Starlink Direct to Cell satellites in orbit. Credit: Starlink
LA PLATA, Maryland — EchoStar Corp. has agreed to sell 50 MHz of its US-licensed AWS-4 and H-bloc spectrum holdings to SpaceX for $17 billion in cash and up to $8.5 billion in SpaceX Class A common stock, valued at $212 per share, EchoStar announced Sept. 8.
The company said the transaction, as with an earlier spectrum-holding sale, is intended to address concerns by the US Federal Communications Commission — concerns fed by SpaceX, among others — that EchoStar had been warehousing spectrum for too long without using it.
The transaction also includes a SpaceX loan made available for EchoStar to service its debt “through at least November 2027,” in the amount of about $2 billion.
One of the notable aspects of the transaction, which EchoStar said it expected will close by November 2027, is a commercial agreement to use SpaceX Starlink’s next-generation direct-to-cell (D2D) satellite service for EchoStar’s Boost mobile network and to refer EchoStar’s HughesNet broadband customers to Starlink on a fee-per-referral basis.
In a Sept. 8 filing with the US Securities and Exchange Commission, EchoStar referred to “next-generation Starlink text and voice and broadband services” that will use the spectrum being sold by EchoStar.
EchoStar is cancelling a $1.3-billion August contract with MDA Space for 100-plus D2D satellites and will now throw in with Starlink. MDA announced Sept. 8 that the cancellation was solely due to EchoStar’s change of strategy and will include termination fees from EchoStar.
EchoStar to refer HughesNet customes to SpaceX Starlink
EchoStar will be paid a fee for referring its current HughesNet customers as well as new customers to SpaceX Starlink. The company said its Starlink tie-in is covered by “long-term commercial agreements” to enable EchoStar’s mobile customers to access the Starlink service, but did not specify whether it had a specific end date.
In a statement, SpaceX President Gwynne Shotwell said:
“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. SpaceX’s first-generation Starlink satellites with Direct to Cell capabilities have already connected millions of people when they needed it most – during natural disasters so they could contact emergency responders and loved ones – or when they would have previously been off the grid.
“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.”
EchoStar’s Hughes division operates a fixed broadband service in North America using Hughes’s Jupiter broadband satellites in geostationary orbit. Faced with competition from Starling’s 8,000-satellite constellation in low Earth orbit, Hughes has been refocusing HughesNet on vertical markets including government and corporate networks and commercial in-flight connectivity.
EchoStar described its D2D constellation as offering full 5G broadband services, well beyond what current D2D providers offer today. It told investors its network would be the only one going beyond text and photo messaging.
EchoStar Chief Executive Hamid Akhavan said in a Sept. 8 statement:
”This transaction with SpaceX continues our legacy of putting the customer first as it 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.”