TLDR
- EchoStar sold wireless spectrum licenses to AT&T for $23 billion and SpaceX for $17 billion, generating $31.2 billion in total proceeds
- Company expects to hold $24.1 billion in cash after using $11.4 billion to pay down debt
- FCC terminated its investigation into EchoStar’s slow 5G deployment following the spectrum deals
- EchoStar retains some AWS-3 spectrum and plans to focus on growing Boost Mobile using AT&T’s network
- Transactions remain subject to FCC approval
EchoStar announced Monday it expects to hold $24.1 billion in total cash following massive spectrum license sales to telecommunications giants. The satellite communications company completed deals worth $31.2 billion with AT&T and SpaceX.
The AT&T transaction involves $23 billion for certain wireless spectrum licenses. SpaceX agreed to pay approximately $17 billion for additional spectrum assets.
EchoStar plans to use $11.4 billion of the proceeds to repay existing debt. This debt reduction will strengthen the company’s balance sheet moving forward.
The company held $4.33 billion in cash as of June 30. The new cash position represents a substantial increase in financial resources.
Regulatory Pressure Drives Sale Decision
The Federal Communications Commission had questioned EchoStar’s compliance with buildout requirements. Regulators expressed concerns about the company’s use of mobile-satellite service spectrum.
EchoStar faced scrutiny over its slow deployment of 5G services nationwide. The FCC investigation created regulatory uncertainty for the company.
Following the announced spectrum deals, the FCC terminated its investigation last week. This removes a major regulatory overhang from EchoStar’s operations.
EchoStar Chair Charlie Ergen addressed the regulatory pressure directly. He stated the FCC situation left the company with limited options for moving forward.
CEO Hamid Akhavan spoke at the World Space Business Week in Paris. He confirmed the company’s financial projections and strategic direction.
Strategic Focus Shifts
EchoStar retains certain spectrum assets including AWS-3 band frequencies. These spectrum holdings are deployed across major national carriers.
The company plans to grow its Boost Mobile hybrid MVNO business. This mobile virtual network operator will utilize AT&T’s existing network infrastructure.
EchoStar intends to integrate satellite connectivity through Starlink’s direct-to-cell service. This partnership would combine terrestrial and satellite technologies.
The company will continue operating its Dish TV satellite television service. EchoStar also maintains its Sling streaming television platform.
Hughes internet service will shift focus toward enterprise customers. This represents a move away from consumer broadband services.
The transactions with AT&T and SpaceX require FCC approval before completion. Regulatory review timelines have not been disclosed.
EchoStar’s stock closed down 2.79% on Monday at $74.89 per share. Pre-market trading showed the stock up 1.20% to $75.79.
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