Premarket trade Friday following the announcement of an expanded alliance between Globalstar Inc. (GSAT, Financial) and Apple Inc. (AAPL, Financial) saw its shares leap 64%. Globalstar will improve its mobile satellite services network under the new arrangement by adding a new satellite constellation, more ground infrastructure, and more worldwide licensing. Globalstar SPE, a Globstar subsidiary, will oversee the enlarged network.
Under the agreement, Apple will pay up to $1.1 billion for infrastructure and cover the 13% Senior Notes of Globalstar due in 2029. Apple also intends to buy a 20% equity share in Globalstar SPE by purchasing 400,000 Class B units for $400 million, estimated to be finalized around November 5, 2024.
Following the expansion of the network, Globalstar projects that its yearly income will more than double from 2024 levels. The company has set an investor day for December to present its strategic future vision. Moreover, this arrangement expands on Apple's past funding of Globalstar, including $252 million in 2023 to pay satellite production and other expenses for its Emergency SOS satellite feature, first introduced with the iPhone 14.
