①USA low-orbit satellite communication company Globalstar received a $1.5 billion investment from Apple, including $0.4 billion in equity acquisition and $1.1 billion in infrastructure prepayment. ②The funds will be used to purchase new satellites and upgrade ground infrastructure. Globalstar will continue to provide Apple with approximately 85% of satellite internet transmission capacity. ③The profitability of mobile satellite services is a concern, and Apple's emergency SOS service free trial has been extended to 2025.
Finance Association news on November 2nd (Editor Shi Zhengcheng) On Friday local time, the USA low-orbit satellite communication company Globalstar announced that its major customer, Apple, has committed to invest $1.5 billion in the company through investments, service purchase commitments, and other means.
(Source: SEC documents)
Impacted by this news, Globalstar's stock price surged by more than 40% after Friday's opening, with a market cap approaching $2.7 billion.
(Globalstar daily chart, Source: TradingView)
Some of the holdings are already profitable.
Overall, the trade between Apple and Globalstar is divided into two main parts. Firstly, Apple invested $0.4 billion to acquire a 20% stake in the company, a transaction completed around November 5th. Based on the latest market cap, Apple is already in a profitable state.
The other amount is a $1.1 billion "infrastructure prepayment," paid quarterly, mainly used to expand Globalstar's satellite service network. Globalstar will also use this money to repay $0.232 billion of 13% interest senior notes.
As part of the trade, Globalstar stated that it will continue to provide about 85% of its satellite internet transmission capacity to Apple.
The new funds will help Globalstar purchase new satellites and upgrade ground infrastructure. Currently, the company is operating 31 satellites, while also having ordered up to 26 more satellites for supplementing and upgrading the low-orbit satellite network.
In the past few years, with the commercialization progress of low-orbit satellites, various mobile phone manufacturers have successively introduced emergency contact services based on satellite internet.
In September 2022, Apple premiered the 'Emergency SOS' service on the iPhone 14— in regions where this service is available (mainly Europe, the USA, and Japan), when users are in remote areas without Wi-Fi or cellular network coverage, they can send distress messages to emergency services by connecting to satellites above. With the iteration of the iOS system, features like messaging with friends and family, and sharing location have been added.
(Source: Apple official website)
In addition to Globalstar, the low-orbit satellite market also includes SpaceX, AST SpaceMobile, Iridium Communications, Lynk Global, EchoStar Mobile.
Ways to make money become a puzzle.
While Apple is increasing its bets on the satellite internet business, it has also brought up an old question: How can mobile satellite services make money?
When this feature was released in 2022, Apple had previously stated that this service would be provided free of charge for two years - meaning that the initial users should have started paying by the end of this year, but Apple has extended the free period until 2025.
This means how to price satellite internet communication, it will be a tricky problem. Considering that the original intention of this service is to seek help in life-threatening situations, any pricing will seem inappropriate. One possible breakthrough idea is to continue providing emergency assistance services for free, while charging for positioning and sending non-emergency messages.