Iridium to Boost Secure Global Navigation with Satelles Acquisition

Iridium to Boost Secure Global Navigation with Satelles Acquisition
by Clarence Oxford
Los Angeles CA (SPX) Mar 05, 2024

Iridium Communications Inc. (NASDAQ: IRDM), a global provider of satellite voice and data communication, disclosed its agreement to acquire Satelles, Inc., a company at the forefront of satellite-based time and location services. This move aims to complement and fortify GPS and other GNSS-reliant systems with Satelles's Satellite Time and Location (STL) service, a secure solution designed to improve the efficiency and reliability of digital infrastructure's timing systems. Such infrastructure includes 5G base stations, data centers, and other vital frameworks, offering protection against GNSS vulnerabilities through low-cost hardware that eliminates the need for outdoor antennas.

The acquisition aligns with Iridium's strategy to invest in technologies that leverage its network's unique capabilities, positioning the company to outperform competing solutions in the assured Positioning Navigation and Timing (PNT) services market.

This market, projected to reach $3.5 billion by 2032, is shifting towards requiring devices that are not only integrated and of small form factor but also offer an alternative to the traditional, larger solutions connected to outdoor GPS antennas. Time synchronization and location data are crucial across various sectors, including financial services, telecommunications, cybersecurity, and transportation, which collectively rely on an estimated 10,000 data centers worldwide.

Iridium's acquisition of Satelles represents a significant step towards reducing size and cost barriers, facilitating the deployment of a more accessible solution for autonomous systems, consumer devices, vehicles, and traditional markets such as aviation, maritime, and land mobile. Moreover, this move offers Iridium's partner ecosystem an opportunity to enhance their GNSS-reliant products and infrastructure.

Matt Desch, CEO of Iridium, emphasized the growth potential of this market and the suitability of STL as a solution that addresses industry needs more effectively than any other available option. The acquisition of Satelles is portrayed as a strategic fit for Iridium, reflecting the company's long-standing commitment to utilizing its network to deliver unparalleled services.

STL leverages the robust broadcast paging channels of the Iridium satellite constellation to provide precise timing information, offering a global, secure time and location signal that is significantly more powerful than those provided by GNSS constellations. The service's resilience to regional GNSS outages, its functionality within buildings, and its current use in securing digital infrastructure for financial markets, governments, and major corporations underscore its value.

Post-acquisition, STL will emerge as a new business line within Iridium, under the leadership of Satelles CEO, Dr. Michael O'Connor, who will report directly to Matt Desch. O'Connor anticipates that integrating STL into Iridium will significantly enhance the capability's impact, benefiting customers and society at large.

Iridium is set to assume all rights to the Satelles patent portfolio, with expectations for the Iridium STL business line to generate over $100 million in service revenue annually by 2030, alongside additional revenue from equipment and engineering. Having already invested in Satelles through three previous stakes, accounting for approximately 20% ownership, Iridium will acquire the remaining interest for about $115 million, net of Satelles's cash reserves, financed through an addition to its term loan.

The transaction, marking Iridium's first acquisition in its history, is anticipated to conclude within the forthcoming weeks. Iridium will further discuss this acquisition during s's Raymond James Annual Institutional Investors Conference and its first quarter 2024 earnings call in April, with additional details available through its Investor Relations website.