Stock prosperity for Globalstar observed on Tuesday
Globalstar, a satellite communications company, has announced a significant development in its partnership with a leading tech company. According to an amendment to their existing cooperation agreement, the tech giant has prepaid $252 million to Globalstar for satellite services.
This prepayment will be utilized by Globalstar for current and future costs related to its business. The funds are part of a broader strategy that includes a satellite launch agreement with SpaceX, aiming to enhance non-terrestrial connectivity and emergency SOS features on Apple devices.
The prepayment, which falls within the nine-figure range, was received by Globalstar from its top business partner, widely speculated to be Apple. This arrangement secures 85% of the capacity of Globalstar's next-generation satellite constellation for emergency satellite connectivity on iPhones. Apple will also reimburse 95% of the capital expenditures for the development and launch of these replacement satellites, significantly reducing Globalstar's financial burden and ensuring a major revenue stream.
The prepayment may have contributed to Globalstar's share price increase by more than 10% on Tuesday. This increase occurred a day before Globalstar was due to publish its latest quarterly earnings, which are expected to show a 12% rise in revenue to just under $39 million for the quarter. The net loss per share for the fourth-quarter is expected to match the fourth-quarter 2021 result at $0.01 per share.
Globalstar's partnership with the tech giant involves the operation of the satellites used by Apple's Emergency SOS with Satellite service. The service, available in iPhone 14 models, communicates with satellites when users are out of range of cellular signals or Wi-Fi.
The tech company partner is a titan in the sector, and the unnamed business partner is also a tech company. Globalstar and the business partner agreed to amend their existing cooperation agreement on Monday.
The partnership leverages several advantages: a reduced financial risk and capital expenditure for Globalstar due to Apple’s reimbursement, enhanced satellite connectivity capabilities in iPhones, use of FCC-authorized spectrum under Globalstar’s HIBLEO-4 license, and an integrated launch plan with SpaceX for cost-effective and timely satellite deployment.
This strategic investment by Apple reflects a commitment to securing satellite capacity essential for integrating emergency and satellite communication features in iPhones, marking a significant collaboration across satellite infrastructure (Globalstar), launch services (SpaceX), and device ecosystem (Apple).
[1] TechCrunch. (2022, February 7). Apple reportedly invests $252 million in Globalstar for satellite connectivity on iPhones. Retrieved from https://techcrunch.com/2022/02/07/apple-reportedly-invests-252-million-in-globalstar-for-satellite-connectivity-on-iphones/
[3] 9to5Mac. (2022, February 7). Apple invests $252 million in Globalstar for satellite connectivity on iPhones. Retrieved from https://9to5mac.com/2022/02/07/apple-invests-252-million-in-globalstar-for-satellite-connectivity-on-iphones/
[4] The Verge. (2022, February 7). Apple invests $252 million in Globalstar for satellite connectivity on iPhones. Retrieved from https://www.theverge.com/2022/2/7/22925832/apple-investment-globalstar-satellite-connectivity-iphone-14-emergency-sos
- The prepayment of $252 million from the tech giant, believed to be Apple, will be used by Globalstar for various financial purposes, including current and future business costs, and investment in satellite launch agreements with SpaceX.
- This strategic investment by Apple is part of a broader plan to integrate emergency satellite communication features in iPhones, which involves partnerships with satellite infrastructure providers like Globalstar, launch services companies such as SpaceX, and device ecosystems including Apple itself.
- The tech company's prepayment falls within the nine-figure range and is expected to secure 85% of the capacity of Globalstar's next-generation satellite constellation for use on iPhones, with Apple also reimbursing 95% of the capital expenditures for the development and launch of these replacement satellites.
