T-Mobile (NASDAQ:TMUS) may be headed to the skies in more ways than one. SpaceX, the space travel venture founded by Elon Musk, has announced that it will be partnering with the wireless provider to “increase connectivity” on a global scale. Reuters reports that “SpaceX’s satellite communications division Starlink is launching a mega-constellation of satellites to low Earth orbit with the aim of providing internet connectivity to underserved regions of the world.” News of the looming partnership sent TMUS stock up this morning and it has been rising steadily since.
Following Russia’s invasion of Ukraine in February 2022, Musk employed Starlink satellites to help the small country stay connected. Now he has turned his focus to helping other parts of the world connect to the internet and is taking T-Mobile along for the ride. The company, which usually lives in the shadow of its larger peers AT&T (NYSE:T) and Verizon (NYSE:VZ) is about to have its day in the spotlight.
Let’s take a look at what investors can expect from this new partnership.
The Countdown for TMUS Stock
As of this writing, TMUS shares are only up 1% for the day. But the real catalyst for TMUS stock will come tomorrow. Earlier today, Musk retweeted a post from SpaceX advertising an event between himself and T-Mobile President and CEO Mike Sievert.
This is something special https://t.co/LSMIRYT8zf
— Elon Musk (@elonmusk) August 24, 2022
While Musk hasn’t provided much detail beyond the tweet, there’s plenty to reason to expect that it will indeed be “something special.” The potential partnership has the potential to combine Starlink’s satellite internet technology with T-Mobile’s 5G network. The Verge has floated the possibility that the announcement of a partnership is designed to strengthen the coverage provided by both companies. But given Musk’s well-documented “quest to help humanity,” it is likely that the partnership is aimed at increasing wireless coverage for underserved parts of the U.S. and beyond.
That would also prove highly profitable for T-Mobile, as it could allow it to expand its 5G technology to remote parts of the U.S. The company has already taken steps to provide wireless plans and technology to lower-income households. Now it may have the opportunity to take it much further by helping customers who don’t live near cellular towers access its 5G technology. As NPR reports:
Tens of millions of people across the country, especially in rural areas and tribal lands, lack the kind of they need for things like work, school and telehealth.
All such people are potential clients for the internet provider who can find a way to get them what they need. SpaceX has the technology that T-Mobile needs to accomplish exactly that. And when one partner is able to secure a substantial share of a lucrative market, it benefits both parties.
The Botton Line
While this is a highly likely scenario, we won’t know anything for sure until tomorrow’s meeting. Until the event kicks off, shares will keep rising.
Regardless of what Musk and Sievert announce, it will boost TMUS stock in the short term. No company sees its shares fall after announcing a partnership with Musk. The question is, how long will it stay elevated? That answer depends on the announcement but any joint-venture with SpaceX will be good for T-Mobile. TMUS stock has been hailed as a safe investment amid market uncertainty and Federal Reserve rate hikes. A partnership with Elon Musk is all it needs to skyrocket even further.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
