Shares of EchoStar (SATS 1.73%) jumped on Wednesday, closing the day up 15.5%. The jump comes as the S&P 500 (^GSPC +0.08%) and the Nasdaq Composite (^IXIC +0.10%) both ticked up modestly.
The telecommunications company's stock continues to rise after yesterday's announcement that it has agreed to sell spectrum licenses to AT&T in a multibillion-dollar all-cash transaction.
NASDAQ: SATS
Key Data Points
EchoStar surges on major deal with AT&T
The company, which originally started Dish Network, has an extensive satellite network and will now sell a significant portion of its spectrum to AT&T for roughly $23 billion. The deal will expand AT&T's network by about 50 MHz of low-band and mid-band spectrum and is expected to close by the middle of 2026, assuming everything gets the stamp of approval from regulators.
The company has been the target of the Federal Communications Commission (FCC), which has accused EchoStar of failing to meet certain obligations in its use of its available wireless spectrum. The company has skipped bond payments and has been close to filing bankruptcy, citing the FTC probe as interfering with its ability to deploy its 5G network.
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Execution risks remain for EchoStar
If the deal goes through, it would provide EchoStar with much-needed liquidity, strengthen AT&T's competitive positioning in wireless, and potentially reshape the U.S. telecom landscape amid ongoing 5G build-out challenges and industry consolidation pressures.
While the AT&T deal offers a lifeline, the company has proven to be on shaky ground with a history of missed obligations. This is a high-risk stock, and I don't recommend it for investors.
