SpaceX's $17 Billion Deal Boosts Its Wireless Business

 

 

“Elon Musk's SpaceX is writing its biggest check ever to expand its foothold in the mobile-phone business.

 

SpaceX said Monday it would pay $17 billion for the rights to use some of EchoStar's valuable spectrum for cellphone service.

 

The deal with EchoStar includes $8.5 billion in cash and up to $8.5 billion of SpaceX stock for two chunks of valuable U.S. wireless licenses and related domestic and international rights to beam signals from space. The rocket and satellite-internet company also agreed to pay about $2 billion of cash toward interest payments on EchoStar debt through November 2027.

 

SpaceX is already a growing home broadband provider through its Starlink business and has dipped into the mobile-phone sector through a U.S. partnership with T-Mobile. However, the new spectrum rights would significantly improve Starlink's ability to connect with cellphones in remote areas beyond the reach of cellphone towers.

 

SpaceX said it would use the spectrum as a foundation for Starlink's direct-to-cell business around the globe. It could also share spectrum with telecom partners.

 

The most valuable piece of the deal covers two license blocks that allow a carrier to provide ground-based 5G cellphone and broadband service in the U.S.

 

T-Mobile is in talks to lease some of the spectrum rights that SpaceX plans to acquire, according to people familiar with the matter.

 

EchoStar's latest spectrum deals respond to pressure from the Federal Communications Commission, which threatened in May to strip some of its valuable spectrum rights. FCC Chairman Brendan Carr said in a letter to EchoStar that it wasn't effectively competing with the big three wireless carriers using the wireless licenses at its disposal.

 

The threat prompted a whirlwind of deal talks with multiple telecom and satellite companies, including T-Mobile and Verizon.

 

AT&T was the first spectrum buyer out of the gate with an agreement to spend about $23 billion to buy other chunks of cellphone spectrum rights from EchoStar to improve its traditional cellphone service from the ground. The Dallas telecom giant's chief executive, John Stankey, called the deal "an opportunistic and pre-emptive asset acquisition."

 

EchoStar said Monday it expects the new SpaceX deal and the earlier spectrum sale will resolve the FCC's inquiries. It plans to use proceeds from the deals to retire debt and fund operations.

 

Shares in EchoStar surged 20% Monday, and the stock has roughly tripled in value in recent weeks. Shares in carriers including T-Mobile, AT&T and Verizon declined to start the week.

 

The deal with EchoStar is the largest ever struck by SpaceX, which Musk founded more than two decades ago.

 

Space and telecom executives have been debating the opportunity represented by connecting mobile phones and other devices through satellites over the past few years. Besides SpaceX, the idea has drawn in heavyweights, including Apple, as well as newer companies like AST SpaceMobile and Lynk Global.

 

SpaceX has already deployed the largest satellite-internet constellation in low Earth orbit with Starlink, which now consists of more than 8,000 satellites. The spacecraft have powered Starlink's expansion around the world, giving SpaceX a growing revenue source.

 

Musk said last year that Starlink would strike partnerships with other cellphone carriers around the world to provide links on cellphones. But those deals require painstaking planning with both wireless companies and their national regulators in each country.

 

Some of the spectrum SpaceX is set to acquire would give the company the ability to directly connect consumers' phones. SpaceX said in its statement Monday that it remained committed to working with network operators around the world.

 

EchoStar said Monday that cellphone users on its Boost Mobile service would benefit from a "long-term commercial agreement" to connect to Starlink's satellites in remote areas, ending the period of U.S. exclusivity that T-Mobile has marketed as a selling point for its wireless plans.

 

The deal requires U.S. officials' approval. And its complex nature could still cause problems. A separate EchoStar plan to merge the Dish Network pay-TV unit with rival DirecTV fell apart last year after some bondholders balked at a debt-swap deal tied to the transaction.

 

The agreement also unravels a direct-to-device satellite constellation that EchoStar said in August it would develop. The company selected Canada-based MDA Space to build those satellites, but terminated the arrangement.” [1]

 

1. SpaceX's $17 Billion Deal Boosts Its Wireless Business. FitzGerald, Drew; Maidenberg, Micah.  Wall Street Journal, Eastern edition; New York, N.Y.. 09 Sep 2025: B1.