Rocket Lab Corp. (RKLB): Announces acquisition of Iridium Communications

Research evidence excerpt

Rocket Lab Corp. (RKLB): Announces acquisition of Iridium Communications

Goldman Sachs Rocket Lab Corp. (RKLB)

Strategic rationale. RKLB views the transaction as synergistic with its launch and

spacecraft manufacturing businesses, and aligns with its vision to become a

vertically-integrated space applications company. The acquisition will eliminate Iridium’s

third-party launch costs and guarantee orbital access as launch capacity tightens, and

Rocket Lab will have immediate access to a de-risked constellation of 66 operational

LEO satellites with an established global customer base. Iridium completed an upgrade

of its full constellation in 2019 for ~$3bn, and with an average useful life of 17.5 years,

the constellation is expected to be operational through 2035.

With launch capacity expected to tighten over the medium-term, RKLB is moving to

capitalize on its ability to provide orbital launch capabilities in a supply constrained

market. The company views the acquisition as another piece of its push into the space

applications vertical, and increasing its mix of revenue derived from operating

constellations that generate high margin recurring revenue from providing satellite

services. RKLB notes that Iridium’s heritage providing voice and data solutions to the

government enables the ability for RKLB to compete for awards on the Space Data

Network (SDN), and sees incremental opportunity in the broadband market, as well as

extracting greater capabilities from the constellations current L-band spectrum via

network densification.

Exhibit 1: Iridium constellation upgrade timeline

$mn

Source: Iridium Communications Inc.

1) OEBITDA represents earnings before interest, income taxes, depreciation and amortization,