Starlink Mobile deemed an existential threat to Verizon

Verizon may have the most to lose from the impending threat of Starlink Mobile. With SpaceX forging ahead with its goal of deploying a network, AT&T, T-Mobile, and Verizon are evidently feeling the pressure, but the latter is in an especially precarious position.

Negative growth and mounting debt

Excluding revenue from its purchase of Frontier Communications, Verizon's organic revenue growth is negative, per Seeking Alpha.

At a time when disruptive technologies like global satellite constellations were emerging, Verizon chose to spend $20 billion buying a legacy terrestrial broadband company while cutting back on infrastructure investment. Meanwhile, Verizon's debt has ballooned to $165.2 billion.

Despite its weak balance sheet, Verizon pays up to $12 billion in dividends annually.

Meanwhile, Starlink is spending aggressively to build a global satellite network.

Best-case scenario

Some industry insiders still believe that SpaceX is signaling its intention to deploy a network just to coerce AT&T, T-Mobile, or Verizon into an MVNO deal. Even if SpaceX makes good on its threats, it may not start building its terrestrial component until 2030.

The real problem for Verizon is that it doesn't have organic growth.

Hammering stock prices for an acquisition

SpaceX has purchased 14 MHz of low-band spectrum in the 800 MHz band in the hope of creating the fourth facilities-based carrier.

As BNP Paribas Equity Research senior analyst Sam McHugh notes, SpaceX still doesn't have enough spectrum for full network deployment. However, its FCC filing says that it wants to roll out "terrestrial infrastructure on towers, rooftops and other structures," a shift from its previous plan of using femtocells.

An MVNO deal will only make it easier for SpaceX to compete.

SpaceX may alternatively be applying pressure on the Big Three to tank their stock valuations and make a potential takeover cheaper. A report in July said that CEO Dan Schulman was getting the house in order for a sale to SpaceX, though Verizon rebuffed it.

Most analysts single out T-Mobile as the preferred target.

Nevertheless, BNP views Verizon as most exposed to SpaceX's threat due to its dominant wireless share and high rural market share.

Verizon needs to get its ducks in a row

While Verizon has shot back to the top of image perception rankings under Schulman and its customers are the least likely to jump ship to SpaceX, the new CEO needs to reevaluate his capital allocation strategy. Unless, of course, Verizon is being prepped for a sale and he would rather not invest more money in a sinking ship.