Shares of AT&T Inc. (T) edged slightly lower in late trading Wednesday after Wells Fargo initiated coverage with a bearish outlook, adding to investor concerns about the potential competitive threat posed by SpaceX's Starlink satellite internet network. The stock closed at $21.12, down less than 0.1%, while Verizon Communications Inc. (VZ) slipped 0.3% and T-Mobile US Inc. (TMUS) dropped 2.5%, reflecting sector-wide unease.
Wells Fargo Warns of Starlink Disruption
Wells Fargo analyst Steven Cahall launched coverage of AT&T with an Underweight rating and set a price target of $18, signaling expectations of underperformance relative to peers. In a research note, Cahall highlighted SpaceX's growing connectivity ambitions as a key risk for wireless carriers. He argued that AT&T is the least likely among the three major U.S. carriers to secure a mobile virtual network operator (MVNO) deal with Starlink, which would allow the satellite operator to use a carrier's network to offer mobile services. If major carriers resist, Cahall suggested SpaceX could build its own fourth wireless network, a scenario that would intensify competition.
Satellite Investment and Market Implications
Morgan Stanley analyst Sean Diffley estimated that SpaceX and Starlink could invest nearly $200 billion in global connectivity capital expenditures over the next five years, with mobile and spectrum spending accounting for roughly 80% of that total. Such massive investment underscores the potential for satellite internet to expand beyond rural broadband into the mobile market, directly challenging the core revenue streams of AT&T and Verizon.
The broader market faced headwinds Wednesday, with the S&P 500 falling 0.28% as oil prices climbed and new U.S.-Iran tensions emerged. The Dow Jones Industrial Average dropped 1.09%, while the Nasdaq Composite managed a slight 0.20% gain. "Duration is the key here. How long does this go on?" asked Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, commenting on the market's uncertainty.
AT&T's Fiber Strategy and Upcoming Earnings
Despite the bearish sentiment, AT&T continues to bet on its fiber broadband and bundled wireless offerings. In the first quarter, the company added 292,000 new fiber subscribers and 294,000 postpaid phone customers. CEO John Stankey described the quarter as AT&T's "best first quarter ever" for advanced connectivity internet net adds. The company is scheduled to report second-quarter results before the New York Stock Exchange opens on July 22, followed by a conference call at 8:30 a.m. ET. AT&T has maintained its quarterly common dividend at 27.75 cents per share, payable August 3.
Outlook and Risks
The bearish view is not without counterpoints. Starlink could opt for partnerships rather than building extensive ground infrastructure, and satellite internet may remain a niche service for rural or backup connectivity longer than some anticipate. However, the risk for AT&T is clear: if a new mobile entrant drives down prices before fiber gains can compensate, both service revenue and subscriber growth could disappoint. The NYSE's main session closed at 4:00 p.m. Eastern, with after-hours trading available on select platforms.
