Advanced Television

Viasat to acquire Inmarsat

November 8, 2021

By Chris Forrester

The long-expected consolidation amongst major satellite players is happening. California-based Viasat is set to buy London-based Inmarsat for $7.3 billion (€6.3bn) in a cash and shares deal.

Inmarsat was taken private in 2019 at $6 billion. Today, Viasat is paying an extra $1.3 billion as management have valued the Net Present Value of synergies at $1.5 billion. Inmarsat financials nor any deal valuation metrics have been disclosed at this stage.

Viasat’s management points to Inmarsat offering complementary resources that will help create a multi-band, multi-orbit system. As a result of the deal, Viasat’s revenue profile will become more global, more diverse and more resilient. Viasat management claims the combined entity has potential for mid-teens percentage revenue growth.

“The combination will create a leading global communications innovator with enhanced scale and scope to affordably, securely and reliably connect the world. The complementary assets and resources of the new organization will enable the availability of advanced new services in mobile and fixed segments, driving greater customer choice in broadband communications and narrowband services (including the Internet of Things),” says Viasat.

The new combination will circle the planet with 19 satellites with an additional 10 satellites on order.

“This is a transformative combination that advances our common ambitions to connect the world. The unique fusion of teams, technologies and resources provides the ingredients and scale needed for profitable growth through the creation and delivery of innovative broadband and IoT services in new and existing fast-growing segments and geographies,” said Viasat’s Executive Chairman Mark Dankberg. “Inmarsat’s dual-band global mobile network, unique L-band resources, skills and capabilities in the UK and excellent technical and operational talent worldwide, are powerful complements to Viasat’s business. Together, we can advance broadband communications and create new hybrid space and terrestrial networks that drive greater performance, coverage, speed, reliability and value for customers. We look forward to welcoming the Inmarsat team into the Viasat family.”

Investment bank Exane/BNPP states in a note to clients: “Talking at the BNP Paribas Global Markets Conference last week, Elon Musk guided for Starlink to generate $30 billion of annual revenues in the medium to long term. Viasat derives 64 per cent of its EBITDA from providing Satellites Services into US consumer broadband markets as well as Inflight Connectivity and Oil & Gas services. Faced with increased competitive pressure from Space X, SES or Telesat, Viasat is joining forces with Inmarsat to build scale, extract cost synergies and reinvest in a multi-orbit, multi-band satellite system with established distribution channels.”

The bank adds: “This merger underpins the idea that scale matters in the satellite industry and that consolidation could accelerate (as suggested by the Patrick Drahi’s bid for Eutelsat). However, apart from adding scale (and leverage – Viasat will be trading on 5x net debt to EBITDA) to one established incumbent competitor, we do not believe this Viasat/Inmarsat will change the competitive landscape for Eutelsat or SES significantly.”

“Neither Viasat nor Inmarsat operate in the Video segment. Inmarsat has no consumer broadband business (the growth engine of Eutelsat). Neither Viasat nor Inmarsat have assets in Mid Earth Orbit. It is however likely that the merged entity will invest in developing a Low Earth Orbit system for which both Viasat and Inmarsat already had spectrum rights,” says Exane/BNPP.

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