Rocket Lab to acquire a satellite operator with an $8 billion bet that it can become the next vertically integrated space superpower, launching its own rockets, building its own spacecraft, and now operating its own global constellation. The company announced Monday it is acquiring Iridium Communications for cash and stock in a deal valuing the satellite operator at roughly $8 billion. The acquisition pairs Rocket Lab, a launch company with a growing spacecraft manufacturing business, with a profitable, decades-old operator whose 80 low-Earth orbit satellites serve 2.55 million customers worldwide.
“We believe this will be one of the most major deals in the space industry,” CEO Peter Beck said in a video announcing the deal. “It's the ultimate combination for growth.” The logic is straightforward. Rocket Lab has rockets and satellite manufacturing.
Iridium has an operational constellation, valuable L-band spectrum, millions of paying customers, and an existing revenue stream. Combined, Beck argued, the company becomes what he called a “fully integrated, self-launching space superpower.”
“This is a deal where one plus one equals three,” Beck said. “One being Rocket Lab. We have unfettered access to space and the ability to build spacecraft at scale.
Then you think of Iridium. They have an already operational constellation; spectrum, and not just any spectrum but extremely valuable spectrum; millions of customers and they're a profitable business.”
The deal gives Rocket Lab a shortcut into the space applications business, providing services from orbit rather than just launching the hardware that provides those services. That's where the vast majority of revenue in the space industry sits, and it's a business that launch providers rarely touch.
Iridium holds a substantial chunk of L-band spectrum and is developing a commercial position, navigation, and timing service as an alternative to GPS. Longtime Iridium CEO Matt Desch said the deal would let the company deploy new services more quickly.
Beck said Rocket Lab plans to “unlock” more growth from Iridium's existing satellite network and build new constellations to provide additional services from space. The deal marks the most aggressive move yet by Rocket Lab to compete with SpaceX, which dominates both launch and satellite services through its Starlink constellation. Rocket Lab's stock rose 12% on the news, according to 24/7 Wall St.
