Rocket Lab buys Iridium
In a blockbuster deal today, Rocket Lab acquired the satellite company Iridium and all its satellite constellation assets.
Rocket Lab will acquire all the outstanding shares of Iridium common stock for $54 per share in a cash and stock transaction. This represents an enterprise value for Iridium of approximately $8.0 billion.
The acquisition … merges Rocket Lab’s leading launch capabilities and satellite manufacturing with Iridium’s global satellite communications network, spectrum, and 500-plus strong partner ecosystem to create a competitive, vertically-integrated space company that designs, builds, launches, and operates its own constellations, delivering critical communications capability to millions of users worldwide.
The transaction will give Rocket Lab an immediate foothold in space-based applications, including both proprietary and standards-based satellite Internet of Things (IoT) and direct-to-device (D2D), PNT (GPS-capability), and critical safety-of-life services, creating a formidable challenger in the global telecom market.
This deal continues Rocket Lab’s aggressive effort in the last few years to diversify its capabilities beyond simply launching rockets. It has successfully demonstrated its ability to build satellites and even interplanetary probes. This merger immediately gives the company the spectrum and communications constellation that already has 2.5 million subscribers, with the ability to enhance and expand that constellation using its launch and satellite capabilities. With the introduction of its larger Neutron rocket next year, Rocket Lab will be well positioned to compete directly with all the other communications constellations, and to do it at a lower cost.
The deal also strengthens the company’s vertical integration. As the press release notes, it “creates an end-to-end space company spanning launch, spacecraft, spectrum, and on-orbit communications services through a proprietary network. Expected to eliminate third-party launch costs for constellation deployment and replenishment and captures launch margin internally while guaranteeing orbital access as launch capacity tightens, ensuring continuity of service to customers.”
Not surprisingly, the value of Rocket Lab’s stock today has leaped upward, rising from a closing price on Friday of around $85 to over $100 today (late Monday).
The industry trend across the board now is vertical integration, begun by SpaceX. It just pays to have the rocket company own the satellite constellation. Such a partnership lowers cost, and gives the company great flexibility and control. Expect more satellite constellations to team up with other rocket companies, especially the startups like Stoke Space and Relativity that are building reusable rockets.
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This was supposed to be a reply to BMJ over on the post about SpaceX launching the GEO bird for Sirius-XM but wound up being an independent comment as I was having some Cloudflare-related difficulties posting an actual reply. In any case, I’m reposting it all here as it is more on-topic:
Nifty! Iridium got its second-generation constellation up on Falcon 9s at market rates. I think it has figured out that future upgrades/additions to the constellation would best be done as part of a company that, like SpaceX, can launch its own stuff at cost.
This does make one wonder if Blue Origin will either someday acquire the LEO constellation from Amazon or at least make it some sort of joint venture entity – perhaps in combination with Blue’s own TeraWave – that can also acquire launch at cost. Long term, it’s going to be a heavy enough lift to compete with Starlink without the added burden of also having to pay retail for launches.
Hmmmmm…….I don’t know any Irridium users…….seems to be plenty of Starlinkers…….can someone do a compare and contrast for us dummies?
Starlink provides internet service. Iridium provides satellite cell phone service globally, especially in remote areas, but it is expensive. It is mostly used by specialists out in the field.
Government contracts, particularly for the military. We regularly used Iridium’s back in 05, 06 and I know a lot of teams still use them in remote areas.
COL–
Not my expertise but, basic Iridium satellite phone service costs about $60 a month just for access plus you pay roughly $1.25 a minute for Data and $1.00 per Text and you are connected at 2.4 Kbps fixed speed at 2,400 baud, and assuming a dedicated Antenna.
This is not something anyone could or would use to casually peruse the Internet.
Higher tier service is available at higher price-points, but you pay up to $1,200 for the equipment, higher fixed monthly access, and similar cost per-minute or per-text.
Thanjs,Bob!
Thanks, Bob!
Wow! Above my pay grade! Thanks!
It seems that success depends on the Iridium part of the new entity being able to transition to a low-cost mass market satellite building business that can out-compete SpaceX, and the RocketLab business being able to transition to an order of magnitude higher launch cadence with a brand new medium-lift rocket that is 100% reusable.
They appear to be trying to get into a market that incumbent SpaceX already dominates, so I wonder what their “hook” is besides Neutron?! If they don’t have one, will Neutron be cheap enough, soon enough? This could be tough sledding.
Iridium has handsets that can communicate directly without a satellite dish.
It’s slow and expensive, but has established a base among businesses and government entities that had to have communication and were able to pay.
With Starlink starting to offer direct to cellphone service, Iridium must’ve seen the handwriting on the wall.
Reminds me of the old Blackberry vs iPhone competition.