ENGLEWOOD, Colo. and HAWTHORNE, Calif.—EchoStar has entered into a definitive agreement with SpaceX to sell the company's AWS-4 and H-block spectrum licenses for approximately $17 billion. That consists of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock valued as of the entry into the definitive agreement, EchoStar reported.
Additionally, the deal includes provisions for SpaceX to fund an aggregate of approximately $2 billion of cash interest payments payable on EchoStar debt through November of 2027.
As part of the deal, SpaceX and EchoStar will enter into a long-term commercial agreement, which will enable EchoStar's Boost Mobile subscribers – through its cloud-native 5G core – to access SpaceX's next generation Starlink Direct to Cell service.
EchoStar said that it anticipates this transaction with SpaceX along with the previously announced spectrum sale to AT&T will resolve the Federal Communications Commission's (FCC) inquiries.
The deal follows pressure from the FCC, which launched an investigation into how Echostar was using its spectrum and whether it was abiding by the terms for its 5G spectrum. Elon Musk’s SpaceX had also been pushing the FCC to take away EchoStar’s satellite spectrum.
In late August, faced with FCC investigations into its spectrum licenses and large debts that could have pushed it into bankruptcy, EchoStar agreed to sell the company's 3.45 GHz and 600 MHz spectrum licenses (a total of 50 MHz of nationwide spectrum) to AT&T for about $23 billion.
"For the past decade, we've acquired spectrum and facilitated worldwide 5G spectrum standards and devices, all with the foresight that direct-to-cell connectivity via satellite would change the way the world communicates," said Hamid Akhavan, president & CEO, EchoStar. "This transaction with SpaceX continues our legacy of putting the customer first as it allows for the combination of AWS-4 and H-block spectrum from EchoStar with the rocket launch and satellite capabilities from SpaceX to realize the direct-to-cell vision in a more innovative, economical and faster way for consumers worldwide."
"We're so pleased to be doing this transaction with EchoStar as it will advance our mission to end mobile dead zones around the world," said Gwynne Shotwell, president & COO, SpaceX. "SpaceX's first generation Starlink satellites with Direct to Cell capabilities have already connected millions of people when they needed it most – during natural disasters so they could contact emergency responders and loved ones – or when they would have previously been off the grid. In this next chapter, with exclusive spectrum, SpaceX will develop next generation Starlink Direct to Cell satellites, which will have a step change in performance and enable us to enhance coverage for customers wherever they are in the world."
EchoStar said that the proceeds of this transaction will be used for, among other things, retiring certain debt obligations and funding EchoStar's continued operations and growth initiatives. Current operations of EchoStar's DISH TV, Sling and Hughes will not be impacted by this transaction.
