SpaceX has struck a $17 billion deal to acquire EchoStar's AWS-4 (Advanced Wireless Spectrum) and H-block spectrum licenses.

For EchoStar, the sale comes just a couple of weeks after the company agreed to sell significant wireless spectrum licenses to AT&T for $23 billion.

In an announcement today (September 8), EchoStar confirmed the sale consists of $8.5bn in cash and up to $8.5bn in SpaceX stock valued as of the entry into the definitive agreement.

On top of this, the definitive agreement provides for SpaceX to fund an aggregate of approximately $2bn of cash interest payments payable on EchoStar debt through November of 2027.

As part of the deal, the two companies will enter into a long-term commercial agreement, that will enable EchoStar's Boost Mobile subscribers – through its cloud-native 5G core – to access SpaceX's Starlink Direct to Cell service. 

"For the past decade, we've acquired spectrum and facilitated worldwide 5G spectrum standards and devices, all with the foresight that direct-to-cell connectivity via satellite would change the way the world communicates," said Hamid Akhavan, president and CEO, EchoStar.

"This transaction with SpaceX continues our legacy of putting the customer first as it allows for the combination of AWS-4 and H-block spectrum from EchoStar with the rocket launch and satellite capabilities from SpaceX to realize the direct-to-cell vision in a more innovative, economical, and faster way for consumers worldwide."

Elon Musk's SpaceX has made no secret of its desire to buy the spectrum from EchoStar in recent months.

SpaceX has previously accused EchoStar of hoarding the spectrum licenses, noting that the spectrum was being underutilized.

Earlier this year, SpaceX stated that EchoStar’s spectrum in the 2 gigahertz band “remains ripe" for sharing among next-generation satellite systems.

EchoStar's network uses spectrum bands including the AWS-4 band, which sits in 2GHz (specifically, 2000-2020MHz and 2180-2200MHz). This band is authorized for Mobile Satellite Services communications.

EchoStar's decision to sell off significant spectrum to SpaceX and its wireless assets to AT&T came after Federal Communications Commission (FCC) Chair Brendan Carr said that the agency would investigate EchoStar's use of 5G spectrum as the company continues its 5G build-out across the US.

The company noted this in its announcement today again, saying that it anticipates the sale "will resolve the FCC inquiries."

Closing of the proposed transaction will occur after all required regulatory approvals are received and other closing conditions are satisfied.

EchoStar notes that the transaction will be used to retire certain debt obligations and will fund EchoStar's continued operations and growth initiatives. The company said the operations of EchoStar's Dish TV, Sling, and Hughes will not be impacted by this transaction.

SpaceX can grow out its constellation

SpaceX stated that the acquisition of the spectrum from EchoStar will have a big impact on the next generation of Starlink's Direct to Device (D2D) satellites.

"The next generation of Starlink Direct to Cell satellites will be designed to fully utilize this spectrum," said SpaceX in a blog post. "Driven by custom SpaceX-designed silicon and phased array antennas, the satellites will support thousands of spatial beams and higher bandwidth capability, enabling around 20x the throughput capability as compared to a first-generation satellite."

In an update, SpaceX revealed that since launching D2D satellites last year, the company has more than 600 Starlink D2D satellites in orbit.

The company's D2D constellation connects to the Starlink LEO constellation, which is made up of more than 8,000 satellites.

Over the past year, Starlink has expanded to 42 new countries, territories, and other markets while bringing in more than 2.7 million new customers, served by more than 100 Starlink missions adding 2,300+ new satellites. The company’s manufacturing facility in Redmond, Washington, is rapidly scaling its production to match satellite production and launch rate.

Starlink has a number of partnerships with mobile network operators across the world, including in the US with T-Mobile.

The company also has partnerships with Optus and Telstra in Australia, Rogers in Canada, One New Zealand in New Zealand, KDDI in Japan, Salt in Switzerland, Entel in Chile and Peru, and Kyivstar in Ukraine.

MDA Space contract cancelled

The impact of the sale goes beyond EchoStar and SpaceX, however. As part of the sale, EchoStar has terminated its contract with MDA Space.

EchoStar had awarded a contract worth $1.3bn to MDA Space last month for 100 satellites to be delivered by 2028, with the option of 100 additional satellites for $1.2bn.

"This arbitrary development is completely unrelated to MDA Space performance and our products and services. The company will be compensated for all related termination costs and fees as per the EchoStar contract," said MDA Space in a statement.

EchoStar didn't acknowledge the contract termination in its sale announcement.