Viasat buys Inmarsat for $7.3bn to forge global satellite broadband and IoT network
US satellite broadband provider Viasat has agreed a deal to acquire UK-based counterpart Inmarsat for $7.3 billion. The combined company will integrate their spectrum, satellite, and terrestrial assets as a “global high-capacity hybrid space and terrestrial network”, the pair said. It will focus on supplying satellite-based broadband and narrowband services to commercial and government sectors.
Global IoT services will remain a primary and developing market for Viasat’s expanded connectivity services, it said. The deal comprises $850 million in cash, to go to Inmarsat shareholders, plus $3.1 billion in shares (46.36 million shares) of Viasat common stock, and the assumption of $3.4 billion of net debt. Revenue and earnings will be “more diverse, resilient and global”, they said, with potential for “mid-teens percentage revenue and profit growth”.
A statement said: “This advanced architecture will create a framework incorporating the most favorable characteristics of multi-band, multi-orbit satellites and terrestrial air-to-ground systems that can deliver higher speeds, more bandwidth, greater density of bandwidth at high demand locations like airport and shipping hubs and lower latency at lower cost than either company could provide alone.”
Viasat has a notable stake in the residential connectivity and aviation / defense markets in North America, and a reputation, it says, for “pioneering ultra-high-capacity satellite technology”. Inmarsat serves global mobility, government, IoT, and enterprise sectors, according to the press note. It currently provides “safety and connectivity services to more than one million mobility and defense platforms”, it said.
Inmarsat claims the “world’s most diverse portfolio” of mobile telecoms satellite networks, and a global spectrum portfolio at 1525-1646.5 covering the L-band, Ka-band and S-band. Its new ELERA satellite system, providing narrowband IoT connectivity in the L-band, was announced in August, to go live with aviation customers from 2022. It is being pitched as a “springboard for innovation… on land, at sea and in the air”.
The combined company will offer a broad portfolio of spectrum licenses across the Ka-, L- and S-bands, and a fleet of 19 satellites, with 10 additional spacecraft under construction and scheduled for launch within the next three years. The Ka-band footprint is scheduled to also include polar coverage, to combine with L-band assets to support bandwidth-intensive applications requiring “all-weather… and highly reliable” narrowband and IoT.
Viasat’s capabilities – specifically, its “beamforming, end-user terminal, and payload technologies and its hybrid multi-orbit space-terrestrial networking capabilities” – will unlock greater value from Inmarsat’s L-band spectrum and existing space assets, it said. The new company will boast “technology and service offerings” from the former, and an extensive “technology, manufacturing and service distribution” from the latter.
Viasat said it will build on Inmarsat’s presence in the UK and “preserve and grow” its investment in UK space comms. It will work with the UK government to bring “additional space capabilities and other advanced tech”, along “skilled engineering and related jobs”. Inmarsat’s London headquarters will expand, along with its footprint in Australia, Canada, and elsewhere in Europe, the Middle East, Africa, and Asia Pacific.
The deal has been approved by the boards of directors of both companies. The transaction is expected to close in the second half of 2022, subject to shareholder and regulatory approvals. Andrew Sukawaty, current chairman of Inmarsat, will be appointed as one of the two new board members in an expanded Viasat board of directors. Decisions about management of the combined company will be made as part of the integration planning process.
Mark Dankberg, executive chairman at Viasat, said: “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.
“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.”
Rajeev Suri, chief executive at Inmarsat, said: “Joining with Viasat is the right combination for Inmarsat at the right time. Viasat is a terrific innovator and Inmarsat brings some powerful additions: global reach, a broad distribution channel, robust business momentum and a presence in highly attractive global mobility segments. Together, the two companies will create a new global player with the scale and scope to help shape the future of a dynamic and growing industry.
“The combination will create a strong future for Inmarsat and be well-positioned to offer greater choice for customers around the world, enhanced scope for partners and new opportunities for employees. The industrial logic is compelling and ensures that the UK has a strong and sustainable presence in the critical space sector for the long term.”
Rick Baldridge, president and chief executive at Viasat, said: “This gives Viasat the scale to increase the pace of innovation that drives new and better services for customers, broadens the opportunities for employees and provides a foundation for significant positive free cash flow, with potential upside from a revitalization of L-band and IoT service growth. Plus, we will have expanded scale and presence in the $1.6 trillion broadband and IoT sectors. I’m excited about the opportunities ahead.”
The number of satellite IoT subscribers will increase at a compound rate of 35.8 percent per year to reach 15.7 million in 2025, from around 3.4 million in 2020. Analyst firm Berg Insight, with a recent research report, said the market for satellite IoT communications is growing at a “good, steady pace”, even despite the impact of the Covid-19 pandemic on demand-side business priorities and supply-side manufacturing and logistics in the broader IoT sector.
It noted only about 10 percent of the Earth’s surface has access to terrestrial connectivity services, leaving a “massive opportunity” for satellite IoT to provide a complement to ground-based cellular and non-cellular IoT networks, useful in remote applications, notably for agriculture, asset tracking, maritime and intermodal transportation, oil and gas industry exploration, utilities, construction and governments.
Network providers variously pushing cellular-based NB-IoT, LTE-M, as well as machine-geared 4G-LTE and 5G, and non-cellular Sigfox and LoRaWAN, among other technologies, are striking deals to launch satellite constellations into space, mostly into low-earth orbit (LEO). The new report from Berg Insights covers 38 satellite IoT operators and about two dozen new satellite-augmented IoT network initiatives.