Investment

Is Amazon gearing up to buy Globalstar?

Amazon is reportedly in talks to buy the satellite group Globalstar, potentially bolstering its own low Earth orbit (LEO) satellite business, Amazon Leo, which is emerging as a competitor to satellite internet constellation Starlink.

However, as the UK’s Financial Times reports, there are some complexities involved in what is being described as a potential US$9 billion deal, notably Apple’s ownership of a 20% stake in Globalstar. No deal has, so far, been finalised and Globalstar, Amazon and Apple do not seem to have commented yet.

It’s true, however, that, as the FT points out, Globalstar shares have surged in recent months on the back of takeover speculation, and also that acquiring Gobalstar could boost Amazon’s efforts to compete with the Starlink internet service owned by SpaceX, which manufactures rockets, space exploration technology and Starlink satellites.

The Amazon Leo service launched the first batch of satellites for its internet constellation last year. The company now has more than 180 satellites in orbit. Amazon plans to have about 700 satellites in space by the middle of this year but, the FT reports, has said that a launch capacity shortage is hampering the build-out of its service, according to regulatory filings.

However, SpaceX, which has made the most of its early entry into the market, not to mention its own launch facilities, now has more than 10,000 active satellites in operation.

It also has a lot of money, with a lot more, potentially, on the way. This week SpaceX made a confidential filing with the US Securities and Exchange Commission (SEC) for an initial public offering (IPO), which would allow shares to be traded in the stock market. As we reported earlier today, the value of SpaceX, once it goes public could surpass US$1.75 trillion.

One of the areas that both companies claims to be targeting is connecting the unconnected, a market that could include many millions of people – possibly 2 billion – but that is also likely to involve low margins, so such a takeover could make it slightly easier for Amazon to address it.

That said, given the enormous costs of competing in the satcoms market, this merger isn’t the only consolidation expected. Indeed some consolidation has already happened, including the SES purchase of Intelsat and, late last year, a Lynk-Ominspace merger.



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