Inmarsat merges with USA based telecom giant Viasat
SuperyachtNews speaks with Peter Broadhurst about the importance of scale for success in a competitive sector…
On November 8 2021, the merger of Inmarsat and US-based telecoms giant Viasat was announced. It marks a significant development for a long-standing marine industry stakeholder and provides insight into a rapidly evolving sector. The transaction has been valued at $7.3 Billion, comprising $850.0 million in cash, approximately 46.36 million shares of Viasat common stock valued at $3.1 billion (based on the closing price on Friday, November 5, 2021), and the assumption of $3.4 billion of net debt.
SuperyachtNews speaks with Peter Broadhurst, senior vice president safety and security services at Inmarsat, about the merger: “The principal reason for the merger is to create scale and scope and a new global leader in satellite communications. In our sector, there are too many players already as well as far too many emerging players,” starts Broadhurst, continuing; "both Viasat and Inmarsat are leading technology companies trying to push the leading edge."
Presenting a simplified overview of the balance of strengths between the two companies, Broadhurst summarises: "Viasat does not have a strong presence in maritime, so Inmarsat will lead on the maritime mobility front, while Viasat has strength in aviation and terrestrial. There are a lot of complementary capabilities that together will deliver a strong, multi-layered global architecture and bring together GEO, HEO, MEO, LEO and terrestrial 4G and 5G networks."
The new combined company hopes to offer a broad portfolio of spectrum licenses across the Ka, L and S-bands and a fleet of 19 satellites in service with an additional ten spacecraft under construction and planned for launch within the next three years. Additionally, it plans to expand its global Ka-band footprint, including planned polar coverage, to support bandwidth-intensive applications, augmented by L-band assets that support all-weather resilience and highly reliable, narrowband and Internet of things (IoT) connectivity.
Rick Baldridge, Viasat's president and CEO, added in a statement to the media: "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."
Reinforced by Broadhurst, as well as in the statement to the media, was the fact that 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. An added benefit of the merger, as Broadhurst outlines, is the consolidation of the technology role out; "By combining our satellite launch programs, Inmarsat can have what is effectively a CapEx holiday and can start looking ahead past 2026."
Inmarsat's London HQ
Broadhurst concludes that, although the natural focal point for a satellite communications company, technology is not necessarily the most important consideration of the client. "The technology is the side of things that we love to talk about, but in our experience, the actual end-user does not care where the capacity is coming from, just that it works. Simply; 'can you deliver me what I want, where I want it?' A lot of satellite providers struggle with that because they don't have the scale."
As the industry expands, and expectations of connectivity do in step, smaller bespoke network suppliers will hopefully remain a valuable part of the sector. However, as has been highlighted by Broadhurst and the realities of the merger, sometimes you need to scale up to thrive in a highly competitive market.
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