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

Elon Musk’s SpaceX has finalized an agreement to acquire 50MHz of wireless spectrum and Mobile Satellite Service (MSS) licenses from EchoStar, strengthening its global Starlink satellite network.

As part of the transaction, EchoStar will transfer its AWS-4 and H-block spectrum licenses to SpaceX in exchange for $8.5 billion in cash and $8.5 billion in SpaceX stock. Of the cash payment, $2 billion will go toward direct interest payments on EchoStar’s existing debt obligations.

SpaceX said the newly acquired spectrum will enable it to develop and deploy its Starlink “Direct to Cell” constellation, which promises to deliver broadband-speed satellite internet directly to mobile phones worldwide. The acquisition gives SpaceX more independence in rolling out direct-to-phone satellite connectivity, reducing reliance on third-party carriers.

SpaceX last year received the Federal Communication 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.