EchoStar has signed a definitive agreement with SpaceX for the sale of its AWS-4 and H-block spectrum licences, valued at approximately $17bn.

Under this agreement, SpaceX will acquire EchoStar’s 50 MHz S-band spectrum in the US, including the AWS-4 and PCS-H bands, as well as its global Mobile Satellite Service (MSS) spectrum licences.

The deal comprises up to $8.5bn in cash and an equivalent amount in SpaceX stock, based on the valuation at the time of the agreement.

Additionally, SpaceX will provide around $2bn in cash interest payments on EchoStar’s debt until November 2027.

This acquisition is expected to facilitate the development and deployment of SpaceX’s next-generation Starlink Direct to Cell constellation, aimed at delivering broadband services to mobile phones worldwide.

The transaction also includes a long-term commercial agreement, allowing EchoStar’s Boost Mobile subscribers to access SpaceX’s Starlink Direct to Cell service via its cloud-native 5G core.

The new Starlink satellites will be engineered to leverage this spectrum, featuring custom-designed silicon and phased array antennas to support thousands of spatial beams and significantly enhanced bandwidth capabilities.

SpaceX president and COO Gwynne Shotwell said: “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.”

The capabilities of Starlink Direct to Cell have been developed in partnership with several mobile network operators, including T-Mobile, Optus, Telstra, Rogers, One New Zealand, KDDI, Salt, Entel, and Kyivstar, to connect millions in previously underserved areas.

In January 2024, SpaceX commenced the deployment of Starlink satellites equipped with Direct to Cell capabilities, targeting mobile coverage in areas lacking terrestrial service.

With more than 600 satellites now operational across five continents, Starlink Direct to Cell has emerged as a key 4G coverage provider globally, connecting over six million users.

The Direct to Cell constellation integrates with the Starlink network, which consists of more than 8,000 satellites, utilising a laser mesh for worldwide coverage.

Operating at an altitude of 360km, these satellites are positioned lower than other constellations to optimise the connection between cell phones and satellites.

The development of this constellation involved the design, manufacture, launch, and operation of space-based cell towers, including the creation of the system’s eNodeB payload and core network.

EchoStar president and CEO Hamid Akhavan said: “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 realise the direct-to-cell vision in a more innovative, economical and faster way for consumers worldwide.”

EchoStar expects that this transaction, along with a previously announced spectrum sale, will address inquiries from the Federal Communications Commission (FCC).

The completion of the deal is contingent upon obtaining the necessary regulatory approvals and satisfying other closing conditions.

The proceeds from this transaction will be allocated towards retiring certain debts and supporting EchoStar’s ongoing operations and growth initiatives, with no impact on its current operations, including DISH TV, Sling, and Hughes.