EchoStar Sells Spectrum to AT&T, Forms Hybrid Mobile Network Operator Partnership

EchoStar has agreed to sell its 3.45 GHz and 600 MHz spectrum licenses to AT&T for $23 billion. The deal will enable AT&T to rapidly deploy the spectrum to US consumers, and Boost Mobile subscribers will continue to receive service from EchoStar's cloud-native 5G core connected to AT&T's nationwide network. The transaction is part of EchoStar's efforts to resolve the FCC's inquiries.

EchoStar Corporation (NASDAQ: SATS) has entered into a definitive agreement with AT&T (NYSE: T) to sell its 3.45 GHz and 600 MHz spectrum licenses for approximately $23 billion. The transaction includes 50 MHz of nationwide spectrum, covering over 400 markets across the U.S. [1]

The deal, subject to regulatory approval, will enable AT&T to rapidly deploy the purchased spectrum to U.S. consumers, enhancing its 5G wireless and home internet capabilities. AT&T will have the option to lease the spectrum, pending the closing of the spectrum sale. This arrangement benefits both AT&T and Boost Mobile subscribers, who will continue to receive service through Boost Mobile's cloud-native 5G core connected to AT&T's nationwide network [1].

Boost Mobile, under this hybrid mobile network operator (MNO) agreement, will operate as a subsidiary of EchoStar, offering subscribers connectivity through its cloud-native 5G core and AT&T's cell sites. Primary connectivity will be provided by AT&T's towers, while Boost Mobile subscribers will continue to have access to the T-Mobile network. The transaction is part of EchoStar's ongoing efforts to resolve the Federal Communications Commission's (FCC) inquiries [1].

Charlie Ergen, co-founder and chairman of EchoStar, expressed pride in the company's achievements, stating, "EchoStar and Boost Mobile have met all of the FCC's network buildout milestones. However, this spectrum sale to AT&T and hybrid MNO agreement are critical steps toward resolving the FCC's spectrum utilization concerns." [1]

Hamid Akhavan, CEO and president of EchoStar, noted the financial benefits of the transaction, stating, "This transaction puts our business on a solid financial path, further facilitating EchoStar's long-term success, and enhancing our ability to innovate and compete as a hybrid network operator." The proceeds will be used to retire certain debt obligations and fund EchoStar's continued operations and growth initiatives [1].

The transaction is expected to close after all required regulatory approvals are received and other closing conditions are satisfied. The operations of EchoStar's other businesses, including DISH TV, Sling, and Hughes, will not be impacted by this transaction [1].

AT&T maintains its 2025 financial guidance and plans for $20 billion in share repurchases during 2025-2027. The company expects its net debt-to-adjusted EBITDA ratio to temporarily increase to 3x, with plans to return to its 2.5x target within approximately 3 years. The transaction is expected to be accretive to adjusted EPS and free cash flow in the third year following closing [2].

The strategic value of this deal lies in its enhancement of AT&T's converged connectivity strategy. By bolstering both low-band (which provides coverage and building penetration) and mid-band spectrum (which delivers the optimal balance of coverage and capacity for 5G), AT&T is positioning itself for long-term network leadership. The mid-band spectrum in particular is crucial for delivering the capacity needed for advanced 5G services in urban and suburban areas [2].

The wholesale agreement with EchoStar allowing continued operation of Boost Mobile represents a win-win arrangement, generating wholesale revenue for AT&T while allowing EchoStar to maintain its wireless customer base without the capital expenditure of building its own nationwide network [2].

References:
[1] https://www.prnewswire.com/news-releases/echostar-announces-spectrum-sale-and-hybrid-mobile-network-operator-mno-agreement-steps-toward-resolving-federal-communications-commissions-fcc-inquiries-302538317.html
[2] https://www.stocktitan.net/news/T/at-t-to-acquire-spectrum-licenses-from-echo-bpryvz9jm3sp.html