- Amazon to buy Globalstar and take on SpaceX
- Apple could become an Amazon shareholder as part of the deal
- The deal puts pressure on SpaceX to accelerate Starlink growth plans and creates more buzz around the space economy ahead of potential SpaceX IPO
Dan Coatsworth, head of markets at AJ Bell, comments:
“Amazon’s acquisition of Globalstar means it is snapping even harder at SpaceX’s heels. It elevates Amazon’s position in the space economy and means Elon Musk now has a competitor with deep pockets. Globalstar lacks the scale of SpaceX but is now in a stronger position to play catch-up.
“Amazon is building a low earth orbit satellite network to provide fast internet access from space for more remote locations on earth – such as rural areas or on ships. This is precisely what SpaceX’s Starlink service offers, making Amazon a direct rival.
“Buying Globalstar gives Amazon the capability to connect via space to smartphones without needing special hardware. For now, that means basic services like emergency messages or texts rather than full internet connectivity.
“What makes this deal more interesting is Apple’s involvement both as a customer of Globalstar and a shareholder. Apple already uses Globalstar’s services for emergency SOS on certain iPhones and Apple Watch models and has a 20% equity stake in the satellite services group.
“Apple will continue to use Globalstar’s service under Amazon’s ownership, creating a working relationship between the two tech giants.
“Amazon is offering a choice of either stock or cash to Globalstar investors, but the cash component is capped at 40% of total Globalstar stock. That implies Apple could be paid partially in Amazon shares, raising questions about where else the two companies might want to work together.
“What’s certain is that the space race is heating up and big money is expected to be ploughed into this industry over the coming years. Amazon’s involvement will only fuel more investor interest, and it could spur SpaceX into upping its game and making sure it maintains the massive lead it currently has over rivals.”
