Peter Beck founded Rocket Lab in 2006 with the goal of launching lightweight rockets more cheaply © Rocket Lab
From FT by Nic Fildes in Auckland
Peter Beck’s Rocket Lab builds out internet satellite business to rival Starlink and Amazon LeoAfter successfully launching New Zealand’s first rocket into space, billionaire Sir Peter Beck is setting his sights on taking on Elon Musk and Jeff Bezos in the internet satellite business.
Last month, the Rocket Lab founder signed the biggest cheque of his life, agreeing to pay $8bn for US-listed satellite communications provider Iridium.
The deal adds a valuable network and spectrum — often called the
“lifeblood of the mobile industry” — to the New Zealand-founded business, which makes and launches rockets and other space components.
“It’s a big swing for Rocket Lab to go and buy something like that, but at the end of the day it’s a positive cash-generating business that’s well established,” Beck told the FT.
A test of Rocket Lab’s Archimedes vacuum engine © Rocket Lab
Founded in 2006 with the goal of launching lightweight rockets more cheaply and frequently than traditional methods, Rocket Lab is a smaller rival to Musk’s SpaceX and
Bezos’s Blue Origin in terms of valuation.
It made its first successful launch in 2009, and by 2017 its orbital Electron rockets had emerged as a competitor to SpaceX’s Falcon 9 for satellite launches.
“When you compare us to Jeff and Elon, we are definitely the plucky upstart,” said Beck.
“You don’t hear me talking about mining asteroids orbiting Mars,” referring to Musk’s vision for
space mining.
The Iridium deal fulfils Beck’s long-held ambition to expand into satellite services.
It also puts Rocket Lab into further competition with Musk and Bezos, who have expanded their Starlink and Amazon Leo satellite networks.
SpaceX bought EchoStar’s spectrum for $17bn last year and Amazon
acquired Globalstar for $11.6bn in April.
By purchasing Iridium’s network and spectrum over building their own, “we’ve short-cut that by 10 to 20 years”, said Beck.
He added that Iridium would benefit from Rocket Lab’s launch infrastructure to reduce the cost and risk of launching a new constellation in the future.
“Whoever has the rocket has the keys to space,” he said.
The acquisition of Iridium gives Rocket Lab a valuable satellite network © Justin Ide/Bloomberg
The acquisition comes at an awkward time for the industry. Rocket Lab’s shares have fallen by more than half from their peak in May as the
mania around SpaceX’s initial public offering cools.
Beck’s sale of 5mn shares for $465mn has added to the pressure.
The chief executive said Iridium, which unlike Rocket Lab is already profitable, would add a strong customer base and “an incredibly defensible high-value niche” in areas such as maritime communications. Beck said Rocket Lab would look to expand those services.
Luke Pearce, an analyst at CCS Insight, said the acquisition would accelerate competition in the booming sector for low Earth orbit (LEO) satellite services. “This creates another credible LEO competitor alongside players such as SpaceX, Amazon Leo and AST SpaceMobile,” he said.
Rocket Lab has been an extraordinary success story for Beck and for New Zealand.
A far-flung sheep farm on the thinly populated east coast of the North Island is now a hotspot for rocket launches.
The country ranks third for the number of rockets launched, behind the US and China, as its remote location has proved ideal for firing projectiles into space without disrupting aviation and maritime traffic.
Rocket Lab conducts most of its launches from a remote site in New Zealand’s Māhia Peninsula © Rocket Lab
In the three months to March, the company reported revenue of $200mn, up more than 60 per cent from a year earlier, and narrowed its net loss to $45mn from $60mn.
Valued at $40bn, Rocket Lab is by far the largest company to emerge from “the land of the long white cloud”, which has historically produced national champions from its dairy and white-goods sectors. Despite the recent fall, its shares are up nearly 600 per cent since its 2021 Nasdaq offering.
The listing minted more than 100 millionaires in New Zealand. Former employees have gone on to found some of the country’s most promising start-ups including ag-tech company Halter, automotive supply chain group Partly and local rival Dawn Aerospace.
Rocket Lab relocated its headquarters to California in 2013 and has become a key supplier to the US defence department, but it still launches most of its rockets from a remote site in the North Island’s Māhia Peninsula.
Its large manufacturing facility east of Auckland sits at the base of a sedate cul-de-sac where pūkeko swamp hens peck at the lawns. Inside the factory, 1,000 people assemble rockets under giant New Zealand and American flags.
Rocket Lab relocated its headquarters to California in 2013 and has become a key US defence supplier © Rocket Lab
Beck credits his father for igniting his aerospace passion during his youth in Invercargill, on the tip of New Zealand’s South Island.
The engineer recalled how his father would point at the stars and say: “There could be someone standing there looking back at you.”
“That for me was bigger than anything in my brain,” Beck said, and gave him a “soft spot for the planetary stuff”.
Rocket Lab’s previous acquisitions include companies that supply wheels, cameras, robotics and other essential components used for missions to Mars, Venus and the Moon.
Iridium represents a new frontier for the company.
“You definitely make your own luck, but it was fortunate that all of those stars aligned,” Beck said of the deal.
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