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Peter Griffin: BusinessDesk tech columnist on Rocket Lab buying Iridium for $14 billion to challenge Starlink · Best of Business

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  Speaker 2: Now.
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  Speaker 3: New Zealand's rocket Lab has just purchased a satellite communications
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  Speaker 3: company called a Ridium for fourteen billion dollars. That means
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  Speaker 3: that soon they will have their own raft of satellites.
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  Speaker 3: Peter Griffin is a tech journalist at Business Deck disc
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  Speaker 3: and host of the Business of Tech podcast and with
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  Speaker 3: us Hi Peter evening here they what do they want
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  Speaker 3: to do with the Ridium satellites.
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  Speaker 2: Well, this really shows the ambition of Peter Beck and
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  Speaker 2: rocket Lab. You know, this is probably the biggest acquisition
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  Speaker 2: in New Zealand company or New Zealand founder company has
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  Speaker 2: ever made. They have sixty six satellites up there already
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  Speaker 2: i Ridium, so they're serving over two million customers. So
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  Speaker 2: that means as soon as they buy this company they'll
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  Speaker 2: get eight hundred nine hundred million dollars in revenue. But
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  Speaker 2: what they're really looking at is taking on SpaceX and Stylink,
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  Speaker 2: and this allows them to do that, to put satellites
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  Speaker 2: up to be completely vertically integrated. Stylink and SpaceX are
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  Speaker 2: so it's a massive increase in their aspirations and the
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  Speaker 2: scale of the company.
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  Speaker 3: So is it that they want to offer us Wi
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  Speaker 3: Fi a lah Starlink.
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  Speaker 2: Well, Iridium has been around for quite a long time
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  Speaker 2: and what they specialize in is more sort of SAT
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  Speaker 2: phone and data connectivity for emergency services for the military,
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  Speaker 2: for oil rigs, for people in very remote places. That
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  Speaker 2: the type of technology they use from these sixty six
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  Speaker 2: satellites is very good for extreme weather conditions, so North
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  Speaker 2: and South Pole, parts of Africa, all that sort of thing.
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  Speaker 2: So that business is very high margin and will continue.
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  Speaker 2: But what they also have in the background when they
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  Speaker 2: launch this bigger rocket Neutron, they want to put up
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  Speaker 2: constellations of satellite just like the Starlink satellites, and that
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  Speaker 2: will then allow them to deliver broadband to consumers like
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  Speaker 2: Stylink does. The real ambition that's a little bit further away.
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  Speaker 2: With the Ridium, it's already in business. They will be
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  Speaker 2: generating revenue as soon as they sign that deal.
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  Speaker 3: And so the acquisition instead of doing yourself, is that
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  Speaker 3: you basically get it immediately rather than having to build
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  Speaker 3: all the infrastructure.
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  Speaker 2: Yes, yeah, that's the key thing, as Sir Peter Beggs
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  Speaker 2: said today this is a shortcut to where they want
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  Speaker 2: to be, which means they don't have to put up
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  Speaker 2: lots and lots of satellites and turn them on and
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  Speaker 2: then find customers. They can buy this business. And they're
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  Speaker 2: very good at making acquisitions. They've done six or seven now.
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  Speaker 2: They have a real knack for taking a company and
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  Speaker 2: integrating it into the rocket Lab view of the world.
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  Speaker 2: And that's what they will do with a radium. That's
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  Speaker 2: what they hope to do anyway.
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  Speaker 3: Yeah, do you think it was a good buy? Eight
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  Speaker 3: billion US dollars fourteen ye zealand billion.
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  Speaker 2: Yeah, I do actually think, And the way they structured
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  Speaker 2: it is a bit of cash. They have to get
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  Speaker 2: a loan for that three point six billion dollar bridging loan,
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  Speaker 2: but the other is basically in rocket Lab shares which
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  Speaker 2: have been up to one hundred and fifty dollars have
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  Speaker 2: come back, have gone up on this news. So I
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  Speaker 2: think that's quite a good move. And it seems to
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  Speaker 2: me very reasonably priced, considering that you're getting eight hundred
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  Speaker 2: million dollars US a year in revenue, and the margin
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  Speaker 2: on this is very good. This is a profitable business.
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  Speaker 2: You pay a lot of money to speak on a
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  Speaker 2: SAT phone or send an email via SAT phone. So
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  Speaker 2: I think it's a pretty good deal. But what they
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  Speaker 2: will have to do over time, those sixty six satellites,
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  Speaker 2: they will have to replace all of them, and that's
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  Speaker 2: quite an expensive undertaking. They will want to have the
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  Speaker 2: Neutron rocket in space and doing regular flights later this
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  Speaker 2: year or early next year, or else they'll have to
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  Speaker 2: go on someone else's rocket, and that will cost a
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  Speaker 2: lot of money.
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  Speaker 3: Okay, Peter, thanks very much appreciated Peter Griffin, Business Desk,
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  Speaker 3: Tech journalist.
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