In 2020, just before the COVID19- pandemic shook global markets, U.S. communications company Comtech attempted to acquire Israeli satellite equipment manufacturer Gilat Satellite Networks for $577 million. That deal collapsed, dragged on in court and ended with Comtech paying Gilat a $70 million cancellation fee. Six years later, in true Hollywood fashion, the tables have completely turned: Gilat (Nasdaq: GILT, TASE: GILT), now a global leader in satellite network technology, solutions and services and traded at a valuation of approximately NIS 3.1 to 3.4 billion, signed an agreement to acquire most of Comtech's own satellite and space activities for $157.5 million in cash. The acquired business, which generated approximately $195 million in the 12 months ending last January, most clearly illustrates the deep strategic shift the Israeli company is undergoing. It is no longer just another player in the civilian-commercial market but is becoming a dominant force in the global defense-tech market.
Full Integrated Solution
The dramatic move involving Comtech is primarily aimed at expanding Gilat's presence in the U.S. and deepening its access to massive government and military budgets. The acquired business brings with it a prestigious customer base that includes the U.S. Department of War (DoW), security agencies worldwide and satellite operators.
"Our goal is to strengthen the defense sector, where we see significant future growth," says Gilad Landsberg, President of Gilat Defense, who has extensive experience in the defense industry (including senior roles at Rafael, Aeronautics and later as COO at Gilat). "Over 70% of the acquired business is directed toward government institutions and armed forces, with an emphasis on the U.S. DoW. This acquisition will make Gilat's defense-related segment account for more than 40% of the combined company's revenues."
The global defense satellite communications equipment market is currently valued at over $2 billion and is expected to double to over $4 billion in the next five years. Geopolitical tensions, from Ukraine and the Middle East to the South China Sea and Europe, are forcing armies to invest in modern, resilient and decentralized communication networks (net-centric battlefield). For Gilat, which has so far generated approximately $100 million annually in the defense segment, this is an opportunity to accelerate sales, with the combined company expected to achieve an annual revenue run rate of over $700 million, according to estimates.
The operational strategy of the dedicated defense division, "Gilat Defense," led by Landsberg, relies on providing end-to-end solutions (on-stop shop). Instead of a security organization having to purchase an antenna from one manufacturer, a modem from a second and an amplifier from a third, Gilat unifies all components and systems under one roof into a fully integrated solution.
This synergy is made possible by combining the forces of the group's subsidiaries, which include Gilat DataPath, specializing in tactical ground terminals, rapid deployment systems and field services for the U.S. Armed forces and the U.S. Department of War; Gilat Wavestream, a leader in the development and manufacturing of advanced solid-state power amplifiers (SSPAs) and block upconverters (BUCs) with proven efficiency in extreme conditions; Gilat Stellar Blu, with expertise in airborne terminals using ESA technology; and now Comtech's satellite and space division, which completes the technological portfolio.
While Gilat specializes in decentralized networks using TDMA technology, Comtech brings expertise in large communication channels using SCPC technology. Landsberg notes that the acquisition brings Gilat into two complementary and significant technological areas: space engineering, which includes electronic components and engineering services for satellites, launchers and space stations required to withstand demanding space conditions, and troposcatter systems, which involve technology enabling data transmission over hundreds of kilometers beyond line-of-sight (BLoS) without using a satellite, by reflecting radio waves off atmospheric layers, a vital solution for forces operating in mountainous areas, at sea, and as a backup for satellite communication systems.
Open Hybrid Approach
One of the biggest challenges today in satellite communications, as many companies are currently experiencing, is competition from giants like SpaceX and its Starlink satellite constellation. "Starlink offers a closed and proprietary system," explains Hagay Katz, Gilat's Chief Product and Marketing Officer. "The satellites, ground stations and end-user terminals are all exclusively manufactured and managed by them. Gilat has chosen a completely opposite strategy, which we define simply: Gilat is the Android of the satellite world. It allows everyone to connect with everyone."
Gilat's systems are based on an open and flexible architecture (multi-orbit software-defined architecture). This is a next-generation, cloud-based advanced ground segment for satellite communications designed to work with Software-Defined Satellites and 5G networks. It enables unified and continuous management of satellite networks in various orbits (multi-orbit) and can work simultaneously with any existing or future satellite constellation, navigating communications in real time. This feature enables hybrid solutions that combine different orbits: low Earth orbit (LEO) satellites offering fast cruising and low-latency data transmission, medium Earth orbit (MEO) satellites, and geostationary (GEO) satellites located at an altitude of 36,000 kilometers and providing broad and stable coverage.
According to Katz, many countries and security organizations are currently concerned about complete reliance on closed networks and seek to establish "sovereign Networks." Gilat's ability to offer terminals and networks that dynamically and seamlessly switch between different satellites and orbits provides them with flexibility, redundancy and resilience against disruptions necessary for critical operational activities.
Enabling Drones to Transmit on Long-Range Missions
As part of the company's focus on unmanned tactical platforms, the company recently unveiled the new electronically steered antenna (ESA) from RaySat (a European subsidiary of Gilat): Viper Ka ESA. The antenna was designed specifically for drones, where severe size, weight and power (SWaP) constraints exist, along with the need to minimize latency.
The Viper Ka weighs only four kilograms and has an ultra-low profile of seven centimeters, minimizing aerodynamic impact on the aircraft. The antenna operates without moving parts, providing high reliability and shock resistance, and enables continuous broadband (Ka-band) connectivity with low latency, with automatic switching between LEO, MEO and GEO satellites. This solution joins the company's BlackRay system, operational on several drones, enabling real-time video and data transmission on long-range, beyond-line-of-sight missions. The new antenna is the first in a series of products based on the same advanced core technology and is expected to serve as the foundation for developing additional solutions for diverse operational applications, including land platforms and small vessels.
Battle-Proven Performance in the International Market
Public and government trust in Gilat's technology translates directly into an unprecedented backlog of orders and prestigious international contracts. In the past year, the company reported a series of significant wins, including: a contract with a potential value of up to $23 million over five years to provide maintenance and support services for mobile satellite terminals to the U.S. Department of War; an order for over $16 million from a European security organization to supply DKET tactical mobile terminals, which serve as resilient communication infrastructure for forward-deployed forces; a $9 million order from the Israeli Defense Ministry to supply next-generation systems and modems for critical missions in competitive environments; and an order for over $7 million for the EnduroStream SSPA power amplifier solution to support the U.S. Department of War.
At the same time, the company supplies end-user equipment for large satellite constellations and competes in deals for the European IRIS2 satellite constellation, which has a budget of approximately $12 billion and is designed to reduce Europe's reliance on external parties.
"Our systems are currently sold worldwide," Landsberg notes. "They have been tested, deployed and proven in extreme field conditions, demanding weather and dynamic, challenging environments. In other words, they are tested in the field, under real combat conditions. Beyond that, the synergy between technological innovation, collaborative strategic thinking and full end-to-end integration capability is what makes Gilat a reliable strategic partner for armies, government agencies and homeland security (HLS) bodies worldwide, and secures its place at the forefront of defense technology for years to come."
Looking Ahead
The current operational success and the completion of the Comtech deal are not the end of the story for Gilat, but merely the starting point for the next stage in the company's evolution. Looking ahead, Gilat's management is already setting ambitious new goals, aiming for continued accelerated growth in the global defense communications market. This growth will be based on a strategic combination of organic growth, through continued development of groundbreaking communication solutions in hardware and software and the expansion of existing mega-contracts with the U.S. Department of War and security agencies worldwide, and inorganic growth, by exploring additional strategic acquisitions that will complement its technological and geographical portfolio. "Gilat is armed with a strong balance sheet, a unique hybrid architecture that proves itself in the field, and an organizational culture that is not afraid to challenge global stronger company, and it is confidently moving toward the next era," Landsberg and Katz conclude. The Hollywood-style turnaround that transformed it from a target for acquisition into a "stronger company" buying the space activities of its competitors is just a preview of a future where Israeli technology will continue to form the backbone of the world's networked and protected battlefield.
Deploying Communication Networks Without Reliance on Fixed, Expensive Hardware
Another technological revolution led by Gilat Defense is the transition to Software-Defined hardware. The company recently conducted a groundbreaking demonstration in cooperation with cloud giant AWS (Amazon Web Services), SES Space and Defense and the WAVE consortium.
As part of the demonstration, a virtual "modem as software" based on FPGA hardware operated directly on AWS's cloud infrastructure and seamlessly connected to the other end using Gilat's Aquarius Pro DS modem. The connection was made using the open DIFI communication standard and incorporated AWS's generative artificial intelligence (GenAI) capabilities. This architecture allows security agencies to deploy and adapt communication networks without reliance on fixed, expensive hardware in the field, run various transmission techniques (waveforms) on the same infrastructure, and respond quickly to changing operational demands.
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