In its second megadeal in the past two weeks, EchoStar continued the divestment of its inventory of unused licenses with a $17 billion cash-and-stock agreement with Elon Musk’s SpaceX involving EchoStar’s AWS-4 and H-block spectrum licenses.
The terms of the agreement include a cash payment of $8.5 billion and $8.5 billion in SpaceX stock. The deal also includes an unspecified long-term commercial arrangement that would enable EchoStar’s Boost Mobile subscribers — through its cloud-native 5G core — to access SpaceX’s next generation Starlink “Direct to Cell” service. The service eliminates “dead space” connectivity problems in cellular services by linking directly to satellites instead of terrestrial cell towers. In addition, SpaceX has agreed to provide another $2 billion to pay interest on EchoStar debt through November 2027.
The AWS-4 licenses acquired by SpaceX were first authorized by the FCC in 2012 for the 2000-2020 and 2180-2200 MHz ranges. In December 2023, the FCC granted EchoStar’s DISH Network subsidiary, who had acquired the licenses, greater flexibility in their use as uplinks or downlinks.
Hamid Akhavan, president & CEO of EchoStar, said in the company’s announcement that the deal “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.”
The latest deal comes in the wake of a $23 billion sale to AT&T two weeks ago of 5G network-compatible licenses in more than 400 markets across the U.S.
In both cases the licenses came with the requirement that they be used in network buildouts that would be substantially built out within 10 to 12 years. EchoStar, facing difficulties in meeting those government requirements, decided to monetize the licenses rather than face a potential FCC order to return them to the government for reallocation.
White & Case advised EchoStar, as it has since EchoStar merged with DISH Network in 2023. The White & Case deal team included partners Michael Deyong and Jonathan Michels in New York alongside Houston partner A.J. Erickson.
Gibson Dunn & Crutcher advised SpaceX with a team led by George Sampras in New York and Rob Little in Dallas. Other Texas lawyers included a Dallas team of Cody Wilson, Joshua Paul Barringer, Michael Cannon, Josiah Bethards and Duncan Hamilton, working alongside Gibson lawyers from New York, London, Brussels and Washington, D.C.