Viasat buys Inmarsat in $7.3bn broadband and IoT deal

Viasat buys Inmarsat in $7.3bn broadband and IoT deal

Business news |
By Nick Flaherty

UK satellite operator Inmarsat has been bought by Viasat of the US for $7.3bn.

The deal comprises of $850m in cash, approximately 46.36 million shares of Viasat common stock valued at $3.1bn and $3.4bn in net debt.

The combined company intends to integrate the spectrum, satellite and terrestrial assets of both companies into a global high-capacity hybrid space and terrestrial network. This is driven by the competition in broadband by StarLink and government sectors by OneWeb, whichis backed by competitor Eutelsat.

The combined architecture will create a framework incorporating multi-band, multi-orbit satellites and terrestrial air-to-ground systems for 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 North American residential and aviation connectivity and defense communications with technology and business models embraced by customers and has ultra-high-capacity beam forming satellite technology.

Inmarsat has dominated the growing global mobility and government segments and recently announced a low earth orbit multi-dimensional mesh network to work with its narrowband geostationary satellites. It is planning to expand its global network later this year with software-defined commercial communications satellites offering both Ka- and L-band capabilities.

The combined company will have a broad portfolio of spectrum licenses across the Ka-, L- and S-bands and a fleet of 19 satellites in service with an additional 10 spacecraft under construction and planned for launch within the next three years.

The global Ka-band footprint, including planned polar coverage, will support bandwidth-intensive applications, augmented by L-band assets that support all-weather resilience and highly reliable, narrowband and IoT connectivity.

The plan is to use Inmarsat’s L-band spectrum and existing space assets with Viasat’s beamforming, end-user terminal and payload technologies and its hybrid multi-orbit space-terrestrial networking capabilities.

“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.”

“Joining with Viasat is the right combination for Inmarsat at the right time,” said Rajeev Suri, CEO of Inmarsat. “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 U.K. has a strong and sustainable presence in the critical space sector for the long term.”

Rick Baldridge, Viasat’s president and CEO added, “This strategic move gives Viasat the scale to increase the pace of innovation that drives new and better services for our customers, broadens the opportunities for our 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 and looking forward to setting up the combined organization for long-term success.”

Viasat says it will build on Inmarsat’s presence in the UK and is committed to preserving and growing the investment of the combined company, as well as supporting the recently published UK National Space Strategy. Viasat plans to preserve and grow Inmarsat’s London headquarters, as well as its footprint in Australia and Canada and across Europe, the Middle East, Africa and Asia Pacific.

Both companies are nearing the end of unusually intensive capital investment cycles within the next 24 to 36 months and expect significant subsequent benefits from converging their respective architectures into a joint, high-performance global network.;

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