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Executive Summary

• AT&T lifts 50 MHz of spectrum from EchoStar for $23 billion. AT&T announced an agreement to acquire 50 MHz of nationwide spectrum from EchoStar for $23 billion, all-cash, with anticipated closing for mid-2026, pending regulatory approvals. The spectrum being acquired consists of 30 MHz of 3.45 GHz licenses and 20 MHz of 600 MHz licenses. Using 325 million POPs, the valuation is implied to be ~$1.40 per MHz POP, although AT&T did not break out the price tag by band. We believe AT&T is paying a fairly full price for spectrum, somewhat surprisingly so, given Charlie Ergen鈥檚 precarious position.

• AT&T confidently leaning into Fiber & 5G. AT&T says the deal will take leverage up about a half-turn to ~3x, which is above its 2.5x leverage target. It is maintaining its $20 billion share authorization program and reiterated both its 2025 and long-term financial guidance metrics. While we acknowledge the higher financial risk, we have been encouraged by the success of AT&T鈥檚 fiber and 5G strategy and believe the incremental spectrum will strengthen the company鈥檚 position in both coverage (600 MHz) and capacity (3.45 GHz), expand its FWA footprint and bring forward potential convergence opportunities given the longer investment timeframe for FTTH.

• V-Day for Charlie: Move to Buy from Hold on DBS. The deal is a huge win for the heavily-indebted EchoStar capital structure. We believe the use of proceeds will be as follows: 1) repay the 11.75% Notes backed by the 600 MHz licenses, 2) repay the $7.2 billion intercompany loan backed mostly by 3.45 GHz licenses, including $2.7 billion held at DBS, 3) repay front-end 2026 maturities at DISH DBS, 4) repay front-end 2026 maturities at Hughes and 5) potentially additional debt repayment at DBS and investments in the company鈥檚 ambitions to be a D2D satellite player using S-Band licenses. We still think there is more juice in the DBS bonds (8% to 11% yields) and are moving to Buy from Hold and reiterate our Buy on Hughes bonds, which still trade at modest discounts to par.

Victory Day for DISH/SATS structure.聽There have undoubtedly been many twists and turns in the EchoStar/DISH credit story over the last decade, and this deal puts the credit on a path to a potentially ceremonious end. SATS is selling only a portion of its spectrum (50 MHz out of an average of 144 MHz, including CBRS) for $23 billion, which comes close to covering its entire debt load ($26 billion), not to mention the $4.3 billion of cash that EchoStar already had on its balance sheet as of June 30. In the press release, EchoStar says it would use proceeds from the deal for 鈥渞etiring certain debt obligations and funding EchoStar鈥檚 continued operations and growth initiatives.鈥� We assess the potential use of proceeds below: