EchoStar to sell more spectrum licenses to SpaceX for $2.6 billion

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(Reuters) -EchoStar said on Thursday it would sell a set of wireless spectrum licenses to SpaceX for about $2.6 billion in exchange for stock in the space startup, while also announcing a leadership transition at the CEO level.

Separately in the day, the telecommunications services company announced a new investment arm EchoStar Capital, and reported its third-quarter results, recording a one-time impairment charge of $16.48 billion due to the decommission process of certain portions of its 5G network.

Its shares were down about 1% in afternoon trading.

The AWS-3 licenses cover airwaves across the U.S. that can be used to support mobile and satellite communications.

By combining EchoStar’s wireless airwaves with SpaceX’s rocket launch and satellite manufacturing capabilities, they can quickly create strong and affordable direct-to-cell services, EchoStar Capital CEO Hamid Akhavan said.

Akhavan, who previously served as the CEO of EchoStar, will take charge of the investment arm, while EchoStar co-founder Charlie Ergen will now lead the entire firm.

The company said current operations of its pay-television service Dish TV, streaming television service Sling TV, wireless service Boost Mobile and satellite-based communication service Hughes will not be impacted by the latest SpaceX deal, which is an expansion of a $17 billion agreement struck in September.

The U.S. Federal Communications Commission had said in September it would terminate its investigation into EchoStar’s 5G buildout obligations in the country after it signed deals to sell wireless spectrum to SpaceX and AT&T.

EchoStar had sold some nationwide wireless spectrum licenses to AT&T for $23 billion in August. AT&T agreed to acquire 50 MHz of nationwide mid-band and low-band spectrum.

(Reporting by Jaspreet Singh and Zaheer Kachwala in Bengaluru; Editing by Shilpi Majumdar)