$SATS – EchoStar as an underpriced SpaceX proxy

**Context - Why SpaceX needed this deal** At full scale, Starlink runs into two hard constraints: launch cadence and spectrum. With a constellation of \~30k satellites you are looking at roughly 20 atmospheric re-entries per day. Falcon 9 would need something close to one launch per day just for replacements, which clearly does not work given current cadence. Starship changes that completely. Replacement cadence drops to roughly one launch per week and the cost per satellite comes down materially. That pushes the global pricing floor for Starlink far lower while massively expanding margins at scale. The other bottleneck was spectrum. You cannot serve tens of millions of users globally without more clean bandwidth. SpaceX solved that by buying large blocks of AWS-4 and H-Block spectrum from EchoStar. **What the deal actually looks like** On 8 September 2025, EchoStar agreed to sell AWS-4 and H-Block spectrum to SpaceX for total consideration of roughly $17bn. Importantly, this was not all cash. The structure was: • Up to $8.5bn cash • Up to $8.5bn in private SpaceX equity • SpaceX funding roughly $2bn of EchoStar’s debt interest through November 2027 • Commercial agreements around Starlink access for Boost Mobile / direct-to-cell Then on 6 November 2025, EchoStar agreed a further $2.6bn spectrum sale to SpaceX. Separately, on 26 August 2025, AT&T agreed to pay $23bn all-cash for 50 MHz of EchoStar spectrum (3.45 GHz and 600 MHz). This matters because it gives you a real, arm’s-length benchmark for what this spectrum was worth. **Balance sheet context** According to reporting at the time, once these spectrum sales and associated debt actions are completed, EchoStar expected to hold around $24bn of total cash, having generated over $30bn of gross proceeds and used a large portion to pay down debt. This is why the equity started trading differently in late 2025. The company was no longer just a leveraged satellite operator sitting on stranded spectrum. **Share count and current valuation** As of the September 2025 10-Q, EchoStar had: • 156.5m Class A shares • \~131.3m Class B shares Total shares outstanding: \~287.9m At a recent share price around $123, that implies a market cap of roughly $35.5bn. That is the starting point. **The SpaceX equity stake** Public reporting implies EchoStar received roughly $11–12bn worth of SpaceX equity at the time of the deal, based on private valuations then circulating. Private SpaceX shares were trading around $350–400bn valuation when the deal was negotiated. Late-2025 secondary transactions reportedly implied valuations closer to $800bn. This is still private market pricing, but it is widely referenced. Instead of pretending we know the exact percentage, it is more honest to look at a range. Using the correct share count of \~287.9m, the implied per-share value of the SpaceX stake looks like this: If SpaceX is worth $800bn: • 1.5% stake → \~$42 per SATS share • 2.0% stake → \~$56 per SATS share • 3.0% stake → \~$83 per SATS share If SpaceX is worth $1tn: • 1.5% stake → \~$52 per SATS share • 2.0% stake → \~$69 per SATS share • 3.0% stake → \~$104 per SATS share That range is wide, but even the low end is not trivial relative to the current share price. **Why this does not show up cleanly in the accounts** Private equity does not get marked to market under GAAP just because secondary prices move. EchoStar still carries the SpaceX equity close to deal value. That means a large portion of the economic value is not visible on the balance sheet. The market also applies a discount because: • The SpaceX stake is illiquid until an IPO or tender • EchoStar still has operating businesses with real execution risk • Holding companies with complexity rarely trade at full NAV All of that is fair. But it also explains why this is mispriced if you believe the SpaceX equity is real and durable. **Putting it together** At \~$123 per share, the market is effectively saying: • The core EchoStar assets plus net cash are worth most of the equity value • The SpaceX stake is either heavily discounted or largely ignored Even without aggressive assumptions, a reasonable sum-of-the-parts starts to look uncomfortable versus the current price once you give the SpaceX stake any credit at all. The upside scenario is obvious if there is a SpaceX liquidity event. The downside is not zero, but you still own real spectrum, real cash, and real operating assets rather than pure narrative. My own position is: 200 shares @ $119 per share. Unsure on calls partly due to the reliance on a SpaceX IPO date. **This is not financial advice, purely my own thoughts.**