Amazon.com announced an $11.57 billion acquisition of Globalstar, significantly boosting its nascent satellite business in a direct challenge to Elon Musk's Starlink.
Tech giants are investing heavily in satellite connectivity. Amazon aims to enhance its network by deploying approximately 3,200 satellites by 2029, with half expected to be operational by a July deadline. The company plans to launch its satellite internet services later this year.
Globalstar's network specializes in reliable, low-data Direct-to-Device (D2D) connections, eliminating the need for ground-based cellular towers and proving vital for emergency services and connectivity in remote areas. This acquisition will enable Amazon to deploy D2D services starting in 2028.
In contrast, Starlink, a SpaceX unit, already serves over 9 million users globally with high-speed broadband and is developing its own D2D services.
Analysts note this move allows Amazon to catch up in D2D spectrum and accelerate deployment. Globalstar's shares surged over 10% on the news, with Amazon's stock also rising. MDA Space, a key contractor for Globalstar, saw a 9% increase.
The acquisition will not affect Globalstar's existing partnership with Apple, which provides satellite-based safety features like Emergency SOS. Amazon has agreed to continue these services. Apple had previously invested significantly in Globalstar to support its iPhone communication services.
SpaceX continues its rapid satellite deployment, with Starlink forming a substantial portion of its revenue. Industry experts anticipate further consolidation in the satellite communications market as companies strive to compete with SpaceX's scale and launch capabilities.
Globalstar shareholders can choose between $90 in cash or Amazon common stock per share. The offer represents a premium of over 31% to Globalstar's pre-deal closing price. The deal, valued at approximately $10.8 billion as of April 9, is expected to close next year, pending regulatory approvals, including from the U.S. Federal Communications Commission, which has expressed openness to the acquisition.