Elon Musk’s SpaceX Buys Wireless Spectrum from EchoStar for $17 Billion

Elon Musk’s SpaceX announced on Monday that it will pay roughly $17 billion to EchoStar for the wireless spectrum licenses for its Starlink satellite network. This significant agreement is essential to growing Starlink’s nascent 5G connectivity company.

In order to expand satellite connectivity to unserved areas, the firms also reached an agreement that will allow EchoStar’s Boost Mobile customers to access Starlink direct-to-cell service.

The acquisition of spectrum enables SpaceX to begin developing and launching modernized, laser-connected satellites, which the company claims would increase the capacity of the cell network by “more than 100 times.”

“With exclusive spectrum, SpaceX will develop next-generation Starlink Direct to Cell satellites, which will have a step change in performance and enable us to enhance coverage for customers wherever they are in the world.” The agreement will help the company “end mobile dead zones around the world,” according to Gwynne Shotwell, president and COO of SpaceX.

Early trading saw a 19% increase in EchoStar shares as a result of the news. Verizon’s stock was down more than 2%, and AT&T and T-Mobile’s stock was down more than 3%.

The drive coincides with a sharp increase in wireless usage. According to industry group CTIA, Americans consumed a record 132 trillion megabytes of mobile data in 2024, which was 35% more than the previous all-time record.

Since 2020, SpaceX has launched over 8,000 Starlink satellites, creating a distributed network in low-Earth orbit in response to demand from the military, transportation companies, and rural consumers.

Since January 2024, SpaceX has launched about 600 of those satellites, which it refers to as “cell towers in space,” for its direct-to-cell network. These spacecraft orbit closer to Earth than the rest of the constellation.

SpaceX’s massive next-generation rocket, Starship, has been in development for about ten years and is essential to the launch of those larger satellites. The rocket is getting closer to its first operational Starlink missions, which are anticipated early next year, due to increasingly challenging test launches.

The agreement was made months after the Federal Communications Commission expressed concerns about EchoStar’s use of spectrum for mobile-satellite services and whether it was meeting its commitments to roll out 5G nationwide.

EchoStar stated that it expects the FCC’s questions to be answered by the SpaceX arrangement and the AT&T deal.

The agreements that EchoStar made with AT&T and Starlink, according to an FCC spokesperson, “hold the potential to boost U.S. leadership in next-gen connectivity, extend innovative new services to millions of Americans, and supercharge competition.”

In August, the business paid $23 billion to AT&T for a few nationwide wireless spectrum licenses. AT&T agreed to purchase 50 MHz of low-band and mid-band spectrum across the country.

In the past, EchoStar and FCC Chair Brendan Carr were encouraged by President Donald Trump to come to an amicable deal regarding the company’s wireless spectrum licenses.

SpaceX plans to issue up to $8.5 billion worth of stock and pay up to $8.5 billion in cash. Additionally, SpaceX has committed to paying almost $2 billion in interest on EchoStar’s debt through the end of 2027.

Following the sale, EchoStar will keep running its internet service Hughes, streaming TV platform Sling, satellite TV service Dish TV, and Boost Mobile brand.

After alleging EchoStar of breaching certain obligations, SpaceX vigorously pushed the FCC to reallocate unused frequencies for satellite-to-phone communication.

In an April letter to the FCC, SpaceX claimed that EchoStar had left “valuable mid-band spectrum chronically underused” and that the company’s 2 gigahertz spectrum “remains ripe for sharing among next-generation satellite systems.”

Through the partnership with EchoStar, SpaceX will be able to use its own frequencies to provide Starlink direct-to-cell services instead of depending only on those it leases from T-Mobile and other mobile operators.

Verizon’s $20 billion acquisition of fiber-optic internet provider Frontier Communications was approved by the FCC in May. In 2021, Verizon paid $52 billion to purchase and clear important spectrum.