$5.3bn inflight WiFi shake-up as Viasat buys Inmarsat

Viasat  has agreed to purchase Inmarsat Group Holdings Ltd for US$4 billion (A$5.3 billion), creating the world’s biggest geostationary satellite company.

California-based Viasat will buy Inmarsat for US$850 million in cash and US$3.1 billion in stock, and will assume US$3.4 billion in debt, according to a statement from the companies Monday.

The satellite industry is responding to an unprecedented challenge from Starlink, a fleet of more than 1,500 spacecraft launched in the last few years by Elon Musk’s Starlink.

That and  other well-funded low-earth orbit constellations like OneWeb and Amazon.com’s Project Kuiper promise faster connections from a lower orbit than traditional satellite firms.

The combination of Viasat and Inmarsat will have a fleet of 19 satellites, with 10 more under construction for launch in the next three years.

Viasat has already obtained commitments for US$2.3 billion of debt, and the deal is expected to close in the second half of next year. It will also issue 46.4 million new shares.

The deal will position the companies for growth in the “very competitive” communications market, Mark Dankberg, executive chairman of Viasat, said in an interview. “We want to be positioned to grow fast.”

Inmarsat CEO Rajeev Suri has been focused on returning the company to revenue growth after Covid-19 hammered its previously fast-growing in-flight aviation business in 2020.

He’s recruited new executives in a push to launch a new network using similar technology to Musk’s StarLink, and expects full-year sales to beat last year’s. He told Bloomberg Television in July these moves could help position the company to participate in dealmaking.

“Inmarsat is in the sweet spot,” Suri said at the time. The company “is likely to have many interested dance partners.”

Other satellite deals are in the offing. French billionaire Patrick Drahi recently offered 3.2 billion euros (US$3.7 billion) for France’s Eutelsat SA, which the company’s board rejected.