Charlie Ergens EchoStar has struck a definitive agreement withElon Musks SpaceXto sell the companys AWS-4 and H-block spectrum licenses for approximately$17 billion, consisting of up to$8.5 billionin cash and up to$8.5 billioninSpaceX stock, the companies said on Monday. Additionally, the definitive agreement provides forSpaceX to fund an aggregate of approximately$2 billionof cash interest payments payable onEchoStar debt through November of 2027, they said.

In connection with the transaction,SpaceX andEchoStar will enter a long-term commercial agreement, which will enableEchoStars Boost Mobile subscribers through its cloud-native 5G core to accessSpaceXsnext-generation Starlink Direct to Cell service, according to the companies. FCC chairman Brendan Carr, in a May letter, had outlined concerns about EchoStars 5G network buildout obligations and the use of some spectrum licenses following complaints from Elon Musks SpaceXthat EchoStar wasnt using 2 GHz/AWS-4 spectrum and should therefore let it and other satellite firms put it to use.

For the past decade, weve 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, saidHamid Akhavan, president and CEO ofEchoStar. This transaction withSpaceX

continues our legacy of putting the customer first as it allows for the combination of AWS-4 and H-block spectrum fromEchoStarwith the rocket launch and satellite capabilities fromSpaceXto realize the direct-to-cell vision in a more innovative, economical and faster way for consumers worldwide.

Said Gwynne Shotwell, president and COO ofSpaceX: Were so pleased to be doing this transaction withEchoStar as it will advance our mission to end mobile dead zones around the world. SpaceXsfirst-generation Starlink satellites with Direct to Cell capabilities have already connected millions of people when they needed it most during natural disasters so they could contact emergency responders and loved ones or when they would have previously been off the grid. In this next chapter, with exclusive spectrum,SpaceXwill develop next-generation Starlink Direct to Cell satellites, which will have a step change in performance and enable us to enhance coverage for customers wherever they are in the world.

EchoStar said that it anticipates the SpaceX transaction along with the previously announced spectrum sale [to ATT] will resolve theFederal Communications Commissions(FCC) inquiries.

Closing of the proposed transaction is subject to the required regulatory approvals and other closing conditions. Its proceeds will be used for, among other things, retiring certain debt obligations and fundingEchoStarscontinued operations and growth initiatives, the company said. Current operations ofEchoStarsDish TV, Sling and Hughes will not be impacted by this transaction.

EchoStarwas represented byWhite Case LLP andSteptoe Johnson PLLCfor this transaction.SpaceXwas represented byGibson Dunn Crutcher LLP andHWG LLP.