SES<\/b> and Intelsat <\/b>closed the chapter on the will they\/won\u2019t they story, with news on Tuesday that SES will acquire Intelsat for $3.1 billion. It is a massive piece of industry consolidation, bringing together two of the largest satellite operators for a combined company with around $4 billion in revenue, more than 100 satellites in Geostationary Orbit (GEO), and 26 satellites in Medium-Earth Orbit (MEO). <\/p>\n
SES CEO Adel Al-Saleh pitched the merger as bringing the companies together to create a player with a stronger multi-orbit position in the market to deliver better offerings in high-value markets like government and mobility. <\/p>\n
\u201cThis is a highly dynamic market. There\u2019s new competition. This market is moving very fast, new LEO [Low-Earth Orbit] entrants are launching constellations. Having scale and a multi-orbit capability is critical to success. Being isolated or cornered into one part of the market without having the breadth and capability to compete is a difficult way to compete in this market,\u201d Al-Saleh told analysts and investors on April 30. <\/p>\n
\u201cThe stronger positioning in a multi-orbit capability gives us ways to deliver [solutions] to clients that we would struggle to deliver independently,\u201d he added. <\/p>\n
Analysts say the deal could improve SES\u2019s competitive positioning against the dominance of SpaceX\u2019s Starlink constellation, and the upcoming Amazon Kuiper constellation, particularly in areas where there is direct competition, like milsatcom and in-flight connectivity. <\/p>\n
\u201cBut it\u2019s not a guaranteed solution to the thorny problem,\u201d Mike Thompson, Access Partnership practice director for Space & Policy tells Via Satellite<\/i>. \u201cStarlink and others are poised to eat SES\u2019s lunch. SES has to move quickly.\u201d<\/p>\nThe Time Was Right<\/b><\/h3>\n
SES and Intelsat have been rumored to be in talks for a merger or acquisition for years. Last summer, the companies ended talks just days after SES\u2019s longtime CEO Steve Collar announced plans to depart. <\/p>\n
Suzanne Ong, vice president of Communications for SES, told Via Satellite <\/i>on Tuesday that talks started up again in spring of this year, and those talks have led to a swift conclusion. She did not say that last year\u2019s resolution was a mistake, but rather that the timing was right now. <\/p>\n
\u201cThe transaction was agreed to when both companies felt comfortable with the terms and that the transaction would create a combined company that would be able to compete better in the industry,\u201d Ong said. <\/p>\n
CEO Al-Saleh took the helm of SES in February, and his move to acquire Intelsat mirrors similar recent industry consolidation. After joining Eutelsat, CEO Eva Berneke quickly moved to acquire OneWeb, and former Inmarsat CEO Rajeev Suri reached a deal with Viasat a few months after starting in his role as well. <\/p>\n
Al-Saleh told investors on Tuesday that strategic discussions at SES were already underway before he joined about how SES should use its C-band proceeds to stay competitive in the long term. He said that both he and Intelsat CEO David Wajsgras worked hard together to figure out how to make the acquisition happen. Previous discussions addressed a merger, but Al-Saleh said this acquisition model was easier to reach a deal on. <\/p>\n
\u201cIt was clear to us that this particular transaction, if we were able to successfully close it with the right type of value, is the most compelling proposition we have on the table for the company, for our shareholders, for our employees,\u201d Al-Saleh said. \u201cThat\u2019s why we went very fast. It didn\u2019t take me long to understand the options.\u201d <\/p>\n
\u201cThere\u2019s a lot of things that made it different,\u201d he added. \u201cBut the biggest thing was the desire of both companies to build something unique here. We both saw that opportunity to create something valuable to our clients and to the market and to solidify the company for the long term.\u201d <\/p>\n
Intelsat CEO Wajsgras commented that this comes after a \u201cremarkable strategic reset\u201d for Intelsat, which returned the company to growth. <\/p>\n
\u201cCommunication and connectivity needs for our customers are changing,\u201d Wajsgras said in a video message. \u201cBy forming a stronger company as part of SES, we will be better equipped to meet those needs going forward, and better equipped to serve important public interests by uniting complimentary networks and offerings. We\u2019ll also be able to offer deeper and broader choice of products and services, with greater, coverage, capacity, and resilience.\u201d <\/p>\n
SES will pay $3.1 billion to acquire all of Intelsat\u2019s equity in an all-cash transaction. The acquisition is funded using existing cash resources of about $2.6 billion and new debt, supported by a committed bridge facility. Additionally, SES will issue contingent value rights for any potential future monetization of the combined collective usage rights for up to 100 MHz of C-band spectrum. <\/p>\n
Wajsgras confirmed that Intelsat\u2019s employee team is an \u201cimportant part\u201d of the transaction.<\/p>\n
The combined company will remain headquartered in Luxembourg, with continued presence in the greater Washington, D.C. area. <\/p>\n
Both boards of directors unanimously approved the deal, and it has the support of Luxembourg government shareholders. The deal is subject to regulatory clearances. Al-Saleh said SES expects the deal to close in the second half of 2025. <\/p>\n
SES pointed to 2.4 billion euros of synergies ($2.6 billion), and that 70% of those synergies will be executive within three years of closing the deal. <\/p>\n
Al-Saleh said he expects that SES will have to work through antitrust concerns, but he is confident there will be a positive outcome. \u201cThere is some work we need to do. We don\u2019t take it just lightly that it\u2019s just a slam dunk. But we don\u2019t we don\u2019t foresee an issue in that area,\u201d he said. <\/p>\n
SES reported the combined company has 2024 expected revenue of 3.8 billion euros ($4 billion). The current combined backlog is worth 9 billion euros ($9.6 billion). SES said growth will come from high-growth Government, Mobility, and Fixed Data businesses, anchored by a Media business with solid cash generation fundamentals. <\/p>\n
Both companies have gone through transformations in recent years from being primarily broadcast-focused to a focus on networks, managed services, and mobility markets. About 60% of revenue of the combined profile is dedicated to growth markets. <\/p>\n
SES has 43 GEO satellites, 26 Medium-Earth Orbit satellites, and seven more upcoming MEO satellites. Intelsat has 57 GEO satellites, four upcoming software-defined GEO satellites, and a distribution agreement for Eutelsat OneWeb\u2019s Low-Earth Orbit (LEO) capacity. <\/p>\n
Al-Saleh told investors that the combined company will have roughly an 800 million euro ($855 millIon) business in Government; 800 million euro business in Mobility ($855 millIon) with aero, cruise, and maritime; and a 600 million euro ($641 million) business in Data and Cloud. <\/p>\n
He pointed to the value of the combined cash generation and the investments it will enable a combined company to make. <\/p>\n
\u201cBeing in a position with strong cash generation that allows you to invest without having to stress your balance sheet and over leverage yourself is very important to be a healthy player in the marketplace,\u201d Al-Saleh said. \u201cIt allows you to invest in your network infrastructure using the latest technologies like we\u2019re doing with additional software-defined satellites. It allows you to build vertical solutions for clients. It gives you an ability to integrate things, to create software that makes it easier for our customers to use our solutions.\u201d <\/p>\n
Al-Saleh added it gives the combined company the opportunity to diversify, citing interest in quantum key distribution, Internet of Things (IoT), direct-to-device, and Earth observation. <\/p>\n
Will the combined entity be in a better position to compete against the likes of Starlink and Amazon? Access Partnership Director Thompson said that the combination of the two sets of assets does not insulate the combined entity against the new competition, but it may buy time to develop competing networks of their own. <\/p>\n
\u201cStarlink and OneWeb have demonstrated it is possible to build mega-LEO networks, but they have not yet demonstrated that they are commercially sustainable. SES\/Intelsat may have a chance to build a mega-LEO of their own, discount their current GEO assets, and leverage their extensive customer bases,\u201d Thompson said. <\/p>\n
\u201cThe industry is facing rapid change, and we have already seen many smaller players swallowed up. The decline in transponder revenues \u2013 particularly with satellite broadcasters scaling back \u2013 continues to threaten investment in new capacity, especially with the new megaLEOs snapping at the heels. SES has already increased investment in their non-GSO system (O3b), but they may need to buy time to fully compete in the new space,\u201d Thompson added. <\/p>\n
He said the merger is a \u201clogical move\u201d for SES, but does not seem overly enthusiastic about the deal, calling it \u201cat best, a stop-gap solution.\u201d <\/p>\n
\u201cIt will give SES better pricing flexibility, as well as unparalleled global coverage and capacity,\u201d Thompson said. \u201cBut they need to persuade customers to stick with them rather than jump ship to the plucky startup.\u201d <\/p>\n
Nathan de Ruiter, partner and managing director of Novaspace told Via Satellite that the combined network assets does not necessarily make the combined entity directly better positioned to Starlink and Amazon. He said the impact really varies by vertical market. <\/p>\n
\u201cConsumer broadband is neither a target market for SES or Intelsat. On the other hand, the combination will improve the competitive positioning in Milsatcom and Aero IFC, where there is an established service business that will directly compete with Starlink and Amazon,\u201d de Ruiter said. <\/p>\n
He also added that as a result of this move, SES will clearly be the largest satellite operator from a wholesale perspective. Novaspace estimates that the combined entity will have a 28% market share of all satellite capacity leasing, and 32% market share in transponder leasing for video applications. <\/p>\n
De Ruiter sees a strong rationale in terms of cost synergies. \u201cBased on a first-level assessment of the combined satellite fleet, we can already identify 6 to 8 satellites with near term end-of-life that would potentially not require a replacement. This would already be a CapeX cost savings upwards of $1 billion. In addition, there are significant potential savings to be achieved in operations and staffing costs,\u201d De Ruiter said. <\/p>\n
Armand Musey, president and founder of advisory firm Summit Ridge Group, said anti-trust concerns could be the biggest problem for the acquisition, especially in North America. The issue might not be with consumer or enterprise broadband, but with North American video services dominated by Intelsat and SES, the U.S. Department of Defense, and potentially the aviation market.<\/p>\n
\u201cIt may come down to whether regulators see new high throughput satellite operators such as Hughes and Viasat, and LEO operators such as Starlink, as sufficiently developed to be viable competition across Intelsat and SES\u2019s customer segments,\u201d Musey told Via Satellite<\/em>. \u201cIf not, it may require a divestiture of some satellite assets to get the deal done.\u201d<\/p>\n For SES, it is the start of a new era, and one that it hopes will mean it will remain one of the largest global operators. <\/p>\n Ong pointed to the fact that SES has long been on the record pushing for industry consolidation, arguing that there are too many players in the market. Intelsat CEO Wajsgras has made the same argument. <\/p>\n \u201cMarket shifts and new entrants have created a new era of satellite innovation, growth and increasingly dynamic competition,\u201d Ong said. \u201cThe combined company will better compete with highly capitalized and rapidly scaling LEO entrants as well as terrestrial players by providing the resources and flexibility to invest and innovate in new capacity and services for all customer segments.\u201d<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" SES and Intelsat closed the chapter on the will they\/won\u2019t they story, with news on Tuesday that SES will acquire Intelsat for $3.1 billion. It is a massive piece of industry consolidation, bringing together two of the largest satellite operators for a combined company with around $4 billion in revenue, more than 100 satellites in […]<\/p>\n","protected":false},"author":1,"featured_media":49626,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-51365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/51365"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=51365"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/51365\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/49626"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=51365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=51365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=51365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}A New Era<\/b><\/h3>\n