Musk’s SpaceX spends US$17 billion to acquire spectrum licences from EchoStar

A SpaceX logo is displayed on a building on May 26, 2020, at the Kennedy Space Center in Cape Canaveral, Fla. (AP Photo/David J. Phillip, File)

Elon Musk’s SpaceX has reached a deal worth about US$17 billion with EchoStar for spectrum licences that it will use to beef up its Starlink satellite network.

The deal for EchoStar’s AWS-4 and H-block spectrum licenses includes up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock. SpaceX will make approximately $2 billion in cash interest payments on EchoStar debt through November 2027.

SpaceX and EchoStar will enter into a long-term commercial agreement which will allow EchoStar’s Boost Mobile subscribers to access SpaceX’s next generation Starlink Direct to Cell service.

Shares of EchoStar surged more than 23% before the market opened Monday.

Last month AT&T said that it will spend $23 billion to acquire wireless spectrum licences from EchoStar, a significant expansion of its low- and mid-band coverage networks.

EchoStar said that it anticipates that the AT&T deal and the SpaceX transaction will resolve recent inquiries from the Federal Communications Commission about the rollout of 5G technology in the U.S.

EchoStar said Monday that it will use the proceeds from the sale partly to pay down debt. Current operations of Dish TV, Sling and Hughes will not be impacted, the company said.

Michelle Chapman, The Associated Press