EchoStar (SATS) shares surged 20% after the company announced it has entered into a definitive agreement with SpaceX to sell its AWS-4 and H-block spectrum licenses for approximately $17 billion. The deal consists of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock, valued at the time of signing.

As part of the agreement, SpaceX will also fund roughly $2 billion in cash interest payments on EchoStar debt through November 2027. In addition, the two companies will enter into a long-term commercial partnership that allows EchoStar’s Boost Mobile subscribers—through its cloud-native 5G core—to access SpaceX’s next-generation Starlink Direct to Cell service.

In the wake of the agreement, EchoStar has also issued a termination-for-convenience notice to MDA Space Ltd. for its constellation contract announced on August 1. MDA said the cancellation stemmed from EchoStar’s sudden strategic shift following FCC spectrum allocation discussions. The company emphasized the decision was unrelated to its performance, and it will be fully compensated for termination costs and fees under the contract terms.

EchoStar said proceeds from the SpaceX and AT&T transactions will go toward retiring debt and funding ongoing operations. Its DISH TV, Sling, and Hughes units will not be affected. The transactions are subject to regulatory approval and customary closing conditions.

“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, EchoStar president & CEO. “This transaction with SpaceX continues our legacy of putting the customer first by combining EchoStar’s spectrum with SpaceX’s rocket launch and satellite capabilities to realize this vision faster and more efficiently.”

SpaceX President and COO Gwynne Shotwell added: “This deal will advance our mission to end mobile dead zones worldwide. With exclusive spectrum, we will develop next-generation Starlink Direct to Cell satellites that deliver a step change in performance, enhancing coverage for customers wherever they are in the world.”

EchoStar expects the transaction, together with a previously announced spectrum sale, to resolve ongoing Federal Communications Commission (FCC) inquiries. Proceeds will be used to retire debt obligations and support ongoing operations across EchoStar’s DISH TV, Sling, and Hughes businesses, which will not be impacted by the deal.

The SpaceX announcement follows EchoStar’s separate agreement in late August to sell spectrum licenses to AT&T for about $23 billion. That deal includes 50 MHz of nationwide spectrum in the 3.45 GHz and 600 MHz bands. EchoStar and AT&T also amended their existing network services agreement to form a hybrid mobile network operator structure, allowing Boost Mobile to run on EchoStar’s 5G core while leveraging AT&T’s tower network. Customers will also retain access to T-Mobile’s network, with no service disruptions expected.