The Zhitong Finance App learned that satellite industry consultant Tim Farrar pointed out in a report released recently that market expectations for a deal between Amazon (AMZN.US) and Satellite Communications (VSAT.US) are heating up. He said, “When I talk to many people, what really excites them is the expectation that Amazon will soon announce the acquisition of Satellite Communications. This acquisition is mainly to acquire international spectrum resources owned by Satellite Communications, and also to integrate Satellite Communications's Ka-band Geostationary Orbit (GEO) business with Amazon's low Earth orbit satellite internet service Leo, and strengthen Amazon's position in the government and aviation markets.”
He also predicted that if Amazon completes the acquisition, Equatys, a joint venture between Telecom and Space42, will come to an end as a satellite program. However, Amazon still needs to work with Space42 to coordinate its use of L-band spectrum in Europe, the Middle East, and Africa.
Meanwhile, Tim Farrar added that AST SpaceMobile (ASTS.US) has attempted to organize a competitive takeover offer against Telecom, but this effort will face funding and management hurdles. He said, “I've also heard that AST SpaceMobile has tried to organize a competitive takeover offer, but this requires strong support from telecom operators, and Weixin management will strongly oppose it.” “In contrast, selling Telecom to Amazon may be seen as a decent exit method, and the deal can be completed just before Satcom's existing geostationary orbit business is completely crushed by competition from LEO satellites.”
At the time of the above speculation, the US Federal Communications Commission (FCC) has just approved Amazon's deal to acquire Globalstar for 11.5 billion US dollars, pushing Amazon to further develop direct connection device (D2D) satellite connection services. The deal is expected to close in 2027. The deal will allow Amazon to obtain 25 MHz of internationally coordinated mobile satellite spectrum and related infrastructure to directly connect phones and other devices to the satellite.
The FCC said the deal is expected to expand network coverage, enhance emergency communications, and increase the utilization rate of related spectrum, while unlikely to cause substantial damage to the public interest. Amazon has also submitted an application pending approval, plans to deploy up to 5105 D2D satellites, and has agreed to continue supporting Apple's satellite services.
Tim Farrar also pointed out that the spectrum arrangement between AST SpaceMobile and Ligado is risky. He said, “AST SpaceMobile's relationship with Ligado is still strained. Since AST's payment to Ligado is only sufficient to cover the ongoing lease fees paid by Ligado to Satellite Communications, even though mobile satellite service (MSS) spectrum is currently highly valued, Ligado is completely unable to benefit from it.” He hinted that Ligado might relinquish spectrum rights in a settlement agreement with the US government, putting AST SpaceMobile at potential risk.
According to Tim Farrar, the acquisition of Satellite Communications will help strengthen Amazon's competitiveness against SpaceX (SPCX.US) in the field of satellite communications, and telecom operators increasingly view Amazon as a counterbalance to SpaceX. “In the D2D market, telecom operators see Amazon as the most realistic potential 'savior' in the D2D market as the market's confidence in whether AST SpaceMobile can ultimately provide practical services continues to wane,” he said.
Furthermore, Tim Farrar linked the “missing puzzle” mentioned by Musk during the SpaceX performance conference call last week to SpaceX's possible acquisition of the remaining business of Echo Star Communications (ECHO.US) through stock payments. He believes that this deal may allow SpaceX to obtain DISH Wireless network assets and additional AWS-3 and CBRS spectrum resources; at the same time, SpaceX may also use this to replace the cash payments involved in previous agreements to acquire AWS-4 and Band 70 spectrum.
He said, “Considering that the mediation process will continue until November 4, it wouldn't be surprising if the deal was announced as soon as next week. However, Ergen (Chairman of Echo Star Communications) has always been known for tough negotiations, which may make it difficult for the two parties to agree on a deal price.”