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Qualcomm Satellite Messaging Partnership Likely To Trigger Iridium's Revenue Stream, Analyst Says

Benzinga · 01/06/2023 13:43

Qualcomm Inc (NASDAQ:QCOM) has been the previously unnamed partner in Iridium Communications Inc's (NASDAQ:IRDM) smartphone Technology Development Agreement and Service Provider Agreement. 

Snapdragon Satellite will be a satellite-based, two-way capable messaging solution for next-generation premium Android smartphones

It will start with devices based on the Snapdragon 8 Gen 2 Mobile Platform and be powered by Snapdragon 5G Modem-RF Systems enabling OEMs and service providers to offer global coverage with emergency messaging. And then could expand to include other personal devices like laptops, tablets, vehicles, and IoT. 

In addition, existing Iridium partner Garmin Ltd (NYSE: GRMN) will support emergency messaging. 

The technology will also serve recreational use on Iridium's fully deployed satellite constellation that covers the globe from pole to pole. 

RelatedQualcomm Launching Snapdragon Satellite: What Investors Should Know About New Product

Raymond James analyst Ric Prentiss expects Iridium will earn revenues through Development Fees, Device Royalties, and Network Usage Fees, but the company has not shared any details regarding the magnitude or timing of these revenues. 

Prentiss expects some financial information with FY23 guidance on the 4Q22 call (~mid-February), with longer-term details likely coming at Iridium's 2023 Analyst Day (~May).

As opposed to working directly with a single smartphone OEM like Samsung Electronics Co, Ltd (OTC: SSNLF), the analyst believes this partnership with Qualcomm on the chip and technology side should lead to global connectivity across several different Android-enabled smartphone devices. The analyst thinks the next steps will be announcements about specific smartphones incorporating Snapdragon Satellite. 

While there have been several recent announcements related to satellite and smartphone connectivity partnerships, Prentiss thinks Iridium offers several inherent advantages. The benefits included global spectrum landing rights, a fully deployed L-Band satellite constellation, and a long history of developing similar technologies.

Moreover, the analyst believes this is a vast global market with room for several successful players, with other ventures including T-Mobile US, Inc (NASDAQ: TMUS) and SpaceXApple Inc (NASDAQ: AAPL), and Globalstar, Inc (NYSE: GSAT), and AST SpaceMobile, Inc (NASDAQ: ASTS) with partners including Vodafone Group Plc (NASDAQ: VOD) and AT&T Inc (NYSE: T). 

Prentiss will continue to watch for financial details and specific smartphone OEM announcements. The analyst currently includes no incremental revenues/EBITDA/value in the model for this agreement.

Price Action: IRDM shares traded higher by 10.2% at $58.60 on the last check Friday.

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