Amazon finalizes agreement to buy satellite firm Globalstar for $11.6 billion

Amazon.com Inc. has finalized a definitive agreement to acquire satellite operator Globalstar Inc. for approximately $11.6 billion, a strategic maneuver intended to bolster its proprietary satellite infrastructure.

Under the terms announced Tuesday, Amazon is offering Globalstar shareholders a choice between $90 in cash per share or 0.32 Amazon shares, with the stock value effectively capped at $90. This valuation represents a significant 117% premium over Globalstar’s trading price in late October. The transaction is projected to conclude by 2027.

Coinciding with this acquisition, Amazon revealed plans to penetrate the direct-to-device (D2D) market by 2028. This emerging sector utilizes satellite constellations rather than terrestrial cell towers to provide connectivity for smartphones and mobile hardware.

Furthermore, Apple Inc.’s existing emergency satellite messaging suite will migrate to Amazon Leo — the recently rebranded name for Amazon’s broadband satellite project, formerly known as Project Kuiper. Securing Apple as a flagship client is a major victory for the Leo division, which has struggled with deployment delays and has trailed SpaceX’s Starlink in establishing high-profile partnerships with industries like commercial aviation.

Market Reaction

Following the announcement, Globalstar’s stock surged by as much as 11% in New York trading. Amazon’s shares saw a modest 3% increase, while AST SpaceMobile Inc., a prominent competitor in the satellite-to-phone space, saw its shares plummet by nearly 10%.

The market for satellite broadband is expanding rapidly, particularly for remote regions, yet Amazon’s progress has been hindered by manufacturing bottlenecks and rocket availability issues. Currently, Amazon Leo has roughly 200 test satellites in orbit, though the company’s long-term roadmap envisions a massive constellation of over 7,700 units. Earlier this year, Amazon petitioned the Federal Communications Commission for an extension regarding its requirement to launch 1,600 satellites by July.

Panos Panay, Amazon’s senior vice president of devices and services, stated that the acquisition ensures customers will receive "faster, more reliable service in more places," maintaining connectivity to essential people and services. To date, the D2D landscape has been dominated by SpaceX and Texas-based AST SpaceMobile. Elon Musk’s SpaceX has partnered with T-Mobile US Inc. to provide Starlink-based connectivity in areas lacking traditional cell coverage. While AST maintains partnerships with AT&T Inc. and Verizon Communications Inc., it remains in the preliminary stages of deploying its operational network.

SpaceX’s Starlink currently leads the industry with over 10 million active users and approximately 10,000 satellites in orbit, with anticipated revenues exceeding $9 billion this year. Globalstar, led by former Qualcomm CEO Paul Jacobs, currently provides the satellite backbone for safety features on the iPhone 14 and newer models, as well as the Apple Watch Ultra 3. These capabilities allow users to transmit emergency messages, request roadside help, and share location data without a cellular signal.

In a further expansion of its satellite business, Amazon recently secured a deal with Delta Air Lines Inc. The carrier has committed to utilizing the Amazon Leo network to provide high-speed in-flight Wi-Fi services to its passengers, signaling a direct challenge to existing incumbents in the aviation connectivity market.