“We believe this will be one of the most transformative deals in the space industry.”
Rocket Lab announced on Monday that it is acquiring the satellite communications company Iridium. The deal, made for cash and shares of Rocket Lab stock, values Iridium at about $8 billion.
The deal pairs the launch company, founded and led by Peter Beck, with a decades-old profitable satellite company whose network of 80 satellites in low-Earth orbit provides telecommunications services.
“We believe this will be one of the most transformative deals in the space industry,” Beck said in a short promotional video announcing the deal. “It’s the ultimate combination for growth.”
Beck said the deal provides a shortcut for Rocket Lab to enter the “space applications” business—that is, providing space-based services rather than launching the satellites that offer voice, Internet, and other communication services to customers on Earth. This is where the majority of revenue in the space industry lies.
“This is a deal where one plus one equals three,” he said. “One being Rocket Lab—we have unfettered access to space and the ability to build spacecraft at scale. We also do missions for people that matter. Then you think of Iridium, they have an already operational constellation; spectrum, and not just any spectrum but extremely valuable spectrum; millions of customers and they’re a profitable business. The result of these two things is a fully integrated, self-launching space superpower.”
Iridium holds a substantial chunk of L-band spectrum, and the company currently serves 2.55 million customers around the world. In addition to its telecommunications capabilities, the company is also developing a commercial position, navigation, and timing service as an alternative to GPS.
Beck said Rocket Lab will “unlock” more growth from Iridium’s existing network of satellites and build new constellations to provide additional services from space.
Longtime Iridium chief executive Matt Desch said the move would allow Iridium to deploy new services more quickly.
“Success will come from those who can bring new innovations to space quickly and sustain them over time as efficiently as possible,” Desch said in a statement. “We’re excited about being able to accelerate the next generation of IoT, aviation, maritime, PNT, and national security capabilities, and pursue new innovative applications as part of Rocket Lab.”
This is a bold move by Rocket Lab, which has been on a buying spree as it seeks to scale up its operations to compete with SpaceX and Blue Origin, both of which also have launch capabilities and seek to operate large constellations. In the last two years, Rocket Lab has acquired both Geost and Mynaric to improve its spacecraft-building capabilities. But both of these acquisitions, valued in the low hundreds of millions of dollars, were dwarfed by the Iridium deal.
Iridium is a company with a long history. First founded in 1998, it had to be rescued from bankruptcy only a couple of years later by the US government due to the difficulty of building and launching a commercial satellite communications network. Arriving as CEO in 2006, Desch developed a plan for a next-generation constellation and worked with SpaceX and its Falcon 9 rocket to get it launched in the 2010s. For a time, Iridium was SpaceX’s most important commercial launch customer. Those satellites generate the bulk of Iridium’s revenue today.
To become, in Beck’s words, a “self-launching space superpower,” Rocket Lab will need to complete the development of its Neutron launch vehicle. The company’s existing workhorse rocket, Electron, is simply too small to deliver most of the kinds of communications satellites that Rocket Lab envisions developing.
The company originally targeted 2024 as the debut date for the medium-lift Neutron rocket, which will feature a reusable first stage and a novel fairing design. There have been teething pains with Neutron, however, including engine failures and structural test anomalies. Nominally, the company is still planning to launch during the fourth quarter of this year. But given the testing issues, it’s not even certain that Neutron will make its debut in 2027.
Source: Ars Technica
