Satellite Broadband Provider Viasat Acquired Inmarsat for $7.3 Billion – Now What?
Viasat, Inc (NASDAQ: VSAT), a global communications company that provides satellite-based broadband service based in Carlsbad, California, said on May 31st it completed its drawn-out acquisition of the British telecom company Inmarsat.
“The combination of Viasat and Inmarsat brings together two organizations with highly complementary technology assets, resources, capabilities, and service portfolios to create a global communications provider that is more than the sum of its parts — broadening the global fixed and mobile services available to customers,” a Viasat spokesperson told SpaceRef via email.
Viasat announced its intention to buy Inmarsat for $7.3 billion in November 2021. According to Inmarsat’s press release announcing the merger, Inmarsat’s shareholders received an aggregate of $551 million in cash and approximately 46.36 million shares of common stock. Inmarsat reduced the cash portion of the purchase from $850 million to $551 million by paying a $299 million special dividend to its shareholders in April 2022. The shares issued to the Inmarsat shareholders at the closing represent an aggregate of approximately 37.6 percent of the total shares of Viasat common stock on a fully diluted basis, with no Inmarsat shareholder receiving shares representing 10 percent or more. In connection with the closing of the acquisition on May 30, 2023, Viasat drew down on approximately $1.35 billion of its committed financing package, including a $617 million secured term loan facility and a $733 million unsecured bridge loan. The lower financed amount reflects, in part, the reduction in the cash component of the purchase price.
Analysts who monitor the global satellite communication industry value the market between $30 billion and $90 billion in 2023 and could reach $160 billion by 2030.
“The combination of our companies brings together the people, technology, innovation, network assets, spectrum resources and global partnerships needed to help connect the world more affordably, securely and reliably,” Mark Dankberg, Chairman and CEO of Viasat, said in a press release. “Together, we believe we are positioned to offer customers a multi-layered network that gives them the right connectivity at the right time, place and price.”
The Viasat spokesperson told SpaceRef that Dankberg will continue to lead the combined company as Chairman and CEO, and that Guru Gowrappan will continue as President. Viasat also reconfirmed its new global international business headquarters will be in London while its corporate headquarters will continue in Carlsbad, California.
According to Inmarsat’s press release, Viasat and Inmarsat have a combined 19 satellites in Earth orbit across Ka-, L- and S-band spectrum to provide connectivity and safety services across maritime, aviation, government, and consumer markets.
In satellite communications, the Ka band allows higher bandwidth communication. This is what SpaceX’s Starlink, Iridium NEXT, and Amazon’s Project Kuiper satellite internet services all use. Services using L-band communication spectrum include navigation satellites, such as the United States’ Global Positioning System (GPS), the European Union’s Galileo, Russia’s GLONASS, and the Chinese BeiDou networks. Mobile phone networks such as Iridium also use the L-Band. Satellite radio services, such as Sirius XM, use the S-band of the spectrum.
The outcome
“This deal means we can deliver more to our customers in terms of speed, bandwidth, reliability, and broader coverage and convenience,” the Viasat spokesperson told SpaceRef. “The Viasat / Inmarsat combination is a unique opportunity to integrate and make available to our joint customers two complementary global and regional Ka band networks integrated with a highly reliable L-band network for resilience to bad weather.”
The spokesperson added that Viasat hopes Inmarsat’s “extensive portfolio of global L-band spectrum and space resources” will allow the company to quickly stake a claim in the growing direct-to-device market. The company also hopes to “and evolve our space assets to support a multi-orbit, 5G mobile market that observers envision as one of the largest growth opportunities for satellite communications,” they continued.
The spokesperson added that the integration of the two companies would be “swift, but thoughtful.”
“We intend to build on Inmarsat’s legacy of global mobile international cooperation based in the UK – leveraging the UK government’s vision of sustainable, peaceful, shared, and equitable access to space. In an industry as dynamic as ours, adaptation and change will be an on-going feature,” they said.
Acquisition Season
Regulators in the European Union and the United Kingdom heavily scrutinized the merger between Viasat and Inmarsat with concerns that it would result in higher prices and reduced quality of Wi-Fi on airplanes. However, regulators ruled that established companies and new industry entrants, such as SpaceX’s Starlink, would ensure sufficient competitive pressure in the industry.
Still, a few other global satellite communications companies are discussing mergers.
Eutelsat of Paris announced a deal with the London-based company, OneWeb, in July 2022. The two companies announced in a June 8th tweet that they recently provided the NATO Communications and Information Agency (NCI Agency) with a successful demonstration of combined geostationary (GEO) and low-Earth orbit (LEO) multi-orbit connectivity capability.
In March 2023, Luxembourg-based Intelsat announced a possible merger with another Luxembourg-based provider, SES. SpaceX’s Starlink and Amazon also are entering the market with hundreds of satellites as well as their own launch capability.
Correction (6/13/2023): The headline of this article originally said that the acquisition was for $17.3 billion instead of $7.3 billion. SpaceRef regrets the error.
