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SpaceX gains a vertically integrated rival as launch specialist adds global comms network
Rocket Lab has agreed to acquire Iridium Communications in an $8 billion cash-and-stock deal, potentially creating another challenger to SpaceX and Amazon for vertically integrated satellite broadband.
Both Rocket Lab and Iridium's boards unanimously agreed to the deal, which was jointly announced on Monday and is expected to close by the middle of next year. Rocket Lab separately described the move in an investor slide deck [PDF] as positioning it as a "fully integrated, self-launching, tier-1 space power" alongside the forces of Amazon/Globalstar and SpaceX/EchoStar. Amazon agreed to acquire Globalstar earlier this year to help serve its nascent Leo satellite operation, while SpaceX agreed to buy spectrum licences from EchoStar in a transaction partly funded with SpaceX shares.
Iridium currently operates a constellation of 80 satellites, 66 of which are active and the rest are on-orbit spares. The satellites use L-band frequencies for user communications and Ka-band frequencies for links between satellites and ground gateways. L-band offers lower data rates but is more resistant to weather interference. Iridium offers service around the world, including in the polar regions (as does Starlink), and claims to have more than 2.55 million global subscribers.
The soon-to-be-absorbed satellite operator already has a wide customer base across several sectors, serving the US government and military, as well as customers in the maritime, aviation, and telecommunications sectors.
One major question is how Rocket Lab would accommodate an influx of customers given the relatively small size of Iridium's constellation (Starlink has close to 10,000 satellites in orbit). Rocket Lab said it plans to expand Iridium's direct-to-device cellular offering to compete with Starlink and Amazon Leo when the latter opens to customers.
"This is our entrance into recurring applications revenue from space, but it's not the finish line," Rocket Lab said in its investor deck. "Rather than simply continuing Iridium's network, we will build upon it to scale into untapped markets and pioneer new space-based services."
Rocket Lab is likely to increase launch activity as it expands the Iridium constellation and seeks more customers.
The proposed deal would make Rocket Lab a more direct competitor to SpaceX in vertically integrated launch and satellite communications, with Amazon playing a distant third as it has yet to realize its Leo ambition.
To add to the risk for SpaceX, Rocket Lab recently achieved a record speed launch for the Space Force, putting its Pioneer space vehicle in orbit just 17 hours after receiving orders for a rapid launch tactical space mission. SpaceX, meanwhile, has pursued heavy-lift capability with Starship but has been repeatedly grounded for failing to meet launch objectives safely. Rocket Lab does not yet operate a rocket with payload capacity comparable to SpaceX's Falcon 9, and development of its planned competitor, Neutron, hasn't been without setbacks.
Rocket Lab is still unlikely to displace SpaceX, whose operations have become so closely entwined with the US government that officials have reportedly deemed them difficult to disentangle. SpaceX also has roughly a year to extend its lead while the Iridium deal undergoes shareholder and regulatory review. ®
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