Globalstar stock rallies on expanded satellite services deal with Apple

Globalstar (NYSE:GSAT) shares jumped 64% premarket on Friday after the telecom firm announced an expanded deal with Apple (NASDAQ:AAPL).

Under the updated services agreement, Globalstar (GSAT) has agreed to offer expanded services to Apple (AAPL) over a new mobile satellite services network, including a new satellite constellation, more ground infrastructure and increased global licensing. The extended mobile satellite services network will be owned by a unit, Globalstar SPE.

Apple (AAPL) will make an infrastructure prepayment of up to $1.1B and an amount necessary for Globalstar to retire its outstanding 13.00% Senior Notes due 2029 as part of the deal.

In addition, the tech company has also agreed to buy 400,000 Class B Units in the Globalstar SPE vehicle, representing a 20% equity interest, for $400M to be paid upon the closing, which is currently expected to occur on or about November 5, 2024.

Globalstar (GSAT) estimates its total annual revenue to be more than double 2024 annualized levels in the first annual period after the launch of the expanded satellite services. The company plans to hold an investor day in December to provide additional details on its business strategy.

Apple (AAPL) said in November 2022 that it would spend $450M on U.S. infrastructure to help get the Emergency SOS texting feature off the ground.

The company provided Globalstar (GSAT) with $252M in financial assistance in the form of a prepayment to be used for satellite manufacturing costs in 2023, as well as launch and other costs associated with the constellation used for Apple’s Emergency SOS satellite feature, that launched on the iPhone 14.5:18.

After initially launching in the U.S. and Canada, the Emergency SOS feature was expanded into much of Western Europe in December 2022. It is also available in Japan, New Zealand and Australia.

Seeking Alpha editor Chris Ciaccia contributed to this story.