Connectivity by satellite is not new, but expanding networks via low earth orbit (LEO) is a recent phenomenon receiving lots of investment.
As interest in LEO connectivity has grown, the number of companies looking to establish themselves in the market has also gone up. However, in recent conversations with satellite industry leaders, we’ve heard speculation that the market may have reached a saturation point.
That means mergers, acquisitions, and market consolidation are likely to occur. In fact, some of that has already begun to unfold.
Moving Beyond Last Resort
There are two big trends happening now: consolidation within the satellite industry, and partnerships between satellite operators and non-satellite service providers.
In the latter case, satellite operators and more traditional telcos seem to be joining forces, likely due to a mutual recognition of how their networks complement each other.
Satellite operators and more traditional telcos seem to be joining forces, likely due to a mutual recognition of how their networks complement each other.
Fiber optic cables and cellular networks do not reach everyone, yet satellites—especially thousands of new LEO satellites—can fill in the gaps.
Likewise, satellites do not offer the capacity to serve densely populated areas the way fiber can. (And on that note, if you're interested in exploring the fiber side of connectivity further, I highly recommend TeleGeography’s Transport Networks Research Service.)
But partnerships aren’t the same as mergers or acquisitions, so let’s explore some examples of where the satellite connectivity market is, or may soon be, truly consolidating.
One for the Money, Two for Network Expansion
The satellite industry is large and incorporates many vertical segments.
Each segment generally involves satellite owners and operators, service providers that lease capacity on satellite constellations, launch companies, spacecraft manufacturers, hardware vendors, software developers, teleport operators, and many hyperspecified companies.
Focusing on satellite operators, there are several potential and recently finalized mergers and acquisitions poised to affect how the satellite industry is organized.
These scenarios are particularly interesting when we consider the quick growth of SpaceX’s Starlink, the expected entry of Amazon’s Project Kuiper, and the fine line between healthy competition and overconcentration of resources in a market.
Viasat and Inmarsat
Long-established in the geostationary (GEO) marketplace, Viasat and Inmarsat are now under the same banner.
On May 31, 2023, Viasat finalized its acquisition of British Inmarsat, bringing together two of the largest satellite operators in the GEO orbit.
On May 31, 2023, Viasat finalized its acquisition of British Inmarsat, bringing together two of the largest satellite operators in the GEO orbit.
Before clearing regulatory review in the U.S. and U.K., a key point of questioning was whether this acquisition would lead to less competition for in-flight connectivity. Regulators ultimately said their concerns were appeased, citing Starlink as reason to believe competition would remain fierce.
SES and Intelsat
In March 2023, Luxembourgish SES publicly acknowledged its interest in merging with U.S.- and Luxembourg-based Intelsat.
Talks between the two companies recently ended, so speculating on what a merger might look like seems futile. Nevertheless, should the discussion ever resurface, the merger would bring together over 120 satellites.
These satellites are predominantly in GEO orbit, with the exception of SES’s medium earth orbit (MEO) coverage, which was obtained through its 2016 acquisition of o3B. Before that, in 2001, SES increased its global presence by acquiring Americom.
Intelsat is also familiar with mergers and acquisitions, having acquired PanAmSat in 2006.
Eutelsat and OneWeb
Last year, Eutelsat and OneWeb established a Memorandum of Understanding to begin the process of merging both companies.
The move would combine French Eutelsat’s 34 GEO satellites with OneWeb’s 648 satellites in LEO orbit.
Previously, in 2014, Eutelsat acquired Satmex, adding GEO orbit satellites to the now 46-year-old company’s portfolio. OneWeb, on the other hand, was created in 2012 and emerged from bankruptcy in 2020.
More Market Mashups
Although deals between satellite operators have the most potential to disrupt the market, there are plenty of other examples of consolidation throughout the satellite industry in recent years.
Unsurprisingly, these examples include recognizable names like Hispasat, Starlink, and Telesat. But other companies focusing on lower bandwidth needs, like IoT connectivity, are also changing form.
While consolidation in the satellite industry is not exactly an unforeseen event, predicting which companies will fold, maintain their presence, or grow in the coming years is no easy task.
And with even more LEO satellites expected to be launched, both incumbent and challenger companies are eyeing opportunities to expand their reach before getting left behind.
Peter Wood
Peter Wood is a Senior Research Analyst at TeleGeography. His work is focused on network services and pricing with a regional focus on Latin America and the Caribbean.