The deal will provide EchoStar with cash to pay down its massive debts and strengthen AT&T position in the 5G and home internet marketplaces in ways that could hurt the cable sector
Faced with an FCC investigation into its spectrum licenses and large debts that could have pushed it into bankruptcy, EchoStar has agreed to sell the company’s 3.45 GHz and 600 MHz spectrum licenses (a total of 50 MHz of nationwide spectrum) to AT&T for about $23 billion.
The deal will allow Echostar to pay down debt, refocus its operations and help resolve the current FCC investigation that had raised fears it might file for bankruptcy.
“I’m enormously proud of the EchoStar team for deploying the world’s first Open RAN network in record time, despite industry skepticism and in the face of the many challenges raised by the COVID-19 pandemic,” said Charlie Ergen, co-founder and chairman, EchoStar. “EchoStar and Boost Mobile have met all of the FCC’s network buildout milestones. However, this spectrum sale to AT&T and hybrid MNO agreement are critical steps toward resolving the FCC’s spectrum utilization concerns.”
The deal has major implications for the wireless business, where it will strengthen AT&T’s position in the 5G and home internet business. But the deal is likely to also have an impact on cable operators and broadband providers.
The $23 billion acquisition will add an average of approximately 50 MHz of low-band and mid-band spectrum to AT&T’s holdings – covering virtually every market across the U.S. That will improve the company’s ability to add converged subscribers with both 5G wireless and home internet services in more places.
The agreement ends EchoStar’s dreams of becoming a major wireless, 5G provider but the deal allows EchoStar participation in wireless industry through long-term wholesale network services agreement with AT&T for its Boost Mobile’s service.
Through Boost Mobile’s hybrid MNO infrastructure, subscribers will continue to receive service from Boost Mobile’s cloud-native 5G core connected to AT&T’s nationwide network, EchoStar said.
