AT&T has announced that it will acquire certain wireless spectrum licenses from EchoStar for approximately $23 billion.

As part of the deal, the carrier and EchoStar have agreed to expand their long-term wholesale network services agreement, enabling EchoStar to operate as a hybrid mobile network operator as it provides wireless services under its Boost Mobile brand.

The nature of the deal sounds very much like EchoStar will become an MVNO instead of the fourth carrier it hoped to become to compete in the market against the "Big 3" telcos - AT&T, Verizon, and T-Mobile.

AT&T noted that it will be the primary network services partner to EchoStar as it continues to serve wireless customers.

The deal will see AT&T acquire approximately 30 MHz of nationwide 3.45 GHz mid-band spectrum and approximately 20 MHz of nationwide 600 MHz low-band spectrum for approximately $23bn in an all-cash transaction.

According to AT&T, these licenses "cover virtually every market across the US" – more than 400 markets in total. The carrier adds that the acquisition significantly strengthens AT&T’s low-band and mid-band spectrum holdings.

“This acquisition bolsters and expands our spectrum portfolio while enhancing customers’ 5G wireless and home internet experience in even more markets,” said John Stankey, chairman and CEO, AT&T.

AT&T said it wants to deploy the mid-band licenses "as soon as possible."

The transaction is expected to close midway through next year, subject to certain closing conditions, including regulatory approvals.

Beyond pushing AT&T's 5G coverage, the carrier adds that the spectrum will bolster its push to move customers from legacy copper-based phone and internet services to next-generation connectivity such as AT&T Internet Air and AT&T Phone – Advanced in areas that AT&T will not reach with fiber.

What now for EchoStar?

As for EchoStar, the company noted that the deal is part of its ongoing efforts to resolve the Federal Communications Commission's (FCC) inquiries.

It stems back to EchoStar's run-in with the FCC after the regulator's chair, Brendan Carr, said in May that the agency would investigate EchoStar's use of 5G spectrum as the company continues its 5G build-out across the US.

In response, EchoStar hit back at Carr, while President Donald Trump even intervened in trying to push for a resolution.

The company, owned by Charles Ergen, pointed to the fact that it has deployed more than 24,000 5G sites, invested billions of dollars in its commercial network build, has 1.3 million subscribers, and is in the process of migrating its remaining six million subscribers.

Despite this, EchoStar chose not to make a $326 million cash interest payment, as it argues that the FCC's inquiry "threatens its viability as a wireless provider."

However, it appears EchoStar has instead decided to sell the spectrum to appease the FCC.

Resolution to FCC's spectrum concerns

"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 Ergen.

"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."

In a statement, EchoStar said that the deal won't impact its other businesses, which include Dish TV, Sling, and Hughes.

EchoStar acquired its Boost Mobile business as part of Dish Network’s role in the T-Mobile/Sprint merger, completed in 2021.

In 2023, Dish Network merged with EchoStar, leading to Boost Mobile becoming the brand name of the company's mobile network.

EchoStar was spun out from Dish back in 2008, as Dish held onto the TV business while shedding the satellite infrastructure that beamed content into them.

The re-merger between the two combined Dish's Pay-TV business and its 5G wireless network with EchoStar's satellite communications solutions.

"This transaction puts our business on a solid financial path, further facilitating EchoStar's long-term success, and enhancing our ability to innovate and compete as a hybrid network operator," added Hamid Akhavan, CEO and president, EchoStar.

"The proceeds of this transaction will be used for, among other things, retiring certain debt obligations and funding EchoStar's continued operations and growth initiatives."