SpaceX’s $17 billion landmark deal to buy AWS-4 spectrum from EchoStar created a ripple effect across the mobile and satellite sectors, with clear-cut winners and losers in both industries.

The deal followed AT&T striking a deal worth $23 billion last month with EchoStar for the former’s 3.45GHz and 600MHz spectrum licences.

“The great spectrum reshuffle, culminating in the EchoStar/SpaceX transaction, has irrevocably altered the competitive landscape of the US telecommunications and satellite industries,” stated Roger Entner, founder and analyst at Recon Analytics, in a research note today (8 September).

“It has created clear winners and losers, solidified a new market structure, and set the strategic trajectories for every major player for the remainder of the decade.”

SpaceX will pay EchoStar $8.5 billion in cash and up to $8.5 billion in stock shares. It also agreed to fund a total of about $2 billion in cash interest payments on EchoStar’s debt through to November 2027.

Ahead of the AT&T and SpaceX deals, EchoStar faced a debt load of approximately $26.4 billion.

SpaceX and EchoStar will also enter into a long-term commercial agreement, which will enable EchoStar’s Boost Mobile subscribers to access SpaceX’s Starlink direct-to-cell (D2C) service. 

The deal also appears to blow up EchoStar’s $13 billion contract with MDA Space to build low Earth orbit (LEO) birds for a new non-terrestrial network (NTN) for its direct-to-device (D2D) satellite constellation.

Here’s a breakdown of the perceived winners and losers related to the EchoStar and SpaceX deal and some of the cascading effects

Winners
Entner noted SpaceX and EchoStar co-founder and chair Charlie Ergen are the clear winners from the deal.

For Ergen, cash-strapped EchoStar gets a lifeline for paying off its debt while benefitting from a D2C service for its Boost Mobile customers.

Entner stated the cash and stock structure is “a work of strategic financial engineering” because SpaceX did not need to go into debt to build out its Starlink satellite constellation.

“Furthermore, by accepting a significant equity stake in one of the world’s most valuable private companies,” Ergen “has transformed what could have been a simple liquidation of assets into a long-term investment”, he noted.

Entner explained the deal is “a stunning financial victory” for Ergen borne from the ashes of the company’s failure to become the fourth largest operator in the US.

SpaceX has been in hot pursuit of EchoStar’s AWS-4 spectrum, contending earlier this year Ergen was squatting on the licences with no immediate plan to use them, a position backed by Federal Communications Commission (FCC) chair Brendan Carr.

While the H-block licenses are a valuable addition for SpaceX, Entner said the AWS-4 spectrum is widely considered the “golden band” for D2C services since it was originally allocated for mobile satellite service (MSS).

T-Mobile US is providing SpaceX’s Starlink birds with its PCS G-block which is currently being used for the operator’s T-Satellite satellite-based text messaging service.

“This acquisition is transformative, enabling SpaceX to develop and deploy a next-generation Starlink D2C constellation capable of moving beyond the limitations of the current text-only service,” he explained. “With dedicated, purpose-built spectrum, SpaceX can now credibly pursue its roadmap of offering reliable voice, streaming-grade data, and robust IoT capabilities directly to unmodified smartphones, a quantum leap in service capability.”

Entner also cast T-Mobile as a winner in the deal since it will have access to near-total coverage across the US if the agreement gains regulatory approvals.

“T-Mobile will soon be able to market a service that offers virtually seamless connectivity, eliminating terrestrial dead zones for core voice and data services,” Entner noted. “This ‘ubiquity ‘feature becomes a formidable competitive moat.”

“It creates a stickier service that could significantly reduce customer churn, particularly among high-value subscribers in rural areas, outdoor enthusiasts, and enterprise clients in sectors like logistics, agriculture, and transportation.”

The expanded service could also lead to AT&T and Verizon’s mobile customers churning over to T-Mobile.

Tim Farrar, an analyst at TMF Associates, said in his research note the EchoStar deal has now made it much harder for Starlink competitors, such as AST SpaceMobile, Globalstar and Lynk Global, “to move forward when they can’t possibly compete with SpaceX’s speed in bringing new satellites to market.”

As a further competitive advantage, Entner noted Starlink also benefits from access to SpaceX’s rockets which deliver its birds into low-earth orbit (LEO.)

Losers
Verizon and AT&T’s ambition to provide D2C services to their customers through partnerships with AST SpaceMobile using their US 850MHz spectrum is now at risk for falling farther behind.

Farrar noted AST SpaceMobile is struggling with delays, including the launch of its prototype FM1 satellite last month ahead of future deployments of its second-generation Block2 Bluebird satellites.

“And AST needs to raise over $400M in the next few weeks to make the $420M payment due to Viasat at the end of October,” Farrar stated.

He explained the one piece of good news for AST SpaceMobile related to the EchoStar deal with SpaceX is the former may no longer retain its European Union 2GHz licence ”though there will undoubtedly be litigation if it is cancelled”.   

If it is cancelled, he noted AST SpaceMobile and partner Vodafone Group will be in competition with SES and Lynk Global for “what will presumably be a paired 10MHz licence, assuming Viasat retains its own paired 15MHz licence”.

Farrar explained the deal also came before tomorrow’s (9 September) launch of Apple’s device launch.

He cited a story published by The Information in June which reportedly said Apple employees working on the company’s direct-to-cell project with satellite partner Globalstar expressed concern the iPhone maker could opt to partner with SpaceX instead.

Globalstar announced plans for its new C-3 satellite system in November 2024, a strategy which included Apple paying the company up to $1.1 billion to boost non-terrestrial connectivity to iPhones. Farrar noted Globalstar’s new satellites have been delayed.

“While this might not be on the agenda tomorrow, decisions about the future of the Apple/Globalstar partnership and the new C-3 constellation will be on everyone’s minds,” he said. “The cancellation of the EchoStar D2D constellation was already a major blow for MDA, but any decision by Apple to pull back from the C-3 constellation would be even more devastating.”

He explained SpaceX wants Apple to cooperate instead of pursuing the C-3 constellation because the H-block and AWS-4 spectrum is not supported by current phones.

If Apple does not decide to abandon its partnership with Globalstar in favour of an arrangement with SpaceX, Farrar stated the latter could opt to develop its own mobile device, which Elon Musk has previously teased.

Farrar noted Musk has discussed Tesla building the phone and providing satellite connectivity through Starlink.

“He has publicly toyed with the idea on social media at times, but he has also made it clear he doesn’t want to deal with the headaches of such a monumental effort,” Farrar explained.

“Finally, I think we can now look to EchoStar to gradually wind down the rest of its operations and sell off its remaining spectrum. The remaining major block is AWS-3, which Verizon might pick up in the next few months, potentially at a discount to the $10 billion EchoStar paid.”

Entner stated AT&T and Verizon’s D2C success now depends on them finding a third-party partner since “they are starting from behind,” or they could opt to join the Starlink camp “under the premise of ‘if you can’t beat them, join them’.