EchoStar’s headquarters in Englewood, Colorado. Photo: EchoStar

SpaceX is buying more wireless spectrum from EchoStar, with EchoStar announcing a deal on Thursday to sell its unpaired AWS-3 wireless spectrum for $2.6 billion in SpaceX stock. In addition, EchoStar is forming a new entity focused on capital management. 

EchoStar said its unpaired AWS-3 licenses are nationwide and are part of 3GPP Band 70n (1695-1710 MHz uplink).

This comes after a deal in September for EchoStar to sell its AWS-4 and H-block spectrum licenses to SpaceX for approximately $17 billion in a mix of cash and SpaceX stock. EchoStar’s share price has soared more than 150% since that announcement due to the company’s stake in SpaceX. 

EchoStar Chairman Charlie Ergen told investors on Thursday that this was “orphan” spectrum left in EchoStar’s hands, and more valuable to SpaceX. 

“In SpaceX hands, it gives them a lot of flexibility of combining uplink and downlink, and it gives them a lot of flexibility for where spectrum might come in the future,” Ergen told investors. “[For SpaceX, the spectrum] obviously went for a lower price, but they’re going to be able to make much better use of it than we can in today’s terms. And we’re pleased to get SpaceX stock.” 

Ergen also noted that EchoStar still owns paired AWS-3 spectrum which is “quite a bit more valuable.” This spectrum is widely used in consumer phones and in use with all three major wireless carriers. There is an FCC auction set for next year in the AWS-3 band. 

“We’re very comfortable with that spectrum and we’ll work with the FCC in terms of the auction rules and how that might all take place. I think it’s the most valuable piece of spectrum we have,” Ergen said. 

In addition, EchoStar is forming a new entity, EchoStar Capital, focused on capital management and M&A to manage the capital from the recent transactions. Hamid Akhavan will lead EchoStar Capital as CEO. 

Ergen will now serve as president and CEO of EchoStar, with operating responsibility for the Pay-TV and Wireless business units. 

“This transaction with SpaceX, in addition to our previously announced spectrum transactions and commercial agreements, will strengthen EchoStar’s ability to develop new business opportunities and growth in value for our shareholders,” Akhavan said in a statement. “The combination of AWS-3 uplink, AWS-4 and H-block spectrum from EchoStar with the rocket launch and satellite manufacturing capabilities from SpaceX accelerates the realization of powerful and economical direct-to-cell service offerings for consumers and enterprises worldwide, including our Boost Mobile customers.”