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Investing.com -- T-Mobile US (NASDAQ:TMUS) stock fell 5% on Monday, while AT&T Inc. (NYSE:T) and Verizon Communications (NYSE:VZ) both dropped 4% following news that EchoStar (NASDAQ:SATS) has agreed to sell its spectrum licenses to SpaceX for approximately $17 billion.
The market reaction reflects concerns about increased competition in the telecommunications sector as SpaceX expands its satellite-based connectivity offerings. EchoStar announced it will sell its AWS-4 and H-block spectrum licenses to SpaceX in a deal valued at approximately $17 billion, consisting of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock.
As part of the agreement, SpaceX will also fund about $2 billion in cash interest payments on EchoStar debt through November 2027. The companies will enter into a long-term commercial agreement enabling EchoStar’s Boost Mobile subscribers to access SpaceX’s next-generation Starlink Direct to Cell service.
"For the past decade, we’ve 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," said Hamid Akhavan, president and CEO of EchoStar.
The transaction is subject to regulatory approvals and other closing conditions. EchoStar plans to use the proceeds to retire certain debt obligations and fund continued operations and growth initiatives, while its current DISH TV, Sling, and Hughes operations will not be affected by the deal.
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