In a surprising move, EchoStar has decided to sell its plans for a low Earth orbit satellite constellation. The company announced on September 8th that it has sold its AWS-4 and H-block spectrum to SpaceX for a staggering $17 billion. This sum is equally divided between cash and SpaceX stock. The agreement also includes approximately $2 billion in cash interest payments to cover EchoStar's debt until November 2027. As a bonus for EchoStar, Boost Mobile customers will gain access to Starlink direct-to-cell services.
This sale effectively ends EchoStar’s pursuit of its own direct-to-device service using this spectrum. The decision comes just after EchoStar sold terrestrial wireless spectrum to AT&T for $23 billion on August 26th. Industry analysts believed EchoStar would use a portion of these funds to finance its estimated $5 billion satellite constellation. This constellation project had previously led to a $1.3 billion contract awarded to MDA Space on August 1st for 100 satellites with an option for an additional 100. However, MDA Space announced on September 8th that EchoStar terminated this contract, citing a sudden shift in EchoStar's business strategy.
The deal follows months of conflict between EchoStar and SpaceX concerning spectrum usage. SpaceX had filed complaints with the Federal Communications Commission, alleging improper use of the spectrum by EchoStar, triggering an investigation. EchoStar, however, stated that selling the spectrum is a more financially beneficial choice than constructing its own constellation. “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,” explained Hamid Akhavan, president and chief executive of EchoStar.
This transaction represents one of SpaceX's largest acquisitions to date. Gwynne Shotwell, president of SpaceX, commented that the newly acquired spectrum will significantly boost Starlink's capabilities. “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,” she stated.