Amazon Signs $11.57 Billion Deal for Satellite Firm Globalstar to Challenge Starlink

Amazon signs $11.57 billion deal for satellite firm Globalstar to challenge Musk's Starlink

Amazon's Strategic Acquisition of Globalstar to Compete in Satellite Connectivity

By Deborah Mary Sophia and Akash Sriram

April 14 (Reuters) - Amazon.com said on Tuesday it would acquire Globalstar in an $11.57 billion deal, bolstering its fledgling satellite business as it tries to catch up with Elon Musk's Starlink.

Amazon's Satellite Expansion Plans

Tech companies are pouring in billions of dollars to capture 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 3,200 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 Direct-to-Device (D2D) Technology

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.

Starlink's Market Position and Response

Meanwhile, Starlink already serves more than nine 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.

Expert Opinions on the Deal

"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.

Shares of Louisiana-based Globalstar rose more than 9% in early trading, after gaining over 6% in the past two weeks on media reports of the companies' discussions. Amazon stock rose 2.5%.

SpaceX Dominance and Industry Trends

SpaceX's Satellite Launch Capabilities

SPACEX DOMINANCE

Amazon's move comes closely on the heels of SpaceX moving forward with its plan for a stock market listing. Starlink contributes roughly 50% to 80% of revenue generated by SpaceX.

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.

Industry Consolidation

"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.

Deal Details and Regulatory Considerations

Shareholder Options and Premium

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

That represents a premium of more than 31% to Globalstar's closing price on April 1, the day before reports of deal discussions emerged.

Closing Timeline and Regulatory Approval

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 U.S. Federal Communications Commission, the agency's chair Brendan Carr said in an interview on CNBC.

"We're very open-minded to the Amazon-Globalstar deal," Carr added.

Apple's Involvement and Future Satellite Networks

Late last year, Globalstar said a new, Apple-backed network under development would expand to 54 satellites, including a small number of backups, from about two dozen in low-Earth orbit currently.

Amazon has signed an agreement with Apple - which invested about $1.5 billion in Globalstar in 2024 - to continue powering satellite-based safety features, such as Emergency SOS and Find My, for iPhone and Apple Watch users.

(Reporting by Deborah Sophia and Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila and Leroy Leo)