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Dish Network has announced its merger with satellite operator EchoStar, creating a new company worth approximately billion. This move aims to reunite billionaire Charlie Ergen’s telecom empire in order to tackle the growing competition from larger U.S. carriers.

In recent years, Dish Network has sought to expand its services beyond satellite TV into areas such as streaming TV and mobile telecom. However, the company has faced tough competition from major rivals like AT&T and Verizon Communications.

The deal, which will be an all-stock merger, combines Dish’s pay-TV business and its 5G network with EchoStar’s satellite infrastructure that serves retail, business, and government clients. This integration is expected to boost cash flow and reduce immediate capital expenditure needs for the combined company.

According to New Street Research analyst Jonathan Chaplin, the main objective of the transaction is for Dish to gain access to EchoStar’s .7 billion in cash. Chaplin also states that besides improving liquidity, this merger will enhance Dish’s leverage.

Under the terms of the deal, EchoStar stockholders will receive 2.85 Dish Network’s Class A shares. This exchange ratio represents a 12.9% premium to EchoStar’s closing stock price on July 5, the day before reports of the merger surfaced.

Following the announcement, EchoStar’s stock fell 5% in early trading, while Dish’s stock rose by 4%.

Charlie Ergen, co-founder of Dish, owns more than half of its outstanding shares and nearly 60% of EchoStar. Ergen will serve as executive chairman, and EchoStar CEO Hamid Akhavan will lead the combined company once the deal closes, which is expected to be by the end of the year.

Dish shareholders will own approximately 69% of the newly merged company, while EchoStar shareholders will hold the remaining stake.

In addition to the merger, both Dish and EchoStar have reported second-quarter revenue that slightly exceeded analysts’ average estimates.

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