AT&T has struck a deal that "could shake up" the U.S. telecom sector. What about the stock?

US mobile operator and Internet provider AT&T has agreed to buy spectrum licenses from EchoStar for $23 billion. The deal will allow AT&T to strengthen its position in 5G and fiber-optic technologies, while EchoStar will improve its financial position and settle problems with regulators. But investors had a mixed reaction to the news: AT&T shares went down after rising in early trading in New York, while EchoStar shares soared more than 80% and set a record.

US telecom giant AT&T announced on August 26 that it plans to acquire spectrum licenses from satellite communications company EchoStar for a total of $23 billion. The deal is expected to close by mid-2026 - after receiving all necessary regulatory approvals.

On the background of this news, AT&T shares rose by 0.8% at the very beginning of trading in New York on August 26, but quickly lost all their gains and began to fall by about 1%. On the contrary, EchoStar shares soared by 84% - to the maximum for the entire time of circulation on the stock exchange. Investors expect the deal to significantly improve EchoStar's financial position, Barron's explained.

The agreement between AT&T and EchoStar may "shake up" the US telecommunications sector, Barron's says. AT&T is seeking to strengthen its network amid growing competition, Reuters notes. The largest U.S. telecom operator will get exclusive rights to use licenses in more than 400 U.S. markets. The company said this will allow it to "maintain its leadership in advanced communications technologies, from 5G to fiber optic solutions."

The parties also agreed to expand cooperation on network services, with EchoStar continuing to operate as a hybrid mobile carrier, providing wireless service under the Boost Mobile brand, and AT&T becoming its primary network partner.

In addition, AT&T reaffirmed its 2025 financial outlook and said that the EchoStar deal will be funded through cash on hand and new borrowings.

According to Citi analyst Michael Rollins, the deal will allow EchoStar to "more profitably monetize a significant portion of spectrum" while also being a plus for AT&T's network ambitions, MarketWatch notes.

The value of the AT&T deal was $9 billion more than EchoStar itself paid for the spectrum and $5 billion more than the appraised value used in securitizing those assets, New Street Research analyst Philip Burnett said in a note cited by Bloomberg. While the deal amount is $1.5 billion below New Street's own estimate, he emphasized that the sale price "is nonetheless an excellent measure of value."

According to key valuation models, AT&T stock looks seriously undervalued, Simply Wall Street noted. Recent market shifts are playing into the hands of stable dividend companies like AT&T: investors are moving away from risky assets into safer securities with predictable payouts and growth potential, they said. AT&T's success isn't just due to its mobile and streaming business - investors are reassessing its risks amid industry changes and positive regulatory signals, Simply Wall Street added.

AT&T stock is up 25% in 2025, and EchoStar securities are now worth 134% more than they were at the beginning of the year, given Tuesday's surge. AT&T securities have 30 recommendations from analysts, and most advise buying (16 Buy ratings and 2 Overweight), MarketWatch shows. Another 10 analysts recommend Hold and two recommend Sell (Underweight and Sell). Echostar shares were rated by only nine analysts: seven believe the securities are worth holding, two believe they are worth buying.

In May, the Federal Communications Commission (FCC) launched an investigation into EchoStar over its commitment to launch 5G services in the U.S., questioning the extension of network construction deadlines and mobile satellite projects, Reuters specifies. The company missed bond payments in June and considered filing for bankruptcy, saying the investigation had stripped it of its ability to make decisions on 5G network development.

In June, US President Donald Trump called on EchoStar as well as FCC head Brendan Carr to find a compromise solution over wireless spectrum licenses.

EchoStar said the deal with AT&T is part of its efforts to resolve issues with the FCC.

"This transaction strengthens our financial position, facilitates our long-term success and enhances our ability to innovate and compete as a hybrid network operator," said EchoStar CEO Hamid Akhavan.

This article was AI-translated and verified by a human editor