EchoStar Soars Over 24% on $17B Spectrum Sale to SpaceX
The landmark deal includes cash and SpaceX stock, funding for interest payments, and a long-term commercial agreement for satellite-to-cell services.
Shares of EchoStar Corporation (SATS) surged in pre-market trading Monday after the company . The agreement is poised to reshape the global satellite connectivity landscape and provide a significant capital infusion for EchoStar.
The deal consideration for EchoStar's AWS-4 and H-block spectrum licenses consists of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock. In a significant move to bolster EchoStar's financial position, the agreement also stipulates that SpaceX will fund approximately $2 billion in cash interest payments on EchoStar's existing debt through November 2027.
In connection with the asset sale, the two companies will that will allow subscribers of EchoStar's Boost Mobile to access SpaceX's next-generation Starlink Direct to Cell service. This collaboration leverages EchoStar's 5G infrastructure with SpaceX's satellite network.
"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," said Hamid Akhavan, CEO of EchoStar.
For SpaceX, the acquisition is a strategic move to accelerate its global connectivity ambitions. "We're so pleased to be doing this transaction with EchoStar as it will ," said Gwynne Shotwell, President and COO of SpaceX.
EchoStar confirmed the proceeds will be used to retire certain debt obligations and to fund continued operations and growth initiatives. The company's core consumer brands, including DISH TV, Sling, and Hughes, will not be impacted by the transaction. The deal also follows a previously reported, but separate, $23 billion offer from AT&T for the spectrum licenses, underscoring the high value of these assets in the evolving telecom industry.
Investor reaction was overwhelmingly positive, with SATS stock trading 24.24% higher at $83.53 in pre-market activity following the announcement.