Amazon's Major Investment in Satellite Connectivity
Amazon is set to enhance its satellite communications capabilities by investing $11.57 billion (£8.5 billion) to acquire Globalstar, a move aimed at expanding its internet and mobile phone service offerings.
The acquisition, announced on Tuesday, will enable Amazon to deploy thousands of satellites into low-earth orbit as part of its Amazon Leo project, which has been under development for several years.
Amazon stated that the Globalstar acquisition aligns with its
"long-term vision for space-based connectivity"and plans to launch a
"next generation" satellite system in 2028.
Competition with Starlink Intensifies
This strategic move positions Amazon in direct competition with Starlink, a satellite internet and phone service provider founded by Elon Musk in 2019. Starlink currently holds a significant lead with approximately 10,000 active satellites in orbit, servicing over 10 million paying customers.
In contrast, Amazon's Leo project presently operates around 200 satellites. Starlink, a subsidiary of SpaceX, is reportedly generating substantial revenue, estimated between $500 million and $1.2 billion from individual user fees alone.
SpaceX is preparing for a public listing this year, with an anticipated valuation exceeding $1 trillion, underscoring the growing importance of satellite internet services in the aerospace sector.
Scaling Up Amazon Leo's Satellite Network
Despite Globalstar's existing constellation of approximately 50 active satellites, Amazon's Leo initiative will need to significantly increase satellite production to achieve its goal of deploying thousands of satellites by 2028.
Amazon CEO Andy Jassy highlighted in his recent annual letter to shareholders that Leo has secured commitments from several major organizations, including Delta Airlines, JetBlue, AT&T, Vodafone, DIRECTV Latin America, Australia's National Broadband Network, and NASA, to utilize Leo satellites for their services and operations as additional satellites become operational.
Globalstar's Infrastructure and Partnerships
Amazon will acquire all of Globalstar's infrastructure, which spans multiple locations including Louisiana, Georgia, Dublin (Ireland), Rio de Janeiro (Brazil), Toulouse (France), and two sites in California.
Founded in 1991 as a satellite communications company, Globalstar has established notable partnerships, including with Apple. Since 2022, Apple has offered iPhone and Apple Watch users the ability to access an emergency "SOS" mode via Globalstar's satellites.
In 2024, Apple acquired a 20% stake in Globalstar. Amazon confirmed on Tuesday that it has reached an agreement with Apple to continue supporting the "SOS" functionality on Apple mobile devices.
Globalstar is publicly traded, with a market valuation that has hovered around $10 billion throughout the year. Amazon's acquisition offer values Globalstar shares at $90 each, payable in cash or equivalent Amazon stock.
Other Industry Developments
Another competitor in the satellite internet market is Blue Origin, the aerospace company founded by Amazon's former CEO Jeff Bezos. Blue Origin's satellite project, TerraWave, announced earlier this year plans to launch at least 5,400 satellites by the end of 2027, targeting internet connectivity for large businesses.
