Space enterprise Starlink enters $17 billion spectrum agreement with EchoStar
SpaceX and EchoStar have announced a significant deal that could revolutionize the satellite internet industry. The agreement, subject to regulatory approval, involves the transfer of EchoStar's AWS-4 and H-Block wireless spectrum licenses to SpaceX for approximately $17 billion.
The acquisition could mark a turning point for SpaceX's Starlink, potentially enabling the company to offer first-party satellite-based mobile services directly to consumers. This move could facilitate faster expansion and more reliable service for Starlink's Direct to Cell network worldwide.
Hamid Akhavan, President and CEO of EchoStar, expressed his enthusiasm about the deal, stating that it allows for the realization of direct-to-cell vision in a more innovative, economical, and faster way for consumers worldwide. SpaceX's President and COO, Gwynne Shotwell, shared similar sentiments, expressing her excitement about the transaction with EchoStar.
The FCC, the central regulatory body for communication networks in the United States, including the use and transfer of spectrum licenses, will need to approve the deal. All changes in spectrum licenses, especially in the context of mergers or acquisitions of companies with telecommunications licenses, must be approved by the FCC.
The FCC ensures that the deal does not compromise competition, consumer protection, and public interest. If approved, EchoStar plans to use the proceeds from the deal for debt retirement and funding its ongoing operations. The transaction includes no advertisements.
Starlink's Direct to Cell network, which has been instrumental in connecting people during natural disasters, allowing them to contact emergency responders and loved ones, now supports data for apps like Google Maps, X, and WhatsApp. Starlink may soon be able to offer mobile services without or alongside its current partnerships with carriers like T-Mobile in the U.S., Rogers in Canada, and Kyivstar in Ukraine.
The first generation of Starlink satellites with Direct to Cell capabilities were launched by SpaceX in January 2024. The transaction includes $8.5 billion in cash, $8.5 billion in SpaceX stock, and SpaceX covering $2 billion in interest payments on EchoStar debt through 2027. EchoStar's Boost Mobile subscribers will be able to connect to SpaceX's next-generation Starlink Direct to Cell service via EchoStar's cloud-native 5G core.
The deal is a significant step forward for both SpaceX and EchoStar, potentially paving the way for a more connected and mobile future. However, the FCC's approval is crucial for the deal to proceed.
