EchoStar to Put Spectrum Sales' Proceeds Toward M&A and Other Investments
EchoStar will put the billions of dollars it gets in proceeds from its spectrum sales into a new division that will focus on merger and acquisition opportunities, as well as other investments in the company's future, it said Thursday as it reported quarterly results. Those sales include one announced Thursday that will transfer its unpaired AWS-3 wireless spectrum to SpaceX for $2.6 billion in stock.
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Chairman Charlie Ergen will return to running EchoStar's pay-TV and wireless businesses, the company said, while CEO Hamid Akhavan will run the investments division, EchoStar Capital.
In a call with analysts, Ergen said the unpaired AWS-3 spectrum was "somewhat orphan spectrum" for EchoStar but far more useful to SpaceX. His company is also open to making a deal for its paired AWS-3 spectrum, Ergen added, which would be more valuable since it's already in smartphones and other devices and the adjacent spectrum is in use by the wireless market's Big Three. EchoStar said SpaceX would use the unpaired AWS-3 spectrum for its direct-to-cell service -- the same way it will use the AWS-4 and H-block spectrum that it's also buying from EchoStar.
Ergen and Akhavan didn't give details on potential EchoStar Capital investments, including whether EchoStar could buy a bigger equity stake in SpaceX. But Ergen repeatedly spoke bullishly about SpaceX, arguing that it "is going to be the leader for the foreseeable future" in space because of its efficient launch capacity and satellite manufacturing capabilities. "They have a pretty big moat around their business."
CFO Paul Orban said EchoStar’s $22.7 billion AT&T transaction is expected to close in 2026, followed by SpaceX's $19 billion deal in 2027. The company struck those spectrum deals to end a pair of FCC investigations into its use of the 2 GHz band and the deadline extensions it received for its 5G network buildout (see 2505130003).
During Q3, EchoStar began the abandonment and decommission process for parts of its 5G network that it won't use in its plan to be a hybrid mobile network operator (see 2509150003), the company said Thursday.
Asked about its negotiations with tower companies, Ergen said the "unprecedented curveball" that came from the FCC investigations represent a force majeure event that excuses EchoStar from liability. American Tower has sued EchoStar over allegedly trying to get out of paying on its tower lease agreements (see 2510280038). EchoStar is in talks with other tower operators and vendors to try to resolve issues, Ergen added.
In addition to EchoStar Capital, Akhavan will also oversee EchoStar's Hughes business. He said it's still in the midst of a several-year transition away from consumer broadband to enterprise broadband. Some progress is being made, with its aviation connectivity business growing, and the enterprise side of Hughes should eclipse consumer in 2026, he said.
In a note to investors, MoffettNathanson said the quarter showed "signs of life at Boost, at least on the subscriber side" but "awful" financial results. EchoStar said it ended Q3 with 7.5 million wireless subscribers, mostly Boost Mobile; 7.2 million pay-TV subscribers; 783,000 broadband and satellite service subscribers; and revenues of $3.6 billion. In comparison, Q3 2024 had 7 million wireless subscribers; 8 million pay-TV subscribers; 912,000 broadband and satellite service subscribers; and revenues of $3.9 billion.