Rocket Lab to buy Iridium in $8 billion space communications deal

Rocket Lab said Monday it will acquire Iridium Communications in a cash-and-stock transaction valuing the satellite communications company at about $8 billion. The deal would move Rocket Lab beyond launch and spacecraft manufacturing into operating a large communications service business.

Rocket Lab, founded and led by Peter Beck, said the transaction would combine its launch and satellite-building operations with Iridium’s low-Earth orbit network. According to Ars Technica, Iridium operates 80 satellites and runs a profitable telecommunications business.

A push into space services

Beck said in a Rocket Lab promotional video that the acquisition would help the company enter what he called the “space applications” business. Ars Technica described that as the market for services delivered from space, such as voice, Internet and other communications, rather than the launches that put satellites in orbit.

In the video, Beck called the transaction “one of the most transformative deals in the space industry” and said it was “the ultimate combination for growth.” He said Rocket Lab brings access to space and the ability to build spacecraft, while Iridium brings an operating constellation, spectrum, customers and profits.

Iridium holds a large portion of L-band spectrum and serves 2.55 million customers worldwide, according to Ars Technica. The company also is developing a commercial position, navigation and timing service intended as an alternative to GPS, according to Iridium.

Beck said Rocket Lab intends to draw more growth from Iridium’s current satellites and build additional constellations for new space-based services. Iridium chief executive Matt Desch said in a statement that joining Rocket Lab would help the company deploy new services faster.

Desch said Iridium expects to accelerate work in Internet of Things services, aviation, maritime, position, navigation and timing, and national security capabilities as part of Rocket Lab. He said success in the sector will depend on bringing innovations to orbit quickly and sustaining them efficiently.

A larger bet against bigger rivals

Ars Technica reported that the Iridium deal is far larger than Rocket Lab’s recent acquisitions of Geost and Mynaric, each valued in the low hundreds of millions of dollars. Those purchases were aimed at expanding Rocket Lab’s spacecraft-building capacity.

The acquisition would also sharpen Rocket Lab’s competition with companies that pair launch vehicles with satellite networks. Ars Technica identified SpaceX and Blue Origin as rivals with launch systems and plans to operate large constellations.

Iridium has a long history in commercial satellite communications. Ars Technica reported that the company was founded in 1998 and was rescued from bankruptcy a few years later by the U.S. government after the difficulty of building and launching its network.

Desch became Iridium’s chief executive in 2006 and later led development of a next-generation constellation, Ars Technica reported. SpaceX launched those satellites on Falcon 9 rockets in the 2010s, and Iridium was for a period one of SpaceX’s most important commercial launch customers, according to Ars Technica.

Rocket Lab’s ability to act as a “self-launching” satellite operator depends in part on its unfinished Neutron rocket. Ars Technica reported that Rocket Lab’s Electron rocket is too small for many of the communications satellites the company envisions building.

Rocket Lab once aimed to debut Neutron in 2024, according to Ars Technica. The medium-lift rocket is planned with a reusable first stage and a new fairing design, but Ars Technica reported that engine failures and structural test anomalies have complicated development.

Ars Technica reported that Rocket Lab is still nominally targeting a fourth-quarter launch for Neutron this year, while noting that the testing problems have raised uncertainty over whether the rocket will debut in 2027.

This story draws on original reporting from Ars Technica.