Communications services provider EchoStar's shares jumped by a whopping 80% in trading today after AT&T announced that it would buy the firm's wireless spectrum licenses for 3.45 GHz and 600 MHz frequency bands. AT&T will pay a whopping $23 billion for the licenses, and the deal comes after EchStar faced the threat of license revocation by the FCC. The deal will allow AT&T to accelerate its fiber deployment in America, and it comes after President Trump nudged EchoStar and FCC leadership to resole their conflicts related to the former's network rollout in America.
EchoStar Is Now In Full Liquidation Mode, Says Moffett Nathanson
According to EchoStar, its deal with AT&T will provide the latter with 50MHz of spectrum throughout the US and enable rapid spectrum deployment. While the $23 billion price tag is eye-watering, AT&T assured investors that it would maintain its aim to repurchase $20 billion of stock between 2025 and 2027.
The mechanics of the deal will see AT&T buy the spectrum from EchoStar and then lease it for the Boost Mobile mobile service. Boost Mobile is America's youngest telecommunications carrier and was acquired by EchoStar subsidiary DISH Wireless.
EchoStar's troubles with the FCC led to the firm warning in May that it was struggling to expand Boost Mobile. The disclosure came after an earlier warning where the firm revealed that it had missed $500 million in interest payments, which led to growing concerns about its bankruptcy.
As a result, EchoStar's shares jumped by 79% today after the AT&T deal injected significant cash into the firm's struggling coffers. AT&T CEO John Stankey commented on the deal in a CNBC appearance earlier today, where he remarked that the deal felt like "the last building block from an asset perspective to really have us in a position to be the best in the industry and we're really excited about it because it's gonna accelerate our growth." Stankey added that the acquisition will "dramatically improve service, it's going to be good for consumers cause it's going to take fallow spectrum that hasn't been in service and move it out there pretty quickly."
After the deal was announced, research firm Moffett Nathanson explained that the deal sees EchoStar receive an offer that is well above the spectrum's carrying value. "In aggregate the realized price is well above the ~$1.00 per MHz POP at which we were carrying the two bands," wrote Moffett Nathanson. In spectrum valuation, MHz POP refers to the sales price of spectrum divided by the product of the Mhz value of the spectrum and the population covered. This calculation enables a valuation comparison across different spectrum bands and markets.
The realized price is "obviously reason enough for celebration for EchoStar," says the research firm. However, another key benefit of the deal is that it "bodes well for the thesis that EchoStar is now in full liquidation mode, and that's also a welcome development," it adds.
In a meeting with FCC chair Brendan Carr in June, EchoStar chair Charlie Ergen had warned him that any changes to the firm's 5G buildout construction extensions or 2GHz spectrum sharing rules "would threaten the viability of EchoStar's current operations and future plans." The stock had soared by 50% in June after Bloomberg reported that President Trump had urged Ergen and Carr to settle their differences.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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