TAMPA, Fla. — Globalstar said Feb. 28 that Apple is lending the company $252 million to help cover upfront costs for replenishing its low Earth orbit (LEO) constellation.
Apple is providing the funds as a prepayment for using the network to upgrade satellite services launched last year for its latest iPhone, which can connect with one of Globalstar’s existing 24 satellites in LEO for emergency services outside cellular coverage.
Globalstar picked MDA and Rocket Lab in February 2022 to supply an initial 17 satellites for launch by the end of 2025 in a contract worth $327 million. The contract includes an option for up to nine additional satellites at $11.4 million each.
The satellite operator intends to fund any upfront costs not covered by Apple’s prepayment with its own cash.
Apple has already agreed to reimburse Globalstar for 95% of the constellation; however, it previously required the satellite operator first to raise third-party financing to fund the manufacturing contract.
Removing the need to raise this financing amid challenging macroeconomic conditions clears a significant degree of uncertainty for Globalstar’s constellation plans.
Last year, the operator sought to extend payment deadlines under its manufacturing contract as rising interest rates made closing the financing difficult.
Globalstar’s shares jumped more than 10% on the news.
In a regulatory filing with the Securities Exchange Commission, the company said it expects the prepayment to be recouped in installments beginning no later than the third quarter of 2025.
Globalstar is allocating 85% of the capacity on its next-generation constellation to Apple. The operator plans to continue offering legacy services including connectivity for Internet of Things (IoT) devices with the remaining 15%.
Apple has not said how it could use Globalstar’s new satellites to improve satellite-enabled features.
The company is currently offering its satellite-enabled SOS capability on iPhone 14 and iPhone 14 Pro for free for two years.