SpaceX to buy EchoStar spectrum for $17B

Elon Musk's SpaceX has announced plans to acquire wireless spectrum licenses from EchoStar for approximately $17 billion, a combination of $8.5 billion in cash and $8.5 billion in SpaceX stock. This acquisition is pivotal for SpaceX as it aims to enhance its Starlink satellite network's 5G connectivity capabilities. Following the announcement, EchoStar's shares surged by over 25%, while shares of major U.S. wireless carriers, including AT&T, T-Mobile, and Verizon, experienced declines of three to six percent.

The deal comes in the wake of concerns raised by the Federal Communications Commission (FCC) regarding EchoStar's compliance with its 5G deployment obligations. Earlier, President Trump had urged EchoStar and FCC Chair Brendan Carr to negotiate a resolution concerning the company's wireless spectrum licenses. In August, EchoStar had already sold some spectrum licenses to AT&T for $23 billion, marking its initial step to address regulatory scrutiny.

With this spectrum purchase, SpaceX plans to develop and deploy advanced laser-connected satellites, which are expected to increase the cell network's capacity significantly. The initiative aims to eliminate mobile dead zones globally, responding to the rising demand for wireless services. According to industry group CTIA, mobile data usage in the U.S. reached a record 132 trillion megabytes last year, a 35% increase from the previous record.

In addition to the spectrum acquisition, SpaceX and EchoStar have established a commercial agreement that will allow EchoStar's Boost Mobile subscribers to access Starlink's direct-to-cell service. As part of the agreement, SpaceX will also assume $2 billion in interest payments on EchoStar's existing debt until November 2027, aiding the company in managing its financial obligations amid ongoing regulatory challenges.

The market's reaction to the deal has been overwhelmingly positive for EchoStar, with shares rising significantly, reflecting investor confidence in the strategic implications of the transaction. For SpaceX, this acquisition represents a crucial step in its goal to broaden Starlink's satellite internet services, enabling direct mobile connectivity to traditional cell phones, particularly in underserved regions without reliance on existing mobile infrastructure. The deal is pending approval from the FCC, which is expected to resolve regulatory inquiries related to EchoStar's spectrum deployment and bolster SpaceX's position in next-generation connectivity.