EchoStar Corporation has just announced a significant transaction with SpaceX that is set to have a substantial impact on both companies and the telecommunications industry as a whole.
The deal involves the sale of EchoStar's aws-4 and h-block spectrum licenses to SpaceX for a hefty sum of approximately $17 billion. This amount consists of up to $8.5 billion in cash and an equivalent value in SpaceX stock. Additionally, SpaceX will be funding around $2 billion in cash interest payments on EchoStar debt through November of 2027.
This transaction will also see the two companies entering into a long-term commercial agreement, enabling EchoStar's Boost Mobile subscribers to access SpaceX's next-generation Starlink direct-to-cell service through its cloud-native 5G core.
Hamid Akhavan, President & CEO of EchoStar, expressed the company's foresight in acquiring spectrum and facilitating worldwide 5G spectrum standards and devices over the past decade, emphasizing the potential of direct-to-cell connectivity via satellite to revolutionize global communication. He highlighted the transaction with SpaceX as a means to combine EchoStar's spectrum with SpaceX's rocket launch and satellite capabilities to realize this vision in a more innovative, economical, and expedited manner for consumers worldwide.
Gwynne Shotwell, President & COO of SpaceX, echoed the sentiment, expressing enthusiasm for the transaction and its potential to further SpaceX's mission to eliminate mobile dead zones globally. She emphasized the impact of SpaceX's first-generation Starlink satellites with direct-to-cell capabilities in connecting millions of people during critical times, such as natural disasters, and outlined the potential for next-generation Starlink direct-to-cell satellites to significantly enhance coverage for customers worldwide.
EchoStar anticipates that this transaction, along with a previously announced spectrum sale, will resolve the Federal Communications Commission's (FCC) inquiries. The closure of the proposed transaction is subject to receiving all required regulatory approvals and satisfying other closing conditions.
The proceeds from this transaction are expected to be utilized for retiring certain debt obligations and funding EchoStar's ongoing operations and growth initiatives. It's important to note that the current operations of EchoStar's Dish TV, Sling, and Hughes will not be impacted by this transaction.
As a result of these announcements, the company's shares have moved 0.03% on the market, and are now trading at a price of $67.24. If you want to know more, read the company's complete 8-K report here.
