Iridium to Expand its Reach as a Global Alternative PNT Service with Acquisition of Market Leader Satelles

Rhea-AI Summary

Iridium Communications Inc. (IRDM) acquires Satelles, Inc. to enhance global PNT solutions, targeting critical infrastructure. The acquisition of Satellite Time and Location (STL) aims to protect against GNSS vulnerabilities and improve timing systems for digital infrastructure. The $3.5 billion PNT services market is shifting towards small-form-factor devices. Iridium plans to expand STL adoption in autonomous systems, consumer devices, and traditional markets like aviation and maritime. The acquisition is expected to generate over $100 million in service revenue by 2030.

Insights

Market Research Analyst

The acquisition of Satelles by Iridium Communications represents a strategic move to enhance its portfolio in the assured Positioning Navigation and Timing (PNT) services market. This market is projected to grow significantly, reaching an estimated $3.5 billion by 2032. The integration of Satelles' Satellite Time and Location (STL) services into Iridium's offerings is poised to address the increasing demand for secure and reliable timing systems, crucial for various sectors such as financial services, telecommunications and transportation.

From a market perspective, the focus on small-form-factor devices indicates a shift away from traditional server rack-sized solutions, which could disrupt the current market dynamics. Iridium's strategy to streamline the adoption process by reducing size and cost barriers is likely to accelerate market penetration and could potentially lead to a competitive advantage. The anticipated service revenue of over $100 million per year by 2030 underscores the financial significance of this acquisition and suggests a positive outlook for Iridium's revenue diversification and growth.

Financial Analyst

Financially, the acquisition of Satelles by Iridium Communications can be seen as a long-term investment in technology that is expected to generate substantial service revenue and additional revenue streams from equipment and engineering. The fact that Iridium had previously invested in Satelles, holding a 20 percent stake, indicates confidence in the technology and its market potential. The acquisition is likely to be scrutinized for its impact on Iridium's balance sheet, cash flows and earnings per share (EPS) in the short to medium term.

Investors will be interested in the acquisition cost for the remaining 80 percent stake in Satelles and how this will be financed. The deal's structure, whether cash, stock, or a combination and the subsequent effect on Iridium's leverage ratios and liquidity will be critical factors in evaluating the financial prudence of this transaction. The projected revenue generation by 2030 will be a key metric for investors to monitor as it will impact future valuations and the stock's performance.

Cybersecurity Expert

The integration of Satelles' STL services into Iridium's offerings is particularly relevant from a cybersecurity standpoint. The STL service's ability to deliver precise timing information through Iridium's satellite constellation enhances the security and resilience of critical digital infrastructure against GNSS vulnerabilities. This is increasingly important as GNSS-reliant systems are susceptible to spoofing and jamming attacks, which can disrupt financial markets, government operations and other major corporations.

The fact that STL signals are 1,000 times more powerful than those from GNSS constellations and can penetrate indoors suggests a significant improvement in secure time and location data provision. The resilience to regional GNSS outages provided by STL could be a game-changer for industries requiring continuous and secure operations. This acquisition could lead to a new standard in secure PNT services, potentially setting a precedent for industry-wide adoption.

Iridium's advanced portfolio of easily integrated assured PNT solutions will protect global industries and digital critical infrastructure

MCLEAN, Va., March 4, 2024 /PRNewswire/ -- Iridium Communications Inc. (NASDAQ: IRDM), a leading provider of global voice and data satellite communications, today announced that it had entered into an agreement to acquire Satelles, Inc., the leader in highly secure satellite-based time and location services that complement and protect GPS and other GNSS-reliant systems. The service, named Satellite Time and Location (STL), is an easy-to-adopt, highly secure solution that increases the efficiency and reliability of timing systems for digital infrastructure like 5G base stations, data centers, and other critical infrastructure and protects against GNSS vulnerabilities using low-cost hardware that doesn't require outdoor antennas. This acquisition continues Iridium's philosophy of investing in differentiating technologies uniquely suited to its network that significantly outperform competing solutions. 

The market for assured Positioning Navigation and Timing (PNT) services, estimated to reach $3.5 billion in 2032, is evolving to require integrated small-form-factor devices instead of the server rack-size solutions connected to outdoor GPS antennas that are available today. Time synchronization and location data play an important role in the global economy, particularly in the commercial sector for major industries supported by critical infrastructure, such as financial services, telecommunications, cyber security, and transportation. These industries and others rely on an estimated 10,000 data centers globally and their hundreds of millions of data processing and storage servers. Each of these servers requires time synchronization and can benefit from the in-server room efficiency and resilience delivered by Iridium STL.

Iridium will now work to reduce the size and cost barriers to adoption, enabling deployment of a more accessible solution for integration with autonomous systems, consumer devices, vehicles and traditional markets like aviation, maritime and land mobile. It also provides an opportunity for Iridium's existing partner eco-system to add to their portfolio of solutions and harden their GNSS-reliant products and infrastructure.

"This market is growing; it's a perfect application of our network, and this solution solves a problem for critical industries better than anything else," said Iridium CEO, Matt Desch.  "Acquiring Satelles makes perfect sense for Iridium and is consistent with what our strategy has always been, which is to take advantage of our unique network to do what others can't or do it better than anyone else can.  STL is the superior solution available today, and we have been following and investing in Satelles's technology roadmap to allow us to create even more opportunity. We're excited to formally bring the Satelles team "in-house," to the Iridium family."

The STL service utilizes the stronger broadcast paging channels of the Iridium^® satellite constellation to deliver precise timing information, which provides truly global, secure time and location signals that are 1,000 times more powerful than GNSS constellations. The service is resilient to regional GNSS outages, works inside buildings and is being used today to secure digital infrastructure for financial markets, governments, and major corporations.

STL will become a new business line of Iridium, led by Satelles CEO, Dr. Michael O'Connor who will report to Iridium CEO, Matt Desch.  "Bringing STL into the Iridium family is going to be a supercharger for this capability that will benefit our customers and our society. I look forward to a bright future together," said O'Connor.

Iridium is assuming all rights to the Satelles patent portfolio and anticipates the Iridium STL line of business will generate over $100 million in service revenue per year, by 2030, and additional revenue from equipment and engineering.

A long-standing investor in Satelles, Iridium had an ownership stake of around 20 percent from three previous investments in the company. For the remaining approximately 80 percent, Iridium will pay about $115 million, net of cash remaining in the Company, which will be financed through a tack-on to its term loan. Iridium expects to complete the acquisition in the next few weeks.  As previously announced, Iridium will be speaking at today's Raymond James Annual Institutional Investors Conference at 4:00 p.m. ET, where additional details regarding this transaction will be shared.  The presentation from the conference can be viewed via webcast through the events page of Iridium's Investor Relations website. Commentary will also be included during our first quarter 2024 earnings call in April.  This transaction is the first acquisition of another company in Iridium's history.

To learn more about Iridium, visit: www.iridium.com

About Iridium Communications Inc.

Iridium^® is the only mobile voice and data satellite communications network that spans the entire globe. Iridium enables connections between people, organizations, and assets to and from anywhere, in real time. Together with its ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. In 2019, the company completed a generational upgrade of its satellite network and launched its specialty broadband service, Iridium Certus^®. Iridium Communications Inc. is headquartered in McLean, Va., U.S.A., and its common stock trades on the Nasdaq Global Select Market under the ticker symbol IRDM. For more information about Iridium products, services, and partner solutions, visit www.iridium.com.

Forward-Looking Statements

Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the closing of the acquisition and the capabilities and potential revenue contribution of the Satellite Time and Location service. Forward-looking statements can be identified by the words "anticipates," "may," "can," "believes," "expects," "projects," "intends," "likely," "will," "to be" and other expressions that are predictions or indicate future events, trends or prospects. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Iridium to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, uncertainties regarding closing the acquisition of Satelles, the development of and market for Satelles's products and services and Iridium's ability to maintain the health, capacity and content of its satellite constellation, as well as general industry and economic conditions, and competitive, legal, governmental and technological factors. Other factors that could cause actual results to differ materially from those indicated by the forward-looking statements include those factors listed under the caption "Risk Factors" in the Company's Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on February 15, 2024, as well as other filings Iridium makes with the SEC from time to time. There is no assurance that Iridium's expectations will be realized. If one or more of these risks or uncertainties materialize, or if Iridium's underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. Iridium's forward-looking statements are based on information available to it as of the date of this press release and speak only as of the date of this press release, and Iridium undertakes no obligation to update forward-looking statements.

Press Contact: Jordan Hassin Iridium Communications Inc. Jordan.Hassin@Iridium.com +1 (703) 287-7421 X: @Iridiumcomm

Investor Contact: Kenneth Levy Iridium Communications Inc. Ken.Levy@Iridium.com +1 (703) 287-7570

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SOURCE Iridium Communications Inc.

FAQ

What company did Iridium Communications Inc. (IRDM) acquire?

Iridium Communications Inc. acquired Satelles, Inc.

What is the name of the service acquired by Iridium (IRDM)?

Iridium acquired the Satellite Time and Location (STL) service.

What market is estimated to reach $3.5 billion in 2032?

The market for assured Positioning Navigation and Timing (PNT) services.

Who will lead the new business line of Iridium (IRDM) after the acquisition?

Dr. Michael O'Connor, the CEO of Satelles, will lead the new business line.

How much service revenue is the Iridium STL line of business expected to generate by 2030?

Over $100 million in service revenue per year by 2030.