Satellite company Iridium hints at mysterious smartphone deal
Iridium, a satellite operator based in Virginia, announced that it "entered into a development agreement to enable Iridium's technology in smartphones."
However, the company did not disclose any details in its latest filing with the SEC, such as the companies it might be working with.
"The agreement is contingent upon the successful development of the technology, as well as negotiation and execution of a service provider agreement, which the company expects to finalize by the end of the year," Iridium wrote in the SEC filing, which was issued in conjunction with the release of its second quarter results. Interestingly, the results press release makes no mention of smartphone development.
"The development agreement also provides for development fees, royalties and network usage fees to be paid to Iridium," the company continued in the SEC filing. "To protect each company's investment in this newly developed technology, the overall arrangement will include substantial recoupment payments from each company for commercializing a similar capability with another party. The agreement also contains termination provisions and other rights, including in the case of a change of control of Iridium."
The company did not provide any further details.
"We think a SPA [service provider agreement] would be similar to the one with Garmin that sells the inReach product along with a satellite subscription to end users, with Iridium the wholesaler collecting network usage fees," speculated the financial analysts at Raymond James in a recent note to investors.
The analysts added that Iridium could make "substantial" revenues from its new smartphone plans, given the size of the global smartphone market. But they added that they believe the company's smartphone opportunity is more likely "midterm than near term."
"We think Iridium's owned L-band spectrum, fully-deployed LEO [low Earth orbit] network, and development experience are ideal to serve this market," the analysts added.
Eyes to the skies
Iridium's new announcement represents yet another major development in the satellite sector. The space has been awash in mergers, acquisitions and promises of major growth, activity largely fueled by the entry of massive companies like SpaceX and Amazon. Just this week, French satellite company Eutelsat and UK-government backed OneWeb inked an agreement to merge.
But Iridium isn't the only satellite company with ambitions to deliver services directly to smartphones. For example, startups Lynk and AST SpaceMobile are both hoping to beam satellite connections directly to smartphones inside wireless operators' existing spectrum holdings.
Separately, Globalstar has been widely rumored to be involved in some kind of agreement with Apple that could see the satellite company provide services directly to Apple iPhones.
There are growing indications that EchoStar and Dish Network – which share Charlie Ergen as a majority owner – could be developing some kind of hybrid terrestrial-satellite 5G service.
More broadly, future 5G specifications are expected to include satellite components, potentially creating a standard for such hybrid services.
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