TECH

Apple buys 20% stake in iPhone satellite service partner Globalstar

Apple has agreed to purchase a 20 percent stake – totaling 400,000 class B shares – in Globalstar, its satellite messaging service provider for $400 million. The iPhone maker has also agreed to make cash pre-payments that will help Globalstar expand its footprint both on the ground and in the sky.

Apple partnered with Globalstar in 2022 to provide emergency messaging capabilities to iPhone 14 users when they are outside of traditional cellular or Wi-Fi range. The feature arrived as a freebie for the first two years, although Apple extended coverage by one additional year for iPhone 14 owners in late 2023.

With the launch of iOS 18, the feature was expanded beyond emergency use. Now, users can send and receive texts, emojis, and tapbacks over SMS and iMessage via satellite. Apple notes that iMessages sent via satellite are end-to-end encrypted for added security.

In a recent filing with the US Securities and Exchange Commission, Globalstar said Apple would also make infrastructure pre-payments totaling up to $1.1 billion (funded on a quarterly basis during the construction process) to help build a new satellite constellation, grow infrastructure here on the ground, and expand global licensing. Some of the money will also help with Globalstar's debt repayment.

Should everything go according to plan, the 20 percent acquisition deal will close later this week.

Most expect Apple to eventually charge for its satellite service, but that has not materialized as of this writing. What exactly that'll look like when the time comes remains to be seen, but Apple still has plenty of time to let the feature mature and prove itself before asking customers to pay up for access.

As an emergency-only feature, Apple likely would have struggled to convince iPhone users to pay. But now with the ability to send casual messages to friends and family while off the grid, it is far more appealing. Should it eventually evolve to include voice calls or even data, the feature would be even more appealing.

Apple's investment will fund a new Globalstar satellite constellation, which, together with the existing infrastructure, will expand the coverage of the network used by the brand's new smartphones.

Apple also acquired class B shares in the subsidiary responsible for operating the new satellite network, for US$400 million.

The partnership's main objective is to expand Apple's ability to offer satellite connectivity to its users, especially in remote areas where cellular coverage is limited. Apple will have access to 85% of the new satellite network's capacity, ensuring its customers have priority access to connectivity via space.

The company plans to launch satellite messaging service for iOS 18 devices, allowing users to connect even in areas without cellular coverage. The plan was announced during the WWDC 2024 event in June of this year.

Globalstar stated that part of the amount raised will be used to pay off its current debts, in addition to investing in the needs to expand the satellite network.

mundophone