SpaceX is buying $17 billion in wireless spectrum from beleaguered satellite TV provider EchoStar as it seeks to boost the cellular service provided by its Starlink satellite network, the companies announced Monday.
The sale will give Elon Musk’s company valuable AWS-4 and H-block spectrum licenses that will allow it to provide cellular service around the world to regular cellphone users without specially-enabled phones.
The Starlink satellite network, first launched in 2019, provides internet service to more than 100 countries, but Musk has been making moves to expand the network into mobile communications.
In July, T-Mobile rolled out a partnership with SpaceX that allows its customers to text when they are off the grid with the plan to eventually offer full mobile services. With Monday’s acquisition, SpaceX could begin offering its own mobile services around the globe.
“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 SpaceX President Gwynne Shotwell in a statement. “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.”
The transaction was a cash-and-stock deal, with SpaceX paying as much as $8.5 billion in cash and up to $8.5 billion in stock. The deal immediately relieves regulatory pressures on EchoStar, which owns the Dish Network satellite TV service that has lost customers to Internet streaming services.
The Dish Network acquired wireless spectrum in 2020 after T-Mobile and Sprint merged and regulators forced T-Mobile to divest assets, including its Boost Mobile prepaid wireless brand. However, the company had come under pressure from Musk and the Federal Communications Commission to make better use of the spectrum.
As part of Monday’s deal, EchoStar entered into an agreement with SpaceX that will allow EchoStar’s Boost Mobile subscribers to access SpaceX’s next generation Starlink Direct to Cell service.
“This transaction with SpaceX … 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 EchoStar chief executive Hamid Akhavan in a statement.
The deal also relieves some financial pressure for the satellite TV provider, which has been grappling with a $25-billion debt load. It calls on SpaceX to make about $2 billion in interest payments on EchoStar’s debt through 2027.
Shares of EchoStar were up around 15% to $77.34 in morning trading.
Bloomberg News contributed to this article.
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