FILE PHOTO: An AT&T logo is seen at an AT&T store in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo
WASHINGTON (Reuters) -AT&T said on Tuesday it will purchase key wireless spectrum licenses from EchoStar for about $23 billion, as the the U.S. telecom provider seeks to boost its network in a competitive market.
In June, President Donald Trump prodded satellite communications and Dish TV parent EchoStar and Federal Communications Commission Chair Brendan Carr to reach an amicable deal over the fate of the company's wireless spectrum licenses, the company said.
The deal marks the latest major investment by AT&T to accelerate its fiber and 5G network build-out as the wireless market saturates and internet usage surges.
Shares of EchoStar jumped more than 40% in premarket trading, while AT&T rose 1.5%.
In May, the FCC told EchoStar it was investigating the company's compliance obligations to provide 5G service in the United States, questioning EchoStar's buildout extension and mobile-satellite service.
Trump met on June 12 with EchoStar Chair Charlie Ergen and later called Carr to take part in the meeting. EchoStar had been seeking to shield its cache of wireless spectrum licenses from the threat of revocation by the FCC.
EchoStar said the AT&T deal is part of its ongoing efforts to resolve the FCC's inquiries.
"This transaction puts our business on a solid financial path, further facilitating EchoStar's long-term success, and enhancing our ability to innovate and compete as a hybrid network operator," said EchoStar CEO Hamid Akhavan, adding it continues to evaluate strategic opportunities for its remaining spectrum portfolio.
U.S. satellite TV provider DirecTV terminated its agreement to acquire EchoStar's satellite television business last year, which includes rival Dish TV, over a failed debt-exchange offer.
In May, AT&T clinched a deal to acquire Lumen Technologies' consumer fiber operations for $5.75 billion in cash.
AT&T's bundled plans that combine high-speed fiber with mobile offerings have resonated well with customers as rivals like T-Mobile and Verizon double down on promotions.
The company added 401,000 net monthly bill-paying wireless phone subscribers during the April to June period.
The licenses cover more than 400 markets across the U.S. in total and will strengthen AT&T's low-band and mid-band spectrum holdings, the company said.
The companies also agreed to expand their network services agreement, enabling EchoStar to operate as a hybrid mobile network operator providing wireless service under the Boost Mobile brand. AT&T will be the primary network partner.
AT&T also reiterated its 2025 financial guidance and said it intends to finance the spectrum purchase with cash on hand and incremental borrowings.
(Reporting by Harshita Mary Varghese in Bengaluru and David Shepardson in Washington; Editing by Devika Syamnath and Nick Zieminski)
