Under the terms of the definitive agreement, EchoStar will receive up to US$8.5 billion (AU$12.9 billion) in cash and up to US$8.5 billion in SpaceX stock, valued at the time of signing. SpaceX also committed to covering roughly $2 billion in cash interest payments on EchoStar’s debt through to November 2027.
The deal includes a long-term commercial partnership, giving EchoStar’s Boost Mobile customers access to SpaceX’s emerging Starlink “Direct to Cell” service, which aims to deliver satellite connectivity straight to standard mobile handsets.
EchoStar president and chief executive Hamid Akhavan said the move built on more than a decade of investment in spectrum and technology to prepare for satellite-to-phone communications.
“This transaction with SpaceX continues our legacy of putting the customer first, as it allows for the combination of EchoStar’s spectrum with SpaceX’s launch and satellite capabilities to realise the direct-to-cell vision in a more innovative, economical and faster way for consumers worldwide,” he said.
SpaceX president and chief operating officer Gwynne Shotwell said the agreement would accelerate the company’s mission to close mobile coverage gaps.
“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 or when they would have previously been off the grid,” she said.
“In this next chapter, with exclusive spectrum, we’ll develop new Starlink Direct to Cell satellites with a step change in performance to enhance coverage for customers wherever they are in the world.”
EchoStar expects the deal, together with a previously announced spectrum sale, to resolve ongoing inquiries by the US Federal Communications Commission.
Proceeds will be used to reduce debt and fund ongoing operations and growth, while EchoStar’s existing services – including DISH TV, Sling and Hughes – will continue unchanged.
Regulatory approvals remain outstanding, with the transaction due to close once all conditions are met.
EchoStar was advised by White & Case LLP and Steptoe LLP, while SpaceX was represented by Gibson Dunn & Crutcher LLP and HWG LLP.