EchoStar stock skyrockets 80% on AT&T deal to buy wireless spectrum for $23 billion

EchoStar's stock experienced a remarkable surge of over 80% on Tuesday, following AT&T's announcement of a substantial $23 billion cash deal to acquire certain wireless spectrum licenses from the telecom firm. This acquisition will enhance AT&T's network by adding approximately 50 megahertz of mid-band and low-band spectrum, covering more than 400 markets across the United States. The agreement is anticipated to finalize by mid-2026, contingent on regulatory approval. EchoStar disclosed in a regulatory filing that this transaction is part of its ongoing strategy to address inquiries from the Federal Communications Commission (FCC). FCC Chairman Brendan Carr previously informed EchoStar's Chairman Charlie Ergen of an investigation into the company’s compliance with federal guidelines for constructing a 5G network. The scrutiny arose after Elon Musk's SpaceX raised concerns about EchoStar's underutilization of valuable mid-band spectrum, urging the FCC to take action to allow new satellite entrants to utilize it. SpaceX operates the Starlink service, which delivers internet via a network of low Earth orbit satellites. In conjunction with the spectrum sale, AT&T and EchoStar have also expanded their network services agreement, which allows EchoStar to function as a hybrid mobile network operator under the Boost Mobile brand. Ergen emphasized that both EchoStar and Boost Mobile have successfully met all FCC network buildout requirements, and the spectrum sale along with the hybrid MNO agreement are vital for resolving the FCC's concerns regarding spectrum use. AT&T's CEO John Stankey described the deal as a comprehensive win, stating it provides an excellent opportunity for customers to access more integrated services. In a recent interview on CNBC's 'Squawk Box,' Stankey expressed confidence that regulators would view the agreement as highly favorable. Meanwhile, AT&T's shares saw a slight rise of less than one percent.