Shares of EchoStar jumped more than 17% on Monday after the telecommunications company unveiled a $17 billion deal with SpaceX to sell its AWS-4 and H-block spectrum licenses.
The agreement marks the firm’s second major spectrum transaction in recent weeks, further strengthening its balance sheet while advancing SpaceX’s ambitions in satellite-powered mobile connectivity.
On August 26, EchoStar announced a $23 billion spectrum sale to AT&T, covering 3.45 GHz and 600 MHz licenses.
At the same time, shares of MDA Space tumbled on Monday after EchoStar abruptly cancelled a $1.3 billion satellite contract with the Canadian aerospace company, citing a shift in business strategy following its spectrum sale to SpaceX.
The stock slid 18% in Toronto trading, closing at C$36.03 (US$26.07).
Terms of deal with SpaceX
Under the agreement, SpaceX will acquire the licenses through a combination of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock, valued at the time of the deal.
In addition, SpaceX will assume responsibility for funding approximately $2 billion in cash interest payments on EchoStar’s debt through November 2027.
EchoStar said it will use proceeds from the deal, among other purposes, to retire certain debt obligations.
The company has been managing a heavy debt load of about $30 billion, and spectrum sales have become a critical part of its financial restructuring.
Boost Mobile to tap Starlink direct-to-cell
Alongside the financial agreement, EchoStar and SpaceX are entering a long-term commercial partnership that will bring Starlink’s direct-to-cell service to EchoStar’s Boost Mobile subscribers.
The move is expected to provide more robust mobile coverage by giving Starlink its own standalone spectrum position.
“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, SpaceX’s chief operating officer.
Analysts say the tie-up positions both companies at the forefront of next-generation connectivity, blending terrestrial telecom operations with satellite infrastructure.
Regulatory overhang and FCC dispute
The deal also comes against the backdrop of a regulatory dispute.
EchoStar has been locked in a battle with the Federal Communications Commission over its spectrum rights, with the agency announcing a review earlier this year.
The company said Monday that its transaction with SpaceX, combined with the previously announced spectrum sale, should resolve outstanding FCC inquiries.
In a filing earlier this year, EchoStar said the FCC’s actions had “materially adversely affected” its operations by freezing its ability to move forward with 5G network plans.
A second blockbuster spectrum deal after AT&T deal announcement
The SpaceX deal follows EchoStar’s announcement on August 26 of a $23 billion spectrum sale to AT&T, covering 3.45 GHz and 600 MHz licenses.
That transaction sent shares up more than 70% in a single session, the biggest one-day jump in 17 years.
New Street Research analyst Philip Burnett noted that EchoStar was at risk of losing unused spectrum, but its sale to AT&T at $5 billion above appraised value and $9 billion more than its purchase price marked a significant financial win.
Analysts’ take and stock outlook
EchoStar’s shares have risen more than 247% this year, far outpacing the S&P 500’s 10.2% gain.
The rally has been driven by record spectrum deals, helping the company manage debt while maintaining its foothold in the wireless market.
Analysts at Citi said the SpaceX partnership strengthens Starlink’s direct-to-cell prospects, while New Street Research expressed confidence in regulatory approval.
MoffettNathanson described the sale as neutral for telecom towers, signalling limited impact on infrastructure providers.
The transaction with SpaceX is expected to close after regulatory clearances.
If completed, it would cement EchoStar’s strategy of leveraging spectrum assets to reduce debt while partnering with industry leaders at the forefront of satellite and wireless convergence.
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