SpaceX has been talking with EchoStar about either buying its discount carrier Boost Mobile or getting access to Boost’s network, The Washington Post reported on Monday, November 2, citing two people familiar with the negotiations. Elon Musk is said to have discussed the deal personally with EchoStar chairman Charlie Ergen last month. No deal has been announced, and neither company commented to Reuters.
Why Boost
According to the Post, Musk asked the heads of Verizon, AT&T and T-Mobile in recent months to let SpaceX use their networks for its own phone service, and all three said no. Boost Mobile could be a way around that: it already has customers and runs on capacity it leases from AT&T and T-Mobile. EchoStar reported 7.38 million wireless subscribers at the end of the second quarter, mostly on Boost Mobile and Gen Mobile.
The catch is that those lease agreements may not transfer to a new owner without the carriers’ consent, so AT&T and T-Mobile could still have a say in whether a SpaceX-branded service launches.
How it fits Starlink Mobile
- SpaceX wants a hybrid network that pairs its direct-to-phone satellites with ground-based cell service, under the Starlink Mobile name.
- Earlier this month SpaceX agreed to buy about $8 billion of wireless spectrum licenses aimed at coverage where satellites can’t reach, and on its recent earnings call CFO Bret Johnsen said the goal is to “become a major mobile carrier” in the U.S.
- Analyst Tim Farrar told the Post that satellite signals aren’t yet strong enough for indoor and dense urban coverage, so a carrier like Boost could carry traffic over towers while the satellite side improves.
Market reaction
Reuters reported that EchoStar shares rose about 3.4% in premarket trading after the report, while T-Mobile slipped. Analysts have pointed out that becoming a fourth national carrier would mean heavy spending on ground infrastructure, customer service and handset promotions, areas where the incumbents are already well established.
Source: The Washington Post, with additional detail from Reuters via Investing.com.