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Talk of a Globalstar sale. Starlink satellite changes. These are among the tea leaves that could presage an Apple-SpaceX satellite partnership.

The Takeaway

A few years ago, Elon Musk pitched Apple unsuccessfully on the idea of his company, SpaceX, providing satellite connectivity to iPhones. There are tantalizing hints that such a deal could be back on the table.

In recent months, in anticipation of a possible future arrangement with Apple, SpaceX has added support in its new satellite designs for the same radio spectrum Apple uses for the iPhone’s current satellite features, which Globalstar provides, according to a person with direct knowledge of the matter. That could allow SpaceX’s Starlink unit to deliver satellite communications capabilities to existing Apple devices when Starlink’s next-generation satellite constellation begins operating in the coming years.

At the same time, the chair of Globalstar, James Monroe, has talked to associates about the possibility of selling his satellite company for more than $10 billion, said people who heard him make the remarks (Globalstar’s current market capitalization is $5.3 billion). Such a deal could signal that Globalstar and Apple are seeking more independence from each other.

A deal between Apple and SpaceX would significantly boost Musk’s aspirations for SpaceX to become a significant provider of wireless services directly to phones. Starlink is currently the leading provider of satellite internet service, mostly to customers who use it via antennas atop their homes or vehicles. But connecting ordinary smartphones to satellites—to keep those devices online when they’re out of reach of conventional cellular networks—could greatly expand the reach of Starlink’s services.

SpaceX is investing heavily to realize that goal. Last month, it reached an agreement to acquire EchoStar’s wireless spectrum for $17 billion. That spectrum will help SpaceX deliver faster internet service to phones globally. It already has partnerships with traditional telecom players like T-Mobile to connect its satellites directly to phones. Last month, SpaceX President Gwynne Shotwell said the company is working with chipmakers to get them to integrate Starlink connectivity into phones.

There are potential obstacles to a SpaceX-Apple partnership. The two companies have a tempestuous relationship. Musk has blasted Apple for its App Store fees because of the financial impact they have had on his X social network. And in August, xAI—Musk’s artificial intelligence startup, which he merged with X—sued Apple, accusing it of manipulating its App Store rankings to hurt xAI’s Grok chatbot and favor OpenAI’s ChatGPT.

Past efforts between the companies to partner on satellites have gone nowhere. In 2022, before Apple launched its first satellite features in the iPhone 14, Musk pitched Apple on the idea of SpaceX becoming the exclusive satellite provider for iPhones for 18 months, The Information previously reported. He proposed that Apple pay $5 billion up front and then $1 billion a year after the end of the exclusivity period. Apple rejected his offer.

Still, Apple—which prides itself on partnering with companies that provide the best experiences for users—has incentives to make peace with Musk. For starters, Globalstar’s network is regarded as slower and outdated compared to that of Starlink.

As a result, the first satellite feature Apple launched with Globalstar gave iPhone users the ability to send only text messages to emergency services in areas without cellular reception. Since then, the companies have added location sharing and the ability to send messages to personal contacts and to roadside assistance.

Globalstar has struggled against SpaceX’s growing dominance in satellite communications and remains highly dependent on Apple, which has invested around $2 billion into Globalstar over the past three years. In Globalstar’s most recent quarterly earnings filing, it included a warning for the first time about Apple, its most important customer: “The loss of the Customer would likely have a material adverse impact on our financial condition, results of operations and cash flows.”

SpaceX, in contrast, is an ambitious, well-capitalized juggernaut that recently launched its 10,000th Starlink satellite and accounts for more than 60% of all active satellites orbiting Earth, by some estimates. One of Starlink’s biggest advantages is the fact that SpaceX rockets launch more payloads into space than any other company or government in the world.

Inside Apple, some executives have long been skeptical of the Globalstar partnership, believing Apple should instead partner with SpaceX, The Information previously reported.

‘Almost Unchallengeable’

While Apple has prominently promoted satellite connectivity in iPhones for its potentially life-saving safety benefits, the company has been careful to avoid taking steps that could in effect make it into a telecommunications carrier itself.

For example, Apple still hasn’t started charging consumers for satellite services as it doesn’t want to be regulated as a carrier, according to people who worked on the features. Last month, it announced it was extending free satellite services for iPhone users for another year, after having announced a similar extension last year.

For the same reason, Apple is unlikely to buy Globalstar itself, even though its agreement with the satellite company gives Apple the right to buy Globalstar before it sells itself to another suitor.

If Apple and SpaceX become partners, consumers who buy new iPhones and other Apple devices in the coming years are likely to be the biggest beneficiaries of the faster satellite connections that Starlink’s next generation of satellites will make possible.

Apple plans to add support in upcoming iPhones as early as next year for 5G networks that aren’t tethered to Earth’s surface, which includes satellites, a person with direct knowledge of its plans said. That would give the iPhone full internet access over satellite rather than restricting the device to the small set of messaging features available on Globalstar’s network or the limited number of iPhone apps that work on T-Mobile’s satellite partnership with SpaceX, which operates at slow 4G speeds.

In the near future, it’s unlikely SpaceX will be able to fully replace the traditional cellular carriers who operate on the ground. Satellite connectivity to phones only works well when users are outdoors with uninterrupted views of the sky, ruling out the service for use inside buildings.

Some analysts say it’s becoming increasingly difficult for a company like Apple to maneuver around SpaceX now that Musk’s company has strengthened its position by acquiring EchoStar’s spectrum.

“If Apple gives up on trying to compete with SpaceX, then Starlink becomes almost unchallengeable in this market,” said Tim Farrar, president at satellite consulting firm Telecom, Media and Finance Associates. “It cements their dominance.”