX would need a willing seller. With T-Mobile the best fit, this SpaceX dynamic could be what motivated T-Mobile owner Deutsche Telekom to seek total ownership and control of its US cash cow subsidiary as reported in April (LINK). In a defensive move, T-Mobile could acquire a cable company. While investors could roll their eyes on purchasing "yesterday's technology", and it would be an overt contradiction to T-Mobile management's messaging, a cable acquisition could serve two purposes.

Related:

Starlink's true intention was revealed by Musk last fall: 

Speculation mounts...