AT&T’s (NYSE: T) $23 billion acquisition of wireless spectrum from EchoStar (NASDAQ: SATS) should increase the cellular and Internet coverage it can offer customers.
The spectrum licenses cover over 400 markets or virtually every one in the U.S., AT&T said. The deal is pending approval from federal regulators, and the companies anticipate it will close in mid-2026. AT&T CEO John Stankey says regulators will find the deal attractive.
Shareholders of both companies were pleased. EchoStar’s stock jumped 106% during the first five days after the deal was announced and has soared 249% in the past year. AT&T shares gained 1.1% in the five-day period and 46% over the last year.
Stocks of acquiring companies generally rise less than those of their targets in mergers. That’s because the acquirers pay money/stock, and the targets receive it.
Competition among telecom companies is intense, as consumers often switch providers to receive a cheaper deal or better coverage. Telecom companies often seek more licenses to broaden coverage.
EchoStar also owns Boost Mobile’s wireless service, Sling’s streaming service and
Dish Network satellite TV. It has faced issues with regulators. The company said in a regulatory filing that the deal should resolve the Federal Communications Commission’s inquiries.
Network service partnership
The deal calls for the two telecom companies to expand their network services agreement. The acquisition results in EchoStar operating as a hybrid mobile network operator through its Boost Mobile brand. AT&T will act as the primary network services partner to EchoStar, as it continues to serve wireless customers.
The acquisition benefits EchoStar because the FCC informed it earlier this year that the agency would examine whether it was in compliance with federal requirements to build a 5G network across the U.S. In June, EchoStar said the investigation stymied its plans for Boost, such as building out its network to provide greater coverage for customers.
In July, AT&T sold its remaining 70% stake in satellite TV provider DIRECTV to private equity firm TPG. During the past decade, the company has conducted three major deals. It acquired DIRECTV in 2015. That same year it also purchased Mexican wireless companies Iusacell and Nextel Mexico.
The spectrum acquisition is a win for AT&T, helping the company “close the gap” with rivals T-Mobile (NASDAQ: TMUS) and Verizon, Morningstar analyst Michael Hodel wrote in a research note. He thinks regulators will approve the deal.
So the purchase may be a win for AT&T.
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