EchoStar Hands SpaceX a $17 Billion Wireless Sling. Can the Giants Survive the Shot?

EchoStar’s $17 billion spectrum sale to SpaceX boosts its balance sheet and sets up a direct challenge to AT&T, Verizon and T-Mobile.

EchoStar (SATS) is offloading its AWS-4 and H-block spectrum to SpaceX in a $17 billion deal split between cash and stock. The agreement also includes a long-term partnership that plugs Boost Mobile users directly into Starlink’s satellite service.

The move strengthens EchoStar’s balance sheet and leaves the company with a stake in Elon Musk’s $400 billion space giant. SATS shares jumped 23% on the news, adding to an already explosive 194% gain this year.

SpaceX Enters the Wireless Space

SpaceX is using its growing satellite fleet to go after the big carriers. As a result, phones will soon be able to connect directly to Starlink’s 8,000 satellites instead of relying on traditional cell towers.

This poses a clear threat to AT&T (T), Verizon (VZ), and T-Mobile (TMUS). Their stocks slipped as much as 2.3% on fears that SpaceX’s service could eat into their dominance.

In addition, spectrum is the lifeblood of mobile carriers, and SpaceX just bought a big chunk of it. EchoStar turned unused licenses into cash and equity, while SpaceX gained the assets it needs to build a rival network.

The deal makes Boost Mobile instantly more competitive and tells us that SpaceX is ready to challenge the old guard on their own turf.

Is EchoStar a Good Stock to Buy Now?

Wall Street analysts are cautious on EchoStar despite its blockbuster deal with SpaceX. The consensus rating is a Moderate Buy, based on five analyst reviews over the past three months. This includes two Buy ratings and three Holds, with no Sells.

The average 12-month SATS price target stands at $65, which implies a 3.33% downside from the current price.

See more SATS analyst ratings