"You'd think that investing in the fundamental infrastructure requires to survive as a business would put shares up, not down."
It's much riskier than just leasing parts of BT's network or buying white-labelled wholesale products.
The general expectation amongst investors regarding Telecoms is "Build it and go bust". Infrastructure is hard and there's a very real chance of price declines meaning that it becomes impossible to pay back the original loans - as happened with the cable companies in the 90's. At that point a rival comes along and picks up your assets in a fire sale for peanuts. Better to be an investor in that rival than in the company that did the building.