Agreement for the Expansion of Broadband Network
Viasat, based in the United States, would become a satellite operator with 19 satellites if it purchased Inmarsat, which is funded by private equity. “The exclusive combination of executives, resources and technologies offers the essential ingredients and scalability for advantageous growth.
This will be accomplished through developing and delivering innovative broadband and Internet of Things offerings in both new and existing fast-growing segments.” It will also encompass geographies, according to Viasat executive chair Mark Dankberg.
According to Inmarsat CEO Rajeev Suri, combining their satellites and spectrum assets into a hybrid space and terrestrial network prepares the merged business for a shifting industry.
“It’s apparent that the satellite communications industry is entering a period of rapidly expanding new market demand.” And it’s still quite fragmented, inviting new participants who see fresh opportunities,” Suri explained.
Approval by Boards
Both firms’ boards of directors unanimously authorized the deal. The Baupost Group, Viasat’s largest publicly traded shareholder, has also given its support.
After receiving approval from other shareholders and governmental clearances, Viasat plans to complete the transaction in the second part of next year.
The agreement includes $850 million in cash, $3.1 billion in Viasat equity, and a $3.4 billion net debt assumption.
The first ViaSat-3 promises to provide much faster internet rates to the Americas than the remainder of Viasat’s fleet. ViaSat-3 will be followed by a third ViaSat-3, aimed at Europe, six months later, and a fourth ViaSat-3, aimed at Asia, for the first time, to globalize the US-based company’s services.
With 14 satellites in orbit, Inmarsat already delivers global connection services, providing Viasat with places of presence and distribution channels to support its international expansion aspirations.
The combination between Viasat and Inmarsat is expected to result in $1.5 billion in synergies. The combined firm is expected to generate more than $4 billion in revenue. This also includes $1.4 billion in well-settled EBITDA, or the earnings before taxes, interest, amortization, and depreciation.
Opportunities in future
Viasat sees chances to use Inmarsat’s worldwide L-band spectrum to develop innovative solutions for the fast-growing internet of things (IoT) industry.
According to Dankberg, the total addressable market for broadband and IoT is close to one trillion dollars and is expected to expand to $1.6 trillion by 2030. “While Viasat was already well-positioned in the fast-growing space-centric global mobility and government markets, we are now even stronger.”
However, as new mega-constellations come online and legacy satellite operators who have previously focused on broadcast are increasingly venturing out into connectivity in response to changing TV preferences, competition in these areas is heating up.