Consolidation finally arrived to the in-flight connectivity world, and it arrived in a massive way. Viasat agreed to buy Inmarsat in a deal valued at $7.3 billion. Subject to typical regulatory and closing conditions, the companies hope to close the transaction in the second half of 2022.
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.
– Viasat’s Executive Chairman Mark Dankberg
Mobility as a driving force
While currently the smallest market segment for the combined companies, mobility also represents the fastest growing. Tagged at $36bn today in a Euroconsult/Valour report, expectations sit at $108bn by the end of the decade. Naturally, the combined Inmarsat and Viasat believe they hold a dominant position to capture the bulk of that growth.
Part of that comes from holding the largest satellite connected commercial aircraft portfolio, jumping ahead of Panasonic Avionics to take that title. The pair also hold the largest contract backlog for installations, on top of the largest install base.
The other half comes from the backlog, with 10 satellites slated for launch in the next three years. This includes the three ViaSat-3 satellites as well as heliocentric orbit from Inmarsat, bringing polar coverage into service. The companies note that the existing Inmarsat GX network is compatible with the ViaSat-3 constellation. That ease of integration is good news for existing installed aircraft.
When asked if the 10 satellites in process need to shift launch cadence or configuration Viasat Executive Chairman Mark Dankberg sees pushed back, with expectations of strong value from the overlap and configuration. “Several of the new Inmarsat satellites that are coming are more software programmable and flexible, and can be targeted at specific geographic hotspots.”
This potential to reallocate the pending Inmarsat capacity to “complement what we’ll have with ViaSat-3 and our regional coverage and our regional satellites that we work with from partners” allows the combined company to better serve the incredibly high demand at hub airports in a combined operation.
As for the push to LEO, Dankbeg continues to hold that it is a “good augmentation for GEO, primarily with the advantage for low latency traffic.” But neither company went heavy on LEO in the past, and that does not appear likely to change as part of the deal. Dankberg believes the company can “deal deal with it, either working with partners or using our own assets,” but is also far more intrigued by terrestrial solutions to augment capacity where demand is higher. This approach meshes well with the ORCHESTRA announcement made by Inmarsat earlier this year.
Dankberg also suggests that the different satellite architectures between the two companies could deliver outsized synergies in the combined operations. The ViaSat-3 constellation, for example, can deliver for the high-bandwidth demand areas like video and consumer services. The Inmarsat constellations backfill on maritime and enterprise services.
And, as noted above, the flexibility of the new Inmarsat satellites increases opportunities for the combined companies to shift capacity in different geographic regions as needed to meet demand. This flexibility will be deployed as needed to support the various service verticals.
Regulatory challenges, especially in the UK
The privatization of Inmarsat in 2019 faced minor pushback from UK’s Competition and Markets Authority. That was resolved with small concessions and commitments to continued UK-based investment.
The new company commits to maintaining the UK office and the prior guarantees made by Inmarsat to secure the prior deal. The amount of time spent in the announcement call and in the press release makes clear that this has been considered by the companies.
The company expects a 9-18 month process to realize the necessary global approvals, with hopes for a shorter process. The companies see the deal as accelerating innovation and providing more product choice to consumers in an already competitive market. But it still has to convince governments that’s the case.
Viasat CEO Rick Baldridge sees the UK base continuing to drive the maritime service, for example. And it will remain important for the IFC market as well. The second ViaSat-3 satellite will be operated from the UK, an opportunity to take advantage of the existing staffing from Inmarsat in the region.
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Viasat is dead and I can’t wait to dump it for StarLink. Cheaper, faster, unlimited.
But also not on planes yet. 😉
There’s little boibt that StarLink won’t make it on aircraft. I expect Viasat to die a quick death from 70% of its U.S. markets switches to StarLink or possibly Amazon. I have no idea why they just spent so much on their way to their death bed.
Viasat didn’t spend this money to build the terrestrial/home user market, though. And I disagree that it will be a quick death. The government contracts and aero are doing a pretty solid job on revenue these days. They exceeded home users from what I’m seeing in this morning’s 10-Q.
Also, most aero/mobility-related traffic isn’t that sensitive to latency, the primary advantage LEO brings to bear. With uncertain operating costs for the network and uncertainty about remaining a profitable and going concern, I don’t think airlines are going to rush to swap out a major capital investment for a new shiny toy that might not be around 3 years down the line.
Starlink will almost certainly get airline customers at some point. But that doesn’t mean the market will abandon all the existing operations.
What people don’t understand is without the Musk funding machine, Starlink will never make money. NEVER. LEOs are the Golden Gate Bridge. Once done launching, you re-launch. Without his BS, Starlink never gets funded. Earth is 75% water, so 75% of your birds are not being used? And don’t tell me maritime, you have to land the traffic somewhere, so you’ll dedicate a bunch of sats for crosslinks? BULLSHIT. Musk is a douchebag, and wants to be cool, which he will never be. Go back to D&D.
Oh, an angry elf. Personal attacks on Musk are only a diversion. What’s extra exciting is that after the geofence of sorts is removed from Starlink, the multi billion RV industry across the world is going to go crazy too with demand. There’s already 1300 of their satellites in orbit with speeds expecting to double every 12 months. Come November 12, there will be even more. Google was smart to recently contract with Elon. I’m also very happy that undeserved people around the world will finally have great internet for homes and education, as opposed to the 50 mbps for $175, 100 gb throttling that Viasat offers. The 600 ms latency issue that causes so much trouble is also solved. In little time Starlink will be at fiber speeds and nobody else has the the technology (or rockets) to ever get close to catching up. It’s just the truth, so take a deep breath and be happy for others instead of emotional.