SpaceX Pays $8.5 Billion in Stock to EchoStar for Advanced Starlink Next Generation Satellites

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In a significant strategic move, SpaceX has entered into an agreement with EchoStar, which involves an $8.5 billion payment in stock as part of a broader $17 billion arrangement. This acquisition will enable SpaceX to obtain EchoStar’s Mobile Satellite Services (MSS) and S-band spectrum, thereby enhancing the direct-to-cell capabilities of its Starlink satellite internet system. This agreement marks a pivotal moment for SpaceX, as it has previously faced substantial resistance from EchoStar in its efforts to expand the Starlink direct-to-satellite offerings. Tensions escalated recently when the FCC commenced an investigation into EchoStar, following SpaceX’s claims that the company was misusing the 2GHz band within its MSS spectrum.

SpaceX’s $17 Billion Acquisition of EchoStar’s MSS Spectrum

Leveraging the capabilities of its Falcon 9 rocket, SpaceX has emerged as a leader in the direct-to-cell satellite internet arena, recently launching services in collaboration with T-Mobile. The primary objective of SpaceX’s cellular service is to eliminate coverage gaps, a mission that will be significantly bolstered once the Starship rocket proves its reliability for regular satellite deployments to low Earth orbit (LEO).

Following the successful test launch of dummy Starlink satellites on a Starship flight, SpaceX is now poised to utilize this reusable rocket for future operational satellite launches. The newly acquired direct-to-cell satellites are expected to enhance data throughput by a staggering 20 times compared to earlier models. SpaceX elaborated on this development in a blog post that detailed the innovative upgrades made possible through EchoStar’s spectrum.

These advanced satellites are projected to deliver over 100 times the capacity of the first-generation Starlink direct-to-cell network, offering 5G connectivity that rivals terrestrial LTE performance. This ambitious upgrade aligns with SpaceX’s vision of creating a seamless global communication network.

In total, SpaceX’s investment in EchoStar consists of $17 billion, with $8.5 billion in cash and the remainder in SpaceX stock. Additionally, the agreement includes a significant relief for EchoStar, as SpaceX will cover $2 billion in interest payments on EchoStar’s debt, alleviating concerns about the company’s financial health.

Following this announcement, EchoStar’s stock has seen remarkable growth, surging 196% year-to-date, significantly aided by a previous $23 billion spectrum deal with AT&T. In premarket trading, EchoStar shares climbed by around 24%, reflecting investor optimism. Gwynne Shotwell, SpaceX’s President and Chief Operating Officer, emphasized that this acquisition aims to address cellular connectivity deficiencies across the globe, reiterating the company’s ambitious goals.

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