EchoStar has entered into a definitive agreement to sell its entire portfolio of prized AWS-4 [1.] and H-block spectrum licenses to SpaceX in a deal valued at approximately $19 billion.  This deal marks EchoStar/Dish Network’s exit as a mobile network provider (goodbye multi-vendor 5G OpenRAN) which once again makes the U.S. wireless market a three-player (AT&T, Verizon, T-Mobile) affair. Despite that operational failure, the deal helps EchoStar address regulatory pressure and strengthen its financial position, especially after AT&T agreed to buy spectrum licenses from EchoStar for $23 billion. 

The companies also agreed to a deal that will enable EchoStar’s Boost Mobile subscribers to access Starlink direct-to-cell (D2C) service to extend satellite service to areas without mobile network service.

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Note 1. The AWS-4 spectrum band (2000-2020 MHz and 2180-2200 MHz) is widely considered the “golden band” for D2C services. Unlike repurposed terrestrial spectrum, the AWS-4 band was originally allocated for Mobile Satellite Service (MSS).

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The AWS-4 spectrum acquisition transforms SpaceX from a D2C partner into a “kingmaker” that controls its dedicated MSS spectrum. The deal with EchoStar will allow SpaceX to operate Starlink direct-to-cell (D2C) services on frequencies it owns, rather than relying solely on those leased from mobile carriers like T-Mobile and other mobile operators it’s working with (see References below).

The combination of T-Mobile’s terrestrial network and Starlink’s enhanced D2C capabilities allows T-Mobile to market a service with virtually seamless connectivity that eliminates outdoor dead zones using Starlink’s spectrum.

“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 & CEO, 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.”

“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, president & COO, SpaceX. “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 anticipates this transaction with SpaceX along with the previously announced spectrum sale will resolve the Federal Communications Commission’s (FCC) inquiries. Closing of the proposed transaction will occur after all required regulatory approvals are received and other closing conditions are satisfied.

The EchoStar-Space X transaction is structured with a balanced mix of cash and equity plus interest payments: