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SpaceX has acquired EchoStar’s Mobile Satellite Services (MSS) and S-band spectrum for $8.5 billion in stock as part of its expansion plans for the Starlink satellite internet constellation. This deal, worth a total of $17 billion, will enable SpaceX to strengthen its presence in the MSS market following previous challenges with EchoStar over the development of the direct-to-cellular Starlink service. The conflict escalated when the FCC began investigating EchoStar after SpaceX accused them of not utilizing their 2GHz band spectrum.
With its reliable Falcon 9 rockets, SpaceX has established one of the largest direct-to-cell satellite internet networks and is now partnering with T-Mobile to provide these services. The company’s goal is to eliminate coverage dead zones through its cellular service and significantly enhance the Starlink constellation once the Starship rocket can reliably launch satellites into low Earth orbit (LEO). Recent test flights have shown promising results, with successful launches of dummy Starlink satellites.
SpaceX’s new direct-to-cellular satellites are expected to increase data throughput by 20 times over their predecessors. According to a blog post, this is achieved through in-house silicon and phased array antennas. The new constellation will offer more than 100 times the capacity of the first-generation Starlink direct-to-cellular network, providing 5G-like connectivity similar to terrestrial LTE levels.
In exchange for the spectrum, SpaceX will pay EchoStar $17 billion, with $8.5 billion in cash and the rest in SpaceX stock. Additionally, SpaceX will cover $2 billion in interest payments for EchoStar’s debt, which had been a concern throughout much of the year. As a result, EchoStar’s shares, up 196% year-to-date following an earlier $23 billion spectrum deal with AT&T, have gained about 24% in premarket trading.
SpaceX’s President and COO, Gwynne Shotwell, envisions this transaction helping the company eliminate cellular dead zones globally. EchoStar’s shares are performing well due to these recent developments.
