(Reuters) - EchoStar on Monday agreed to sell wireless spectrum licenses to SpaceX for its Starlink satellite network for about $17 billion, in a bid to resolve a regulatory review over underutilization of its assets for 5G service expansion.
Shares of EchoStar rose nearly 22% in premarket trading following the news.
The deal comes months after the Federal Communications Commission questioned EchoStar's compliance with buildout extensions and its use of mobile-satellite service spectrum, raising concerns
about whether it was meeting its obligations to deploy 5G in the U.S.
President Donald Trump had earlier prodded EchoStar and FCC Chair Brendan Carr to reach an amicable deal over the fate of the company's wireless spectrum licenses.
EchoStar in August sold some wireless spectrum licenses to AT&T for $23 billion, its first move to resolve the regulatory probe.
The company said it anticipates this transaction with SpaceX, along with the previously announced spectrum sale, will resolve the Federal Communications Commission's concerns.
Under the terms of the agreement, SpaceX will pay up to $8.5 billion in cash and issue up to $8.5 billion in stock. SpaceX has also agreed to cover roughly $2 billion in interest payments on EchoStar's debt obligations through late 2027.
The companies have also entered into a commercial agreement, which will enable EchoStar's Boost Mobile subscribers to access Starlink direct-to-cell service.
The FCC had said it was working with EchoStar to ensure beneficial use of "scarce spectrum resources". EchoStar has been trying to shield its assets from the revocation threat by the FCC.
The FCC review was harming its "ongoing deployment and threaten its viability as a wireless provider," Echostar had said, citing that as a reason for the company missing roughly $500 million in interest payments.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur and Shinjini Ganguli)
