Thuraya Telecommunications is investing in Astrocast through a convertible loan valued at $17.5m.

The deal also includes an extension of the technical agreement for another four years that was originally entered between Astrocast and Thuraya in 2019.

Thuraya is the mobile satellite services subsidiary of the UAE’s flagship satellite provider, Al Yah Satellite Communications (Yahsat). The transaction marks Thuraya’s first investment in a LEO satellite constellation.

Astrocast operates a global nanosatellite IoT network with a focus on enabling low power wide area connectivity across core industries including transportation, logistics, oil and gas, utilities, mining, forestry, agriculture, and maritime. The agreement with Astrocast aims to strengthen Thuraya’s positioning in the IoT market and help expedite the execution of its strategy for satellite enabled IoT.

The overall IoT market is projected to see a CAGR of 22% over the next four years to $525bn and the satellite IoT business is forecasted to generate cumulative revenues of $6bn over the same period. The transaction with Astrocast represents an opportunity for Thuraya to increase its exposure to a fast-growing sector that is still significantly under-penetrated and has a long runway for growth.

“We look forward to working together with Astrocast to execute this strategic investment which highlights our continued belief in the outsized impact of the IoT sector for the space and satellite industries,” said Ali Al Hashemi, group CEO of Yahsat. “We are pleased to further strengthen our relationship with Astrocast as we mutually explore ways to expand our service offering across GEO and LEO assets to unlock greater growth potential. Through this agreement, we are committed to enabling innovations in the maritime, energy, logistics, transportation, mining and agriculture industries.”

Fabien Jordan, CEO of Astrocast, added: “We are delighted to have secured this agreement with Thuraya, as we anticipate their support and expertise in guaranteeing Astrocast’s success in the low-power narrowband IoT market in the future. Our partnership with Thuraya has been solid for the past four years, and their continuous support is incredibly important to us. In addition, collaborating on creating new products and applications and leveraging the Thuraya distribution network will expedite the expansion of our customer ecosystem.”

To carry out the investment, Astrocast will issue a convertible loan to Yahsat for in-kind investment of $17.5m. The loan carries an interest of 8% and has a term of 45 months from issue. Principal plus any interest can be converted into shares in the company, at a premium to market price at issue date.