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

Elon Musk’s SpaceX has agreed to acquire 50 MHz of wireless spectrum and mobile satellite service spectrum licenses from EchoStar for use in the Starlink satellite network.

EchoStar will sell its AWS-4 and H-block spectrum licenses in exchange for $8.5 billion in cash and $8.5 billion in SpaceX stock. SpaceX said the deal would let it develop and deploy its “Direct to Cell” constellation, which it claims can provide broadband-speed internet access to mobile phones across the world. Of the cash, $2 billion will be made as direct cash interest payments on debt held by EchoStar.

SpaceX last year received the Federal Communications Commission’s approval to go forward with plans to offer a direct-to-phone version of its Starlink satellite internet service, with T-Mobile as a provider. This spectrum purchase gives SpaceX more freedom to operate, without having to depend on other network providers as much.

In particular, SpaceX said the new spectrum will enable “optimized 5G protocols” in its direct-to-phone service, once the next line of satellites is operational. The deal also gives customers of EchoStar’s Boost Mobile service access to Starlink’s direct-to-phone service.

The deal was conducted under significant pressure from the FCC, which launched an inquiry into EchoStar’s utilization of its spectrum holdings in May, after public encouragement from SpaceX. According to Bloomberg, President Trump personally urged EchoStar CEO Charlie Ergen to sell the spectrum licenses in the weeks that followed. On August 26, EchoStar sold $23 billion worth of spectrum licenses to AT&T.

In a statement, EchoStar said it believes that, together with the AT&T deal, today’s spectrum sale to SpaceX will resolve the FCC inquiry.

The spectrum deal effectively ends EchoStar’s own ambitions to build a direct-to-device satellite constellation. As part of the move, EchoStar simultaneously canceled a $1.3 billion contract with Canadian satellite maker MDA Space that was announced just five weeks earlier in August for 100 satellites.

SpaceX said Monday that the new spectrum will enable upgraded satellites with “more than 100 times” the capacity of first-generation Starlink direct-to-cell satellites.