EchoStar Corporation (Nasdaq: SATS) shares climbed 22% to $82 in early trading on Monday after the satellite and wireless company announced it has inked a $17 billion deal to sell spectrum licenses to SpaceX.
The definitive agreement consists of up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock.
SpaceX has also agreed to fund about $2 billion of cash interest payments payable on EchoStar debt through November 2027.
"This transaction with SpaceX continues our legacy of putting the customer first as it allows for the combination of AWS-4 and H-block spectrum from EchoStar with the rocket launch and satellite capabilities from SpaceX to realize the direct-to-cell vision in a more innovative, economical and faster way for consumers worldwide," EchoStar CEO Hamid Akhavan said in a statement.
EchoStar noted that proceeds from the transaction will be used for, among other things, retiring certain debt obligations and funding EchoStar's continued operations and growth initiatives.
In connection with the agreement, SpaceX and EchoStar will also enter into a long-term commercial deal, which will enable EchoStar's Boost Mobile subscribers to access SpaceX's next-generation Starlink Direct to Cell service.
SpaceX said it will use the spectrum to boost its wireless coverage through its Starlink Direct-To-Cell constellation, with the aim of ending mobile dead zones around the world.
EchoStar has seen a decline in its satellite TV services subscribers, with total revenue falling 6% to $3.725 billion during the June quarter.