EchoStar stock is up 244% year-to-date.
It has been quite a past few weeks for EchoStar (NASDAQ:SATS), the satellite communications provider that owns Dish Network and Boost Mobile.
Two weeks ago, the stock soared some 75% on a deal with AT&T (NYSE:T) to sell $23 billion worth of its spectrum, or wireless airwaves. As part of the deal, it created a hybrid network with AT&T, still serving its Boost Mobile customers. Investors and Wall Street experts saw it as a win for EchoStar.
On Monday, EchoStar made waves again, this time selling more of its spectrum to SpaceX, the aerospace company that owns Starlink, the satellite broadband network.
The $17 billion sale to SpaceX, owned by Elon Musk, was foreshadowed when the AT&T deal was announced, as CEO Hamid Akhavan said the company was evaluating other opportunities for its spectrum.
$17 billion deal with SpaceX
The massive sell-off of its spectrum stemmed from concerns by the Federal Communications Commission (FCC) that it had not deployed its spectrum in a timely manner, essentially hoarding it, for lack of a better term. One of the complaints came from Musk.
The led to the deal with AT&T and now SpaceX. Here are the terms:
- EchoStar sold its AWS-4 and H-block spectrum licenses to SpaceX for approximately $17 billion.
- The $17 billion consists of $8.5 billion in cash and up to $8.5 billion in SpaceX stock.
- SpaceX agreed to make $2 billion of cash interest payments payable on EchoStar debt through November of 2027.
Further, SpaceX and EchoStar entered into a long-term commercial agreement to allow Boost Mobile subscribers to access Starlink’s 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,” Akhavan said. “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.”
EchoStar stock up 244%
After these two deals, EchoStar expects that the FCC’s concerns are satisfied. Much of the proceeds will be used to pay down the massive debt that EchoStar has accumulated and invest in new initiatives.
The firm said that its other properties – Dish Network, Sling TV and Hughesnet Internet are not impacted by this transaction.
EchoStar stock was up 17% on Monday and has gained a ridiculous 190% over the past month. Year-to-date it is up 244%.
EchoStar has been consistently posting net losses since it merged with Dish Network in late 2023 due to high expenses to build out its networks and slowing subscriber numbers.
Analysts remain cautious, but it does have a low forward P/E of 7 and a low price-to-sale ratio. This reset for EchoStar is worth monitoring, to see how it deploys the influx of cash. It worth noting that its competitors were all down on Monday.
