Satellite network operator SES says it is to acquire fellow operator Intelsat, describing the deal as a "compelling transaction focused on the future".
SES plans to purchase of 100% of the equity of Intelsat Holdings S.a.r.l. for a cash consideration of US$3.1 billion and what are described as "certain contingent value rights".
Naturally the SES outlook on the deal is positive. This combination, it says, will create a stronger multi-orbit operator with greater coverage, improved resiliency, an expanded suite of solutions, and enhanced resources to profitably invest in innovation and benefit from the collective talent, expertise and track record of both companies. It adds that the combination will also deliver greater value for customers and partners.
There’s no doubt that with a combined fleet of more than 100 geostationary earth orbit (GEO) and 26 medium earth orbit (MEO) satellites, the new SES will benefit from enhanced coverage, greater network resiliency, complementary spectrum rights, and improved service delivery utilising an expanded network of ground segment assets. More GEO and MEO satellites are on the way.
It may well be good news for Intelsat too. The company filed for bankruptcy protection in the US in 2020. In 2022 it announced it had emerged from its financial restructuring process as a private company and reduced its debt. Now it’s part of SES and the stronger financial profile of the new company, says SES, enhances the ability to better invest in future network infrastructure, customer solutions, and future use cases and/or business diversification opportunities with a better risk profile than could be done by the two companies on a standalone basis.
SES adds that with the creation of a stronger multi-orbit operator, customers across government, mobility (including maritime and commercial aviation), fixed data, and media segments will benefit from an expanded set of capabilities and solutions.
But competition may be the key consideration here, and not just in space. SES says: “Bringing together these two companies, with the associated synergies, will create a stronger multi-orbit operator better able to compete in a fast-moving satellite communications landscape and respond to the evolution of competing communications technologies.”
However, as Reuters points out European satellite companies have been looking to consolidate to better compete with the likes of Starlink and Amazon's Project Kuiper. These companies, says the UK’s Financial Times, are challenging established operators such as SES, which are suffering from declining broadcast revenues, by offering accessible high-speed broadband services even in remote areas.
And the FT reminds us that this isn’t a lone instance: 2022 saw French satellite operator Eutelsat and UK start-up OneWeb announce a merger, while US satellite company Viasat in 2021 said it would acquire Britain’s Inmarsat in a US$7.3 billion deal.
And of course more recently we heard about the imminent merger of Bayanat, an AI-powered geospatial solutions provider, and Yahsat, the UAE’s flagship satellite operator.
As for what this means for the satellite communications market as a whole, it does beg a few questions, For instance, is there enough demand? Is there enough revenue potential? Are too many operators involved? Or is more consolidation on the way?
