Mergers and acquisitions for spectrum: Rocket Lab (RKLB.US) focuses on Iridium Communications (IRDM.US) L band, and the CEO bluntly stated that “spectrum cannot be changed out of thin air”
The Zhitong Finance App notes that as Iridium Communications (IRDM.US) shareholders prepare to vote on the proposed acquisition of Rocket Lab (RKLB.US), Rocket Lab CEO Peter Baker said that this deal will bring the rocket and satellite manufacturer a valuable asset that has already attracted the attention of SpaceX and Amazon: spectrum.
RKLB shares rose 3% to close at $71.98 on Tuesday, recording a second straight trading day of gains.
Iridium's spectrum is critical to Rocket Lab
In an MTS interview, Beck said, “The only thing you need for communication is spectrum. Spectrum is a law of physics; you can't change the spectrum out of thin air.”
Beck used SpaceX and Amazon's spectrum investments as examples to explain why Rocket Lab wanted Iridium. This deal will add satellite communication services to an enterprise that has already manufactured spacecraft and launched rockets.
“I probably shouldn't have called it Rocket Lab in the first place; maybe I should have called it Space Lab (Space Lab).” Beck said, “Rockets always steal the limelight.” He said that integrating launches, spacecraft and services under the same roof can reduce the cost and time required to deploy a new network.
According to his “rough estimate of napkins,” Beck estimates that Rocket Lab could have developed and deployed the Iridium constellation for about $350 million, and he estimates that Iridium spent about $3 billion on this. He also said that such a project might only take 12 to 24 months, rather than 5 years or more.
Beck called Iridium's L-band spectrum “a really loud sound” that can penetrate rain and buildings, and is therefore extremely valuable for defense and security-critical communications. He also mentioned the potential of this spectrum for alternative location services, saying that its signal might be 1000 times stronger than GPS and more difficult to be interfered with.
Iridium shareholders are scheduled to vote on the merger on Thursday. Rocket Lab has completed a $1.944 billion share sale and terminated a previous $3.6 billion bridge financing commitment, providing sufficient cash for the proposed acquisition. The company expects the deal to be completed by mid-2027.
The Space Force is betting on continuing to advance
The company is implementing the same “build-launch-operate” integrated model in the field of national security. Rocket Lab said in a recent X (Twitter) post that it has completed the program launch of the “Space-based Aerial Target Indication” (SB-AMTI) demonstration project for the US Space Force. The company said it will deliver a Fluctuating spacecraft equipped with sensing technology to help the military track down airborne threats.
Prior to this launch, the company just announced last month that it had received a contract award of 397 million US dollars from the Space Force. Rocket Lab is tasked with developing, launching, and operating a number of Fluctuations, to be carried by its Neutron rocket, which has yet to fly for the first time. The contract includes an option to purchase additional spacecraft, but Rocket Lab has yet to disclose the number of satellites or launch dates.
SpaceX received an additional $4.16 billion SB-AMTI contract award in May. The Space Force has said it plans to use multiple vendors in a broader architecture, which will allow Rocket Lab to take a place far beyond its initial SpaceX project.