Elon Musk’s SpaceX and Charlie Ergen’s EchoStar have reached a final deal to sell the latter’s AWS-4 and H-block spectrum licenses for about $17 billion, which could include up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock, the companies announced Monday.
They added, “The final agreement stipulates that SpaceX will pay a total of roughly $2 billion in cash interest payments due on EchoStar debt through November 2027.”
As part of the deal, SpaceX and EchoStar will sign a long-term business contract that “will enable EchoStar’s Boost Mobile subscribers — through its cloud-native 5G core — to access SpaceX’s next-generation Starlink Direct to Cell service.”
After Musk’s SpaceX complained that EchoStar wasn’t using 2 GHz/AWS-4 spectrum and should allow it and other satellite companies to do so, FCC Chairman Brendan Carr expressed concerns in a May letter regarding EchoStar’s 5G network buildout obligations and the use of certain spectrum licenses.
“Over the last ten years, we have procured spectrum and enabled global 5G spectrum standards and devices, all with the vision that satellite-based direct-to-cell connectivity would revolutionize global communication,” stated Hamid Akhavan, president and CEO of EchoStar.
“This deal with SpaceX carries on our tradition of prioritizing the customer by enabling the integration of EchoStar’s AWS-4 and H-block spectrum with SpaceX’s rocket launch and satellite capabilities to achieve the direct-to-cell vision in a more creative, cost-effective, and expedient manner for consumers globally.”
“We are thrilled to be completing this transaction with EchoStar as it will further our mission to end mobile dead zones worldwide,” stated Gwynne Shotwell, president and COO of SpaceX.
Millions of people have already been connected by SpaceX’s first-generation Starlink satellites, which feature Direct-to-Cell capabilities, when they needed it most, such as during natural disasters, so they could communicate with loved ones and emergency responders, or when they would have otherwise been disconnected. The next-generation Starlink Direct to Cell satellites, which will feature a significant performance improvement, will enable us to enhance coverage for clients worldwide. These satellites will be developed by SpaceX in the next chapter, utilizing exclusive spectrum.
EchoStar stated that it expects the Federal Communications Commission’s (FCC) questions to be addressed by the SpaceX deal “along with the previously announced spectrum sale [to AT&T].”
The necessary regulatory approvals, as well as “other closing conditions,” must be met before the proposed deal may close. Among other things, the company stated that the money raised would be utilized to “retire certain debt obligations and fund EchoStar’s continued operations and growth initiatives.” “This transaction will not affect the ongoing operations of EchoStar’s Dish TV, Sling, and Hughes.”
