Globalstar, Apple Ink $1.1 Billion Deal to Expand Satellite Services Worldwide

Globalstar, a leading provider of satellite communications, has entered into a major agreement with Apple valued at $1.1 billion, marking a significant expansion in the company’s services and infrastructure.

The deal, filed with the Securities and Exchange Commission (SEC) in an 8-K form, outlines the creation of a new mobile satellite services (MSS) network that includes a fresh satellite constellation and enhanced ground infrastructure.

At the heart of the agreement is a substantial prepayment from Apple, which amounts to up to $1.1 billion. This payment will allow Globalstar to fund the capital investments necessary to construct and launch the new MSS network.

The project will be managed by Globalstar Licensee, LLC, a subsidiary of Globalstar, with Apple holding a passive equity stake of 20% through a $400 million investment in Class B Units. The closing of the deal is expected around November 5, 2024, subject to regulatory approvals and other customary conditions.

Along with the infrastructure funding, Apple will also provide prepayment to help Globalstar retire its outstanding Senior Notes, totaling $219 million, with an additional $13 million allocated for make-whole fees.

Globalstar files 8-K with details of expanded Apple agreement for more satellites: $1.1B prepay plus $400M equity investment in special purpose entity, revenue will more than double after launch https://t.co/637K3eMeMO

— Tim Farrar (@TMFAssociates)

November 1, 2024

While Apple’s involvement includes significant financial contributions, Globalstar will retain operational control over the new network. The agreement ensures that 85% of the network’s capacity will be dedicated to providing satellite services to Apple, while Globalstar will continue to serve its other MSS customers using the remaining capacity.

The agreement also includes provisions that allow Globalstar to repurchase Apple’s equity interest under certain conditions. Should Globalstar fail to meet specific obligations, or if Apple chooses to terminate the agreement, Globalstar could be required to repay advances or redeem Apple’s Class B Units.

The company’s strong financial momentum has been evident in recent quarters. According to Globalstar’s latest earnings report, service revenue increased by 18%, pushing total revenue to a record $60.4 million.

In light of this performance, Globalstar has raised its full-year revenue forecast to $235 million, with expectations of a healthy adjusted EBITDA margin of 53%. The deal with Apple is expected to further accelerate this growth trajectory.