Amazon to buy Apple satellite partner, Globalstar in $11.6b deal

Interesting times as Amazon reaches a deal to acquire Apple’s satellite services partner, Globalstar for around $11.6 billion. Under the arrangement Amazon and Apple have agreed that Amazon will power satellite services such as Emergency SOS via satellite messages for supported iPhone and Apple Watch models.

Globalstar satellites, radio frequency spectrum, and operational expertise will enable Amazon Leo to add Direct-to-Device (D2D) services to future generations of its low Earth orbit satellite network. The new Amazon Leo service will help mobile network operators extend voice, text, and data services to customers beyond the reach of terrestrial cellular networks, also creating a direct competitor to Starlink.

How will it work for Apple?

Globalstar currently supports satellite services on iPhone 14 or later, as well as Apple Watch Ultra 3. These services let users text emergency services, message friends and family, request roadside assistance, and share their location. 

Amazon has agreed to continue to support Appe products currently using Globalstar’s existing and planned upcoming low Earth orbit satellite constellations, being manufactured by MDA Space, and has also agreed to “collaborate” with Apple on future satellite services using Amazon Leo’s expanded satellite network.

Reaching that deal has allegedly been complex, not least I imagine because Apple has invested a huge amount of money in Globalstar’s infrastructure to support the services it wants to provide. 

What Apple said

“Apple and Amazon have a long and proven track record of working together through Amazon’s core infrastructure services, and we look forward to building on that collaboration with Amazon Leo,” said Greg Joswiak, Senior Vice President of Worldwide Product Marketing, Apple in an Amazon statement.

Joswiak says the deal ensures Apple customers will continue to have access to the vital satellite features they have come to rely on. “Since launching more than three years ago, our groundbreaking safety service Emergency SOS via satellite has helped save many lives around the world—from a scout troop stranded on a winter hike in British Columbia, to a woman who was airlifted to safety in Colorado after her car rolled down a 250-foot cliff,” he said.

What Amazon said

“There are billions of customers out there living, traveling, and operating in places beyond the reach of existing networks, and we started Amazon Leo to help bridge that divide,” said Panos Panay, Senior Vice President of Devices & Services, Amazon. 

“By combining Globalstar’s proven expertise and strong foundation with Amazon’s customer-obsession and innovation, customers can expect faster, more reliable service in more places—keeping them connected to the people and things that matter most. We’re excited to support Apple users through the Leo D2D system, and look forward to working with mobile network partners to help extend coverage to every corner of the planet.”

What Globalstar said

“We have long believed low Earth orbit satellite constellations offer the most effective path to truly connect users and devices anywhere and anytime,” said Paul Jacobs, CEO, Globalstar. “For more than 30 years, Globalstar has executed on this vision through sustained, long-term investment in technological innovation, operational excellence, and development of globally harmonized spectrum across both satellite and terrestrial applications. The combination with Amazon Leo will advance innovations in digital connectivity that will benefit our customers and advance us toward a more intelligent, continuously connected world.”

What Amazon intends to do

Beginning in 2028, Amazon Leo will deploy its own next-generation D2D satellite system, allowing Amazon to deliver more advanced voice, data, and messaging services to mobile phones and other cellular devices. 

This will offer substantially higher spectrum use and efficiency than legacy direct-to-cell systems, which essentially means you can anticipate faster speeds and better performance. 

Globalstar’s existing fleet is expected to “integrate seamlessly with Amazon’s first- and second-generation Leo systems,” Amazon said, “forming a powerful, unified network that combines fixed and mobile satellite services to support a wide range of customers and use cases. 

The complete Amazon Leo network will include thousands of advanced LEO satellites with the capacity to support hundreds of millions of customer endpoints.

What happens next for the deal

The transaction isn’t expected to close until 2027 and is subject to regulatory approvals and “operational milestones”. .Under the terms of the definitive merger agreement, GSAT stockholders can elect to receive either $90 in cash or 0.321 Amazon shares for every Globalstar share they own.

Globalstar shares are already up 10% at time of writing as a consequence of the agreement. The value of the company’s stock has increased an astonishing 295.94% in the last year.

Conclusion

A bad day for Starlink. A big warning to mobile carriers who may now face a global competitor in the form of Amazon, and potentially a relief for Apple which seems to have secured access to satellite services without ending up in an anti-competitive situation as it may have been if it had taken over Globalstar while being the biggest smartphone manufacturer. Though it does seem more likely now that Amazon will begin to intensify how it competes in the mobile sector.

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