SpaceX to acquire EchoStar Spectrum licences portfolio in USD17b deal
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The news: US telecommunications and satellite company EchoStar has agreed to sell its portfolio of spectrum licences to SpaceX in a USD17 billion ($25.8 billion) deal.
The numbers: Under the terms of the agreement, SpaceX will pay up to USD8.5 billion in cash and issue up to USD8.5 billion in stock. Elon Musk’s SpaceX has also agreed to cover roughly USD2 billion in interest payments on EchoStar's debt obligations through late 2027.
The context: The deal will see EchoStar sell its full portfolio of AWS-4 and H-block spectrum licenses to SpaceX. The frequencies designated for satellite communications by the US Federal Communications Commission (FCC) and are known as advanced wireless services-4 or the 2 GHz band.
SpaceX and EchoStar will also 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 Starlink Direct to Cell service.
In May the FCC launched an investigation into whether EchoStar was meeting its obligations for its wireless and satellite spectrum rights, which requires it to carry terrestrial mobile transmissions as well as traffic between satellites and ground-based infrastructure.
The review was launched after SpaceX complained that the telecoms giant was not putting its spectrum holdings to use and asked the FCC to grant its pending applications for shared access to the AWS-4 band.
Regulators have been urging EchoStar to sell some of its airwaves, which saw the company sell spectrum licences to AT&T for around USD23 billion in August.
What they said: Hamid Akhavan, president & CEO, EchoStar said: "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."
Gwynne Shotwell, president & COO, SpaceX added: "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."
The sources: EchoStar press release, Reuters, Bloomberg
