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EchoStar may sound like a character from BattleStar Galactica, but it’s actually something way more exciting: a telecommunications and internet services provider.
Today, it surged a staggering 70.25% on a deal to sell spectrum licenses to AT&T for $23 billion. AT&T fell 0.63%.
So, how does a seemingly boring stock you’ve probably never heard of supersize its market cap in a single day?
It’s been a journey
EchoStar, which owns Dish TV, became the fourth-largest wireless carrier in the US back in 2020, thanks to its acquisition of Boost Mobile. Boost brought in oodles of spectrum licenses—aka, the right to use specific frequencies for cellular communications.
But there was a problem: EchoStar wasn’t financially sound enough that it could build the infrastructure to actually use all the wireless spectrum licenses the company received from Boost.
That meant it was basically squatting on its portion of the spectrum for years, which created some serious issues for EchoStar. Since the wireless spectrum is a finite resource, its inability to use its licenses spurred an inquiry from the Federal Communications Commission, whose job it is to make sure carriers utilize their portion of the airwaves.
It also gave EchoStar some high-profile enemies—the most prominent being Elon Musk, who has repeatedly criticized EchoStar via X, and argued that SpaceX should get any spectrum that EchoStar wasn’t using.
In fact, as recently as June, EchoStar was reportedly considering Chapter 11 bankruptcy, the WSJ reported.
Handing spectrum over to the pros
All that background brings us to today. EchoStar is unloading 50 MHz of unused spectrum through its deal with AT&T in exchange for roughly $9 billion more than what it paid for airwaves it couldn’t even use. That’s great news for EchoStar, not only because it avoids government scrutiny, but also because it gives the company the cash to pay off its debt and avoid the B-word (bankruptcy).
AT&T benefits by getting a whole bunch of spectrum it can actually make use of to boost its reach and bring in new customers: The spectrum licenses cover 400 markets, according to AT&T.
Talk about getting a Boost.—LB