Rocket Lab Corp. made its clearest bid yet to challenge Space Exploration Technologies Corp. – or SpaceX. The Long Beach launch company’s $8 billion acquisition of Virginia-based Iridium Communications Inc. opened the door for its own orbital satellite constellation, planting Rocket Lab firmly on the telecommunications turf SpaceX has claimed with its Starlink network.
Already armed with matching manufacturing means, the purchase would allow Rocket Lab to vertically integrate Iridium’s satellite network while scaling it through existing capacities. The combined cash-and-stock deal, expected to close by mid-2027, means yet another player has come to take a piece out of the global telecommunications market – on track to generate roughly $1.32 trillion of service revenue in 2029, according to PricewaterhouseCoopers data.
“This is a defining moment for the space industry and the start of a new era of strategic, accelerated growth for Rocket Lab and Iridium,” said Sir Peter Beck, founder and chief executive of Rocket Lab, in a statement. “By marrying Iridium’s deep heritage, trusted infrastructure, and highly sought-after spectrum with Rocket Lab’s extensive and proven launch and manufacturing capabilities, we have the capability to unlock entirely new markets.”
The acquisition would grant Rocket Lab immediate access to Iridium’s 66 low Earth orbit satellites and space-based applications, including its L-band spectrum, positioning, navigation and timing (PNT) infrastructure, and safety-of-life services. That would also come with Iridium’s more than 2.5 million subscribers. With the transaction, Rocket Lab would tap into government, defense, aviation, maritime and commercial communications markets, diversifying its predominantly space-tech-related portfolio.
Wall Street is already sensing the gravity of the deal. Since Rocket Lab made the announcement on June 29, its stock price has surged from $91.29 per share to close at $100.46 Thursday, representing a 10.05% boost.
‘Own our own assets in orbit’
Among the many firms taking on traditional telecommunication giants, aerospace challengers have gained much ground.
SpaceX stepped onto the scene in 2015 with its Starlink constellation, and now it has a fleet of more than 10,000 active satellites and a subscriber base exceeding 12 million across 160 countries. In April, Amazon.com Inc. announced it is acquiring satellite operator Globalstar Inc. for approximately $11 billion by 2027, which integrates the latter’s network and radio spectrum into Amazon’s low Earth orbit satellite program to offer direct-to-device cellular service.
Rocket Lab is not oblivious to the trend, and Iridium seems the perfect partner. It pulled in $871.7 million of revenue and $114.4 million of net income last year, with $634 million in the service revenue category – “the steady, subscription-style revenue Rocket Lab doesn’t yet have,” according to a Motley Fool report by analyst Daniel Sparks.
“As the worlds of space and terrestrial communications continue to converge, more critical services will depend on space-based capabilities,” said Matt Desch, Iridium’s chief executive, in a statement. “Success will come from those who can bring new innovations to space quickly and sustain them over time as efficiently as possible.”
Acquiring the firm also aligns with Rocket Lab’s long-term strategy to bring everything in-house and build a diverse business that goes beyond its initial focus on small-scale launch services.
“We do acquisitions that bring new capabilities into the company and interest into new markets, and then we do acquisitions that basically further vertically integrate our supply chain and de-risk execution,” Rocket Lab Chief Financial Officer Adam Spice told the Business Journal in March. “If you look at launch today, it only represents about 30% of our revenue. Seventy percent of our revenue comes from a completely different business that wasn’t even there five years ago.”
Spice further shared that Rocket Lab’s long-term goal is to “actually own our own assets in orbit.” With the acquisition of Iridium’s network, that future is shaping up to be a reality.
Besides tapping into the Iridium constellation, Rocket Lab also secured a $90 million satellite production contract from the U.S. Space Force in May, under which it will design, manufacture and operate two geostationary satellites for military tracking purposes.
SpaceX IPO
As the massive $75 billion initial public offering of SpaceX escalates the competition to commercial space dominance, the Iridium deal signals Rocket Lab’s move to secure key swaths of the market before it’s too late.
While SpaceX primarily operates consumer-grade frequencies, Iridium targets a different market with the L-band spectrum, providing highly reliable, low-bandwidth frequencies for satellite phones, emergency maritime tracking and aviation communications. Though the two companies are not yet directly in competition in telecommunications, the move signals a race that increasingly looks like a close pursuit with similar footprints.
“The ambition isn’t subtle. Rocket Lab wants to look more like SpaceX – a company that builds rockets, launches them, and runs its own satellite network on top,” Sparks, the Motley Fool analyst, wrote. “What Rocket Lab is paying for is years of work it would otherwise have to do itself.”
