Amazon to buy satellite firm Globalstar in US$11.5 billion deal

Amazon.com will acquire Globalstar in an US$11.57 billion ($16 billion) ⁠deal, bolstering its ⁠fledgling satellite business as it tries to catch up with Elon Musk's Starlink.

Tech companies are pouring billions of dollars into capturing the lucrative market for satellite-based connectivity, but it will be a tall order to match Starlink's 10,000-unit-strong network.

Through the deal, Amazon adds Globalstar's two dozen satellites to its existing network of more than 200.

Amazon has been ‌working to ramp up its network by deploying about 3200 satellites in Earth's low ‌orbit ‌by 2029, with roughly half required to be in place by a July regulatory ‌deadline.

It is also preparing to roll out its satellite internet services later this ⁠year.

Globalstar's satellite network is designed for reliable, low-data connections directly to mobile devices, or Direct-to-Device (D2D).

The technology removes the need for devices to connect to ground-based cellular towers, making them crucial in powering emergency services and delivering connectivity in areas with limited cellular coverage.

The deal will help Amazon deploy D2D from 2028, the companies said.

Meanwhile, Starlink already serves ​more than 9 million users globally.

The SpaceX unit, which provides high-speed broadband through user terminals, is also developing D2D services through partnerships with telecom operators such as T-Mobile.

"Amazon has been falling behind Starlink on ⁠satellite broadband. Acquiring Globalstar allows them to catch up on their D2D spectrum position, and leap ahead on D2D deployment," said Armand Musey, president & founder of Summit Ridge Group.

Apple-Globalstar partnership intact

Globalstar currently powers satellite-based safety features such as Emergency SOS and Find My for Apple's iPhone and Apple Watch users.

Amazon said that it has signed an agreement with Apple to continue providing those services.

Apple invested about US$1.5 billion in Globalstar in 2024 to fund the expansion of its iPhone communication services, in a deal that ​also gave the tech giant a 20 percent equity in Globalstar.

Globalstar said ⁠late last year that a new, Apple-backed network under development would expand its footprint to ⁠54 satellites, including a small number of backups, from the two dozen currently.

Apple did not immediately respond to a Reuters query on its current position in ​Globalstar.

SpaceX dominance

Amazon's move comes closely on the heels of SpaceX moving forward with its IPO plan.

Musk's SpaceX has been deploying Starlink satellites ‌at a rapid pace, ⁠launching dozens at a time and building the world's largest satellite constellation.

Starlink represents roughly 50 percent to 80 percent of SpaceX's revenue.

"There has been continued consolidation in the sector in order to compete with SpaceX in the satcom market, given SpaceX’s scale... and virtually unlimited launch capacity. I expect this trend to ‌continue," said Austin Moeller, director of equity research at Canaccord Genuity.

Under the Amazon deal, the satellite firm's shareholders can elect to receive either US$90 in cash or 0.3210 shares of Amazon common stock for each Globalstar share they own, the companies said.

Reuters calculated the deal value based on the US$90 per-share price.

The offer represents a premium of more than 31 percent to ​Globalstar's April 1 closing price - the day before reports of deal talks emerged.

Amazon told Reuters that the total consideration will fluctuate based on its share price changes until the deal closes, adding that Globalstar equity was valued at about US$10.8 billion as of April 9.

The acquisition is expected to close next year, ‌subject to regulatory approvals ⁠and achievement of specific deployment milestones by Globalstar.

The deal ​will also require approval from the US Federal Communications Commission, the agency's chair Brendan Carr said in an interview on CNBC, adding the FCC was "very open-minded" to the acquisition.