Rocket Lab is buying Iridium’s satellite network for $8 billion to take on SpaceX

Rocket Lab, the space company best known for its small satellite launcher Electron, has announced plans to acquire Iridium Communications for $8 billion. The deal will combine Rocket Lab’s launch services and spacecraft manufacturing with Iridium’s satellite-based communications network, putting it in a better position to challenge SpaceX.

Iridium offers communications services to over 2.5 million subscribers around the globe. Its users tap into Iridium’s constellation of 66 low-Earth orbit satellites and L-band spectrum to maintain contact with people on ships, aircraft, and in other remote locations. Iridium partnered with SpaceX to launch its constellation of NEXT satellites in 2019.

In a video about the acquisition, Rocket Lab CEO Sir Peter Beck says the deal will offer a “shortcut” for the company to build a satellite network. “They have highly valuable spectrum, which is very difficult to come by,” Beck says. “They have millions of customers, and, of course, they’re a trusted government provider.” Beck adds that it’s a “highly profitable business” and that the company is “not investing in hopes and dreams.” The move mirrors SpaceX’s Starlink push, which is currently the company’s only profitable business.

Rocket Lab aims to build upon Iridium’s network and help deploy its next generation of satellites, which will include direct-to-device services that the space company says “will grow into an important new capability for U.S. national security and emergency response.”