SpaceX strikes $17B deal to buy EchoStar’s spectrum for Starlink’s direct-to-phone service

In a monumental move, SpaceX, led by Elon Musk, has finalized a significant agreement to acquire 50MHz of wireless spectrum along with Mobile Satellite Service spectrum licenses from EchoStar. This deal, valued at $17 billion, encompasses $8.5 billion in cash and an additional $8.5 billion in SpaceX stock. The acquisition is aimed at bolstering SpaceX's Starlink satellite network, enabling the development and rollout of its innovative "Direct to Cell" constellation. This new service promises to deliver broadband-speed internet access directly to mobile phones around the globe. As part of the financial arrangement, $2 billion will be allocated as direct cash interest payments to settle debts held by EchoStar. The acquisition aligns with SpaceX's plans, which received approval from the Federal Communication Commission (FCC) last year to offer its direct-to-phone version of Starlink internet services, in partnership with T-Mobile. This strategic purchase empowers SpaceX to operate more autonomously, reducing reliance on other network service providers. The new spectrum will facilitate the implementation of optimized 5G protocols in its forthcoming direct-to-phone service, set to launch with the next generation of satellites. Moreover, this deal also extends the benefits of Starlink's service to customers using EchoStar's Boost Mobile, enhancing connectivity options for users. The transaction, however, came amid considerable pressure from the FCC, which had initiated an inquiry into EchoStar’s use of its spectrum holdings back in May, following encouragement from SpaceX. Notably, Bloomberg reported that former President Trump personally urged EchoStar CEO Charlie Ergen to proceed with the spectrum sale shortly after the FCC's inquiry began. Just weeks prior to this agreement, EchoStar had also sold $23 billion worth of spectrum licenses to AT&T. In light of these transactions, EchoStar expressed confidence that the sales will address the FCC's concerns effectively.