SpaceX Buys $17B EchoStar Spectrum for Starlink Phone Service
▼ Summary
– SpaceX is acquiring 50MHz of wireless spectrum and Mobile Satellite Service licenses from EchoStar for $8.5 billion in cash and $8.5 billion in stock.
– This acquisition will support SpaceX’s development of its “Direct to Cell” constellation to provide global broadband internet access to mobile phones.
– The deal gives SpaceX more operational freedom and reduces its reliance on other network providers for its direct-to-phone service.
– The FCC had launched an inquiry into EchoStar’s spectrum usage, and this sale is expected to help resolve that regulatory issue.
– EchoStar’s Boost Mobile customers will gain access to Starlink’s direct-to-phone service as part of the agreement.
SpaceX has finalized a major agreement to purchase $17 billion worth of wireless spectrum assets from EchoStar, a move set to significantly advance its Starlink satellite network’s capabilities. The acquisition includes 50MHz of AWS-4 and H-block spectrum licenses, which will support the development of SpaceX’s Direct to Cell service, an initiative aimed at delivering broadband internet directly to standard mobile phones worldwide.
The transaction involves a substantial financial arrangement: $8.5 billion in cash and an equivalent amount in SpaceX stock. Of the cash portion, $2 billion will be allocated as interest payments on EchoStar’s existing debt. This strategic purchase grants SpaceX greater operational independence, reducing its reliance on third-party network providers as it moves forward with its satellite-based communication ambitions.
Last year, the Federal Communications Commission greenlit SpaceX’s plans to launch a direct-to-phone version of Starlink, with T-Mobile named as an initial partner. The newly acquired spectrum will enable the integration of optimized 5G protocols into the service once the next generation of satellites becomes operational. Additionally, customers of EchoStar’s Boost Mobile will gain access to Starlink’s direct-to-phone offerings as part of the agreement.
This deal unfolded amid regulatory scrutiny. The FCC had launched an inquiry in May into EchoStar’s use of its spectrum holdings, following public encouragement from SpaceX. Reports indicate that former President Donald Trump personally urged EchoStar’s CEO, Charlie Ergen, to move forward with the sale. Earlier in August, EchoStar also sold $23 billion in spectrum licenses to AT&T.
In a public statement, EchoStar expressed confidence that the combined sales to AT&T and SpaceX will satisfactorily address the FCC’s inquiry. The company believes these transactions resolve concerns regarding its spectrum utilization and compliance.
(Source: TechCrunch)
