$SATS

EchoStar Corporation’s $22.65B spectrum sale to AT&T may have provided a major financial gain, but it clearly shows the company has abandoned its ambitions to build a national wireless network (MNO). Since the deal covers the entirety of the low-band (600 MHz) spectrum critical for coverage EchoStar’s ability to deploy a nationwide wireless footprint has been severely weakened. This effectively ends its plans to become the fourth MNO in the U.S., signaling that the company has forfeited its future as a major wireless player.

From here, EchoStar looks more like a declining pay-TV operator and a small satellite broadband business rather than an emerging wireless leader. Essentially, it seems to have traded away its wireless future for cash, perhaps with the intent to pivot toward a different business model.

The stock gapped up strongly, though it had previously left other gaps unfilled. Still, it’s not in a favorable position for buying. The key is to calculate the contribution of this sale to the company’s financials. In this context, I would personally consider selling.

:( Sad news