AT&T announced a significant strategic move, committing $23 billion to acquire specific wireless spectrum licenses from EchoStar. This acquisition is poised to substantially expand AT&T’s low- and mid-band coverage networks, encompassing over 400 U.S. markets. The telecommunications giant intends to swiftly deploy these licenses to enhance its home internet subscriber base and achieve its growth objectives. Furthermore, the deal strengthens the long-term services agreement between AT&T and EchoStar, positioning AT&T as the primary network services partner for EchoStar’s Boost Mobile brand, which operates as a hybrid mobile network operator.

AT&T CEO John Stankey emphasized that the acquisition will bolster and expand the company's spectrum portfolio, ultimately improving customers’ 5G wireless and home internet experiences across a broader range of markets. This move aligns with AT&T's broader strategy of investing in valuable wireless and broadband assets to become a leading connectivity provider. The company previously outlined plans to extend its fiber broadband network to more than 50 million locations by the end of 2029 and aims to largely complete the modernization of its 5G wireless network with open technology by 2027. This modernized network is designed to support super-fast download speeds and serve as a foundation for new product and GenAI innovations. AT&T also anticipates realizing up to $8 billion in cash tax savings between 2025 and 2027 from the Republicans' One Big Beautiful Bill Act, with an estimated $3.5 billion of these savings earmarked for accelerating its fiber internet build-out and network investments. Shares of AT&T Inc. saw a modest increase of less than 1% following the announcement.

For EchoStar Corp., the $23 billion mega-sale of spectrum licenses to AT&T represents a potential "game changer" for its heavily indebted business. The transaction caused some of its $25 billion debt to soar from distressed levels, providing significant relief and vindicating bondholders who had navigated years of complex financial challenges, including brinkmanship and legal disputes with billionaire Charlie Ergen's wireless and pay-TV empire. Creditors had endured controversial asset moves, subsequent litigation, Ergen’s skirmishes with figures like Elon Musk and regulators, and even faced skipped coupon payments and the looming threat of bankruptcy.

The proceeds from the transaction are primarily designated for paying off borrowings across Ergen’s sprawling businesses. This development was particularly welcomed by debt investors, with bonds of EchoStar subsidiaries like Dish Network emerging as the biggest gainers in the U.S. high-yield secondary market. Specifically, Hughes Satellite Systems Corp.’s 6.625% 2026 notes surged by as much as 21 cents on the dollar to 96.5 cents, while Dish’s 5.125% 2029 bonds jumped by up to 11.625 cents to 83 cents. Additionally, Dish DBS five-year senior credit-default swaps tightened considerably. EchoStar shares experienced a dramatic rally, soaring 76% at the opening bell.

The cash influx from the deal is also expected to help resolve a lawsuit initiated by bondholders after Ergen controversially moved Dish’s valuable wireless spectrum licenses and other assets out of their reach. Furthermore, the transaction alleviates some of the regulatory pressure stemming from a dispute with the Federal Communications Commission (FCC) and its chairman, Brendan Carr, concerning EchoStar’s management of its spectrum rights. The FCC had launched an investigation in May into whether EchoStar was meeting its obligations for its wireless and satellite spectrum rights, following concerns it had failed to put valuable slices of wireless spectrum to use. EchoStar had even initially skipped a $326 million cash interest payment in May, citing impacts from the FCC’s review, though it later made the payment. New Street Research analyst Blair Levin noted that Carr successfully achieved his primary objective of ensuring EchoStar's spectrum would be "more intensely utilized," while also avoiding pushing EchoStar into Chapter 11, an outcome encouraged by the President.

EchoStar, which resulted from the merger of Dish Network Corp. and EchoStar in January 2024, plans to utilize the $23 billion in proceeds for substantial debt repayment. This includes repaying a $3.5 billion Dish Network note backed by 600MHz of spectrum and a $7.6 billion inter-company notes attached to 3.45GHz. The company also intends to deliver $3 billion in cash to its DBS unit, enabling DBS to pay off all $4.8 billion of debt maturing next year, factoring in existing cash and interim cash generation. Additionally, almost $5 billion of the proceeds will be delivered to EchoStar itself, which received most of an inter-company loan in an asset transaction the previous year.