Sirius XM shares jumped 2.7% in morning trading after market participants linked SpaceX's $8 billion deal for Grain Management's spectrum portfolio to the value of the company's licensed satellite spectrum. According to StreetInsider, SpaceX agreed to pay $8 billion for up to 14 MHz of paired 800 MHz spectrum from Grain Management, a portfolio that came from T-Mobile and still needs FCC approval, working out to about $571 million per megahertz. Applying that price to an estimated 25 MHz of Sirius XM spectrum, the article puts a rough value of about $14.3 billion on those licenses, above the company's $9.1 billion market value, though it flags the figure as an estimate because satellite-radio licenses are not the same as 800 MHz cellular spectrum. Sirius XM's licenses are S-band, built for satellite radio rather than phone service, and the SXM-11 satellite went into full service in late September, covering about 8 million square miles and about 210 million equipped vehicles. Morgan Stanley, in a note cited by Reuters, said the Grain deal shows SpaceX is becoming a more aggressive buyer of spectrum, with any pressure on the carriers likely to show up first in rural markets. After the initial pop, the shares cooled down to $26.67, up 1.3% from the previous close.
Deutsche Telekom AG
T-Mobile US IncSirius XM Holding IncSpaceX's $8B spectrum deal implies a ~$14.3B valuation for Sirius XM's licensed spectrum, above its $9.1B market value, lifting valuation hopes.
Morgan Stanley
