SEATTLE, Washington: Amazon is making a major push into satellite communications with a US$11.57 billion deal to acquire Globalstar, as it ramps up efforts to compete with Elon Musk's dominant Starlink network.
On April 14, the company said the acquisition would strengthen its position in the fast-growing satellite internet market, where technology firms are investing heavily to expand global connectivity.
Through the deal, Amazon will add Globalstar's roughly two dozen satellites to its existing constellation of more than 200, as it works toward deploying about 3,200 satellites in low-Earth orbit by 2029. Around half of those must be operational by a July regulatory deadline.
Amazon is also preparing to roll out its satellite internet services later this year.
Globalstar's network is designed for Direct-to-Device (D2D) connectivity, enabling mobile devices to connect directly to satellites without relying on ground-based cellular towers. The technology is particularly valuable for emergency services and for providing coverage in remote or underserved areas.
The companies said the deal would help Amazon begin deploying D2D services from 2028.
Amazon faces stiff competition from SpaceX's Starlink, which already serves more than nine million users globally and continues to expand rapidly.
"Amazon has been falling behind Starlink on satellite broadband. Acquiring Globalstar allows them to catch up on their D2D spectrum position and leap ahead on D2D deployment," said Armand Musey, president & founder of Summit Ridge Group.
Shares of Louisiana-based Globalstar rose more than nine percent in early trading, while Amazon stock gained 2.5 percent.
The move comes as consolidation accelerates in the satellite communications sector, driven by SpaceX's scale and launch capacity.
"There has been continued consolidation in the sector in order to compete with SpaceX in the satcom market, given SpaceX's scale... and virtually unlimited launch capacity. I expect this trend to continue," said Austin Moeller, director of equity research at Canaccord Genuity.
Under the agreement, Globalstar shareholders can choose to receive either $90 in cash or 0.3210 shares of Amazon common stock for each share they own — a premium of more than 31 percent to the company's closing price on April 1.
The acquisition is expected to close next year, subject to regulatory approvals, including from the U.S. Federal Communications Commission, and the achievement of certain deployment milestones. "We're very open-minded to the Amazon-Globalstar deal," FCC Chair Brendan Carr said in an interview on CNBC.
Globalstar is also working on a new Apple-backed network expected to expand to 54 satellites, while Amazon has an agreement with Apple to continue supporting satellite-based safety features such as Emergency SOS and Find My on iPhones and Apple Watches.
