Iridium ($IRDM) is acquiring Satelles to expand its positioning, navigation, and timing services, with the aim of complementing GPS services—or providing a backup should GPS fail.
The deal is expected to close April 1, when Satelles will become a new business line within Iridium, CEO Matt Desch told reporters on Monday. After the acquisition, Satelles CEO Mike O’Connor will report to Desch.
“The technology is an incredibly efficient use of our network,” Desch said. “That’s why we wanted to really move from where we were in the wholesale side selling signal capacity to the retail side, providing solutions to the market.”
Satelles 101: The startup, which was founded in 2013 by four Stanford doctoral students, has offered its Satellite, Time, and Location service since 2016. The system differs from traditional GPS in multiple ways, including:
- Using satellites in LEO, compared to GPS birds in MEO, which could lead to a weaker signal
- Working in areas GPS doesn’t reach, including indoors or in tunnels
By the numbers: Iridium has a previous relationship with Satelles, and already owns ~20% of the company after three previous investments. Iridium will pay $115M to finalize the acquisition—the first in its history.
Tick tock: Desch said that O’Connor approached him about six months ago asking for his blessing as a longtime partner to begin talks with people who were interested in the business. Shortly after giving O’Connor the go ahead, Desch had a change of heart—“I said, ‘This is something we should really do ourselves.”
What’s next: Desch said he expects Satelles to add to Iridium’s bottom line as soon as next year, and to add “significantly” to profits in the out years. The company is expected to discuss the acquisition in greater detail during its earnings call next month.
Correction: An earlier version of this story incorrectly stated the orbit in which GPS satellites fly. They fly in MEO.
