EchoStar agreed a deal to sell its unpaired AWS-3 licenses for approximately $2.6 billion in return for SpaceX stock and named co-founder Charlie Ergen as its new CEO following the formation of a new business called EchoStar Capital.

The transaction builds on the $17 billion agreement the companies entered into in September which sold AWS-4 and H-block spectrum licences to Elon Musk-owned SpaceX. The deal will close after receiving customary regulatory approvals.

Hamid Akhavan served as president and CEO of the company but is now chief of EchoStar Capital with former chair Ergen resuming the roles of president and CEO of EchoStar.

EchoStar Capital will be responsible for investing new capital from the recent spectrum transactions “in order to fuel future growth opportunities for EchoStar Corporation”.

Ergen now assumes the operating responsibility for the pay-TV and wireless business units.

“EchoStar will soon be in the unique position of having substantial available capital, vastly changing its scope of opportunities,” Akhavan stated. “Through EchoStar Capital we will fuel EchoStar’s growth into new and complementary arenas, beyond its successful pay-TV, wireless and enterprise business units.”

Akhavan noted the latest transaction with SpaceX, in addition to previously announced spectrum transactions and commercial agreements, “will strengthen EchoStar’s ability to develop new business opportunities and growth in value for our shareholders”.

 “The combination of AWS-3 uplink, AWS-4 and H-block spectrum from EchoStar with the rocket launch and satellite manufacturing capabilities from SpaceX accelerates the realisation of powerful and economical direct-to-cell service offerings for consumers and enterprises worldwide, including our Boost Mobile customers,” he stated.

Tim Farrar, an analyst at TMF Associates, told Mobile World Live the deal gives SpaceX more terrestrial options with Band 70 and it also might make it easier for Verizon to buy EchoStar’s paired AWS-3.

He said the rumour SpaceX will buy Apple-backed Globalstar for $10 billion seems less likely now. Bloomberg reported 30 October Globalstar was exploring a potential sale and held early discussions with SpaceX.

Q3 earnings
In its Q3 earnings results, the company reported a $16.5 billion impairment charge from decommissioning parts of its 5G network that are no longer needed for its Boost Mobile service following spectrum sales to AT&T and SpaceX.

The Federal Communications Commission ended its investigation into EchoStar’s use of spectrum after those sales. EchoStar stated it was moving to a hybrid MNO model after selling off the spectrum licences.

EchoStar added 232,000 Boost Mobile wireless subscribers in the quarter compared to a loss of 297,000 a year ago. Revenue for the wireless business came in at $938 million, compared to $898 million.

AT&T chair and CEO John Stankey stated on the company’s Q3 earnings call the company it was starting to see more of EchoStar’s Boost Mobile wireless customers moving to its network.