Verizon in talks over EchoStar spectrum deal

Verizon is reportedly in discussions with EchoStar to acquire a chunk of its wireless spectrum as the US operator looks to strengthen its 5G services, following rival AT&T in potentially buying up the satellite and telecom company’s assets.

Sources told Bloomberg that discussions centre on EchoStar’s AWS-3 licences, which are considered a key band for 5G deployments. As per regulatory filings, the company reportedly recorded a value of $9.8 billion for the assets.

The possible deal follows a wave of spectrum sales by EchoStar, which began offloading assets last month amid a US Federal Communications Commission (FCC) probe into its spectrum deployment progress.

In August, the company sold its 3.45GHz and 600MHz licences to AT&T in a $23 billion deal, followed weeks later by a $17 billion agreement with SpaceX offloading its AWS-4 and H-block spectrum. The deals were positioned as part of efforts to resolve FCC concerns and reduce the company’s debt burden.

While AT&T and SpaceX’s transactions with EchoStar reportedly exceeded the assets’ values, a source told Bloomberg that this may not be the case with Verizon’s potential deal.

News of the talks sent EchoStar shares up by as much as 15 per cent in extended trading, the news outlet reported.

The possible move is part of an ongoing shift in strategy for EchoStar, which once aimed to become the fourth major US mobile network operator. CEO Hamid Akhavan recently stated the company no longer plans to pursue that ambition, instead pivoting its strategic focus to becoming an “asset-light growth company” with a hybrid model that takes advantage of AT&T’s network to support its Boost Mobile service.

The US government is also expected to auction additional AWS-3 spectrum next year. In early 2015, Verizon was one of the biggest spenders in the last auction it held for the frequencies, splashing $10 billion.