- May 24, 2024
- Posted by: admin
- Category: Emilio Cozzi
The Luxembourg telecommunications company will finalize the $3.1 billion deal in 2025, resulting in the largest fleet of geostationary satellites. This comes at a time when companies like Starlink, OneWeb, and Kuiper are revolutionizing the market with low-Earth orbit (LEO) services.
DI EMILIO COZZI
Announcement Dated April 30, 2024: SES, the Luxembourg-based commercial satellite operator, will acquire 100% of Intelsat to create one of the largest multi-orbit telecommunications infrastructures, primarily in geostationary orbit. Approved unanimously by the boards of directors, the deal will be completed in 2025 after necessary regulatory approvals. According to Intelsat’s announcement: “SES will pay $3.1 billion (€2.8 billion) to acquire 100% of Intelsat Holdings S.a.r.l., in a transaction valuing Intelsat at $5.0 billion (€4.6 billion).” This significant economic and strategic move reflects ongoing changes in the space communication and telecommunications services sector.
Networks, Managed Services, and Mobility Markets
The combined companies will launch a fleet of over 100 geostationary orbit (GEO) satellites and 26 medium Earth orbit (MEO) satellites, with eight new GEO satellites and seven O3b mPower MEO satellites planned for launch in 2026. Intelsat will bring the right to use a wide range of frequencies and ground segment assets. The combined order backlog will reach €9 billion, with an EBITDA of €1.8 billion. According to the announcement, the segments providing government, mobility, and fixed data services will represent about 60% of SES’s expanded total revenue of €3.8 billion, driven by the growing demand for reliable, high-performance connectivity solutions worldwide.
Intelsat’s commercial aviation division currently serves nearly 3,000 aircraft, while SES’s maritime activities support five major cruise line operators. The fixed data sector (civilian internet) will be integrated with multi-orbit network coverage, offering “competitive deals” and cloud and 5G applications. The strength of geostationary satellites lies mainly in servicing pay-TV operators, free-to-air/free-to-view platforms, public and private broadcasters, and the transmission of sports and events to a global audience, with improved redundancy (SES broadcasts 6,400 channels reaching 363 million homes worldwide). Despite the shrinking TV operator market due to the rise of LEO internet networks, this will remain a key business area for Intelsat.
Surviving the Era of LEO Mega Constellations
The shrinking satellite TV market is highlighted in analyses like that of the World Economic Forum, which predicts a decline in subscribers alongside a rise in streaming (due to the low latency and higher performance of LEO internet).
SES and Intelsat must compete with the dominant LEO constellations Starlink and OneWeb, with Amazon’s Kuiper on the horizon. OneWeb was recently acquired by France’s Eutelsat, while Viasat acquired Inmarsat in 2023, consolidating major GEO satellite service providers. Intelsat, having undergone significant restructuring under U.S. bankruptcy law to reduce its debt from nearly $16 billion to about $7 billion, faces the challenge of maintaining competitive GEO services. SES, on the other hand, needs to adapt to a broadcasting market losing ground to streaming. SES CEO announced that in 2023, SES Networks (mobile networks, on-demand entertainment services for planes and ships, government and defense services, and emergency services) accounted for over 50% of the group’s revenue, surpassing SES Video’s broadcast section. Intelsat recently signed an MoU to provide multi-orbit internet and connect equipment for agricultural machinery giant CNH in remote areas, starting in Brazil, using user-friendly satellite terminals designed for harsh farm environments.
The entry of operators like Starlink (a SpaceX venture) and OneWeb is revolutionizing the paradigms. Todd Harrison, a space sector expert and senior fellow at the American Enterprise Institute, noted for Breaking Defense: “We are witnessing a wave of disruption in the commercial satellite communications market thanks to Starlink and OneWeb, with their lower costs and higher capacity LEO broadband services. For the first time in a long time, traditional operators are being significantly challenged.”