What's Happening?
Amazon has announced its acquisition of Globalstar, a satellite operator, for $11.57 billion. This move is part of Amazon's strategy to expand its satellite business and compete with Elon Musk's Starlink. The acquisition will add Globalstar's two dozen
satellites to Amazon's existing network of over 200 satellites. Amazon plans to deploy around 3,200 satellites in low Earth orbit by 2029, with a significant portion required by a regulatory deadline in July 2026. The deal offers Globalstar shareholders the option to receive $90 in cash or 0.3210 shares of Amazon common stock per share. The acquisition is expected to close next year, subject to regulatory approvals and specific deployment milestones.
Why It's Important?
The acquisition is a significant step for Amazon as it seeks to establish a foothold in the satellite internet market, which is currently led by Starlink. With Starlink serving over nine million users globally, Amazon's entry into this market could intensify competition and drive innovation. The deal also underscores the growing importance of satellite-based connectivity, particularly in areas with limited cellular coverage. By acquiring Globalstar, Amazon aims to enhance its Direct-to-Device (D2D) capabilities, which are crucial for providing reliable, low-data connections directly to mobile devices. This acquisition could also position Amazon to better compete in the satellite spectrum and accelerate its D2D deployment.
What's Next?
The acquisition will require approval from the Federal Communications Commission (FCC), with the agency's chair expressing openness to the deal. Amazon's integration of Globalstar's satellites is expected to bolster its satellite internet services, with plans to launch these services later this year. The deal also involves a partnership with Apple, which has invested in Globalstar, to continue powering satellite-based safety features for iPhone and Apple Watch users. As the satellite industry continues to evolve, further consolidation and competitive moves from other tech companies are likely.
