Globalstar has reached a new agreement with Apple to provide mobile satellite expansion services. According to the agreement, Globalstar will provide services to Apple through a new mobile satellite service network, including a new satellite constellation and additional infrastructure. Following the announcement of the agreement, Globalstar's stock price surged by 64%. Apple will make a cash prepayment, including an infrastructure prepayment of up to $1.1 billion, and has agreed to purchase a 20% stake in Globalstar SPE for $400 million. Globalstar expects that its annual total revenue after the expansion will be more than double the annualized level of 2024
The Zhitong Finance APP noted that after Globalstar (GSAT.US), a telecommunications company, announced an expanded agreement with its client Apple (AAPL.US), its stock price surged by 64% in pre-market trading on Friday, before narrowing to 45%. According to the updated service agreement, Globalstar has agreed to provide expanded services to Apple through a new mobile satellite service network, including a new satellite constellation, more ground infrastructure, and additional global licenses. The expanded mobile satellite service network will be owned by a unit of Globalstar SPE.
Apple will make a cash prepayment to Globalstar, including approved capital expenditures related to the expanded MSS network, which includes: (1) an infrastructure prepayment of up to $1.1 billion, which will be funded quarterly during the construction period. Globalstar SPE will use these funds, along with proceeds from the following stock sales, to pay the amounts due for the expanded MSS network (including but not limited to construction and launch costs); (2) the amount required for the company to repay its upcoming 13.00% senior notes ("2029 Notes"), with the infrastructure prepayment and funds for current debt repayment included in the "2024 Prepayment Agreement."
In addition, Apple has agreed to purchase 400,000 Class B shares of Globalstar SPE for $400 million, with payment expected to be made around November 5, 2024, subject to closing conditions.
Globalstar estimates that during the first annual period following the expansion of satellite services, its total annual revenue will be more than double the annualized level of 2024