$1.5B Deal Expands Satellite Phone Services
Nov 18, 2024
A major investment in Globalstar’s new constellation project is part of Apple’s significantly expanded satellite communications strategy. Tech giant has said it will invest $1.5 billion, $1.1 billion of which will be spent developing a new satellite constellation, while $400 million in the form of a 20 percent equity stake in a Globalstar LLC, which will oversee the new system. This is a big step up in Apple’s commitment to satellite communications services.
Apple iPhone satellite locator. Credit: Apple
The project, which is separate from Globalstar’s ongoing constellation upgrade with MDA Space, is an extension of the company’s satellite infrastructure. The investment includes not only the development and launch of a new mobile satellite services constellation but also substantial ground infrastructure improvements. Under the terms of the agreement, Apple has committed to reserving 85 percent of the network’s capacity for use by its own services, a sign of just how deep the partnership between the two companies really is. Key elements of the financial structure of the deal comprise strategic provisions for Globalstar’s stability and growth. The $1.1 billion part is a prepayment for the use of the new network to provide expanded satellite services, plus $232 million to pay down debt. These financial arrangements allow Globalstar to continue to maintain strong operational capability while undertaking this ambitious expansion project.
Paul Jacobs, Globalstar’s CEO, has confirmed that work on the new constellation program is already under way, but details about satellite manufacturers and project timelines are not yet available. The announcement has sent shares in the company soaring, as reflected in the market’s confidence in the expanded partnership with Apple. Globalstar is continuing its existing constellation refresh program by ordering 17 satellites from MDA Space and the option for 9 additional units. It follows an existing successful collaboration between the two companies. Since November 2022, Apple has integrated satellite capacity into standard phones, and is the first phone manufacturer to do so, using Globalstar’s satellite capacity for its emergency messaging service on the iPhone 14. In addition to emergency messaging, the service has expanded to include standard messaging in places where cellular or Wi-Fi are not available, exhibiting the real world utility of satellite to phone.
Competition in the satellite-to-phone communication industry is growing broader. Apple was the first to bring these services to the mass market, but others are joining forces with satellite operators to develop similar capabilities in collaboration with equipment manufacturers and mobile network operators. In the United States, companies such as AST SpaceMobile partner with major carriers such as AT&T and Verizon, and mobile network operators in other countries. This partnership has evolved in tandem with the increasing need in consumer electronics and communications for satellite connectivity. With the growing use of satellite to phone technology, Apple’s strategic investment in Globalstar’s new constellation puts both companies in a position to make a big impact on how the world connects. It’s a major milestone for both companies, but also a sign of a larger shift in how consumers may get communications services in the years ahead.
