TAMPA, Fla. — Iridium Communications announced plans March 4 to buy out Satelles, which provides a backup for GPS via the satellite operator’s L-band network, marking the first acquisition in the 36-year-old company’s history.
The operator is spending about $115 million to buy the 80% of Satelles it does not already own in a deal they expect to complete April 1.
Reston, Virginia-based Satelles has been broadcasting timing and location signals since 2016 through a channel Iridium’s satellites in low Earth orbit previously used for paging.
These signals are a thousand times more powerful than those from U.S.-based GPS satellites and other global navigation satellite systems (GNSS), Iridium CEO Matt Desch said during a media briefing.
Stronger signals from space are better at penetrating walls for indoor coverage and are also less susceptible to being jammed or spoofed.
Rising demand for more secure positioning, navigation, and timing (PNT) capabilities that can also serve as a backup for existing GNSS helped Satelles generate revenues in the low tens of millions of dollars in 2023, Desch said, and are set to become a major contributor to Iridium’s bottom line in the coming years.
Iridium estimates Satelles service revenue will climb to more than $100 million per year by 2030, on top of sales from equipment and engineering.
The acquisition comes as Iridium seeks to hit $1 billion in annual sales before the decade’s end, derived mainly from the company’s voice, messaging, and data connectivity services. Iridium recorded $791 million in revenues for 2023, up 10% year-on-year.
During a recent investor meeting, the publicly listed operator said “tuck-in acquisitions” would help the company reach its $1 billion goal.
In addition to Satelles, Iridium is a minority shareholder in Aireon, the aircraft-tracking venture that also leverages its constellation, and GNSS signal aggregator DDK Positioning.
Iridium has also recently announced plans to make its satellites compatible with 5G standards used by mass-market smartphones, staking its claim to a direct-to-device market that has attracted SpaceX and other established and startup satellite operators.
The company declined to disclose how many customers Satelles serves and the amount of business it has in the pipeline.
Satelles CEO and cofounder Michael O’Connor, who will join Iridium following the deal and report to Desch, said during the media briefing that it is starting to build commercial traction in regions that include the United States, Western Europe, and Asia.
The company’s timing synchronization services are being used to protect trading on stock exchanges such as the New York Stock Exchange.
Data centers and 5G base stations also depend on a timing synchronization signal and are a near-term service opportunity the company is chasing.
According to Desch, it can be very expensive to get a sufficient GPS timing reference signal to 5G base stations, particularly those inside a building because of the antenna that must be installed outside on a leased rooftop to access them.
Other potential customers include airlines and governments.
The Pentagon is among government agencies exploring ways to reduce GPS dependence — efforts galvanized by Russia’s 2022 invasion of Ukraine, where Russian electronic warfare systems have repeatedly jammed and spoofed critical infrastructure.
Iridium plans to invest in the capabilities following the transaction to reduce the size and cost of the equipment and make it easier to deploy.
Customers currently need to connect a device the size of a credit card to a router or other equipment requiring timing synchronization, and an indoor antenna about the size of a small pepper shaker.
According to Desch, standardized chips Iridium hopes will enable smartphones to send texts and SOS alerts via its satellites from 2026 could potentially use the signals for timing synchronization and in-building location services.
Further out, Iridium sees a growing need worldwide for more secure location-based services to serve autonomous vehicles.
Another company developing alternative GPS services is Xona Space Systems, a five-year-old Californian startup aiming to start building as many as 300 small PNT satellites by 2025.
