Shares in satellite communications provider EchoStar (SATS) rose as high as 5% on Thursday morning despite two U.S. lawmakers flagging market competition concerns about its recent multi-billion-dollar deals.
Claim 50% Off TipRanks Premium and Invest with Confidence
- Unlock hedge-fund level data and powerful investing tools designed to help you make smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis so your portfolio is always positioned for maximum potential
The deals were with telco giant AT&T (T) and Elon Musk’s private space exploration firm SpaceX (PC:SPXEX). AT&T’s shares rose fractionally following the development.
In late August, EchoStar struck a $23 billion deal with AT&T to sell its 3.45 GHz low-band and 600 MHz mid-band spectrum licenses to the telecom giant. About two weeks later, the company also agreed to sell its mid-band AWS-4 and H-block spectrum licenses to SpaceX in a $17 billion arrangement.
U.S. Lawmakers Sound Competition Alarm
Last month, AT&T disclosed that it has deployed the mid-band spectrum at a “record fast” rate at more than 23,000 of its cell sites across the U.S. The telco aimed the deployment at improving its 5G network for users to improve their streaming and gaming experience, among other purposes.
As part of the deal, AT&T is to provide the primary network coverage for EchoStart’s Boost Mobile network subscribers. SpaceX is also expected to plug these subscribers directly into its Starlink satellite service.
However, Senator Elizabeth Warren and Representative Greg Casar on Thursday argued that both deals — together worth $40 billion — pose the risks of harming market competitiveness and customer service in the wireless and satellite industries. The U.S. lawmakers, therefore, called on the American telco watchdog, the Federal Communications Commission (FCC), and the Justice Department to probe the deal.
A New EchoStar Probe Incoming?
The legislators’ call comes months after the FCC closed its investigation into EchoStar’s slow deployment of its 5G services. The regulator ended the probe after Echostar agreed to sell its spectrum licenses to SpaceX.
Before then, SpaceX claimed the satellite communications company was hoarding valuable spectrum and called for the FCC’s investigation into its allegations. Meanwhile, the FCC at the start of this month gave AT&T the go-ahead to purchase $1 billion worth of low- and mid-band spectrum from U.S. Cellular, a former wireless network provider.
Is SATS a Good Buy Now?
On Wall Street, EchoStar’s shares continue to hold a Moderate Buy consensus rating from analysts based on two Buys and one Hold issued over the past three months.
In addition, the average SATS price target of $99 implies about 6% downside risk.
