Charlie Ergen’s EchoStar has struck a definitive agreement with Elon Musk‘s SpaceX to sell the company’s AWS-4 and H-block spectrum licenses for approximately $17 billion, consisting of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock, the companies said on Monday. “Additionally, the definitive agreement provides for SpaceX to fund an aggregate of approximately $2 billion of cash interest payments payable on EchoStar debt through November of 2027,” they said.
In connection with the transaction, SpaceX and EchoStar will enter a long-term commercial agreement, “which will enable EchoStar’s Boost Mobile subscribers – through its cloud-native 5G core – to access SpaceX’s next-generation Starlink Direct to Cell service,” according to the companies.
FCC chairman Brendan Carr, in a May letter, had outlined concerns about EchoStar’s 5G network buildout obligations and the use of some spectrum licenses following complaints from Elon Musk’s SpaceX that EchoStar wasn’t using 2 GHz/AWS-4 spectrum and should therefore let it and other satellite firms put it to use.
“For the past decade, we’ve acquired spectrum and facilitated worldwide 5G spectrum standards and devices, all with the foresight that direct-to-cell connectivity via satellite would change the way the world communicates,” said Hamid Akhavan, president and CEO of EchoStar. “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 Gwynne Shotwell, president and COO of SpaceX: “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. 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.”
EchoStar said that it anticipates the SpaceX transaction “along with the previously announced spectrum sale [to AT&T] will resolve the Federal Communications Commission’s (FCC) inquiries.”
Closing of the proposed transaction is subject to the required regulatory approvals and “other closing conditions.” Its proceeds will be used for, among other things, “retiring certain debt obligations and funding EchoStar’s continued operations and growth initiatives,” the company said. “Current operations of EchoStar’s Dish TV, Sling and Hughes will not be impacted by this transaction.”
EchoStar was represented by White & Case LLP and Steptoe & Johnson PLLC for this transaction. SpaceX was represented by Gibson Dunn & Crutcher LLP and HWG LLP.