Inmarsat’s £5.4bn takeover by US rival given provisional thumbs up

The £5.4 billion takeover of UK satellite giant Inmarsat by US firm Viasat has been given the provisional green light by Britain’s competition watchdog as it said the merged firm would be “challenged” in the rapidly expanding sector.

The Competition and Markets Authority (CMA) said that while the companies compete closely in the aviation sector – specifically in the supply of satellite connections for onboard wifi – the deal does not substantially reduce competition for services provided on flights used by UK customers.

It said the merged company will likely face “significant competition” from both emerging and established players as the sector expands.

Following a four-month in-depth phase of the probe, the CMA said the combined firm would be “challenged” by the likes of SpaceX’s new competitor Starlink, as well as established firms such as Intelsat and Panasonic, over the coming years.

The satellite sector has seen a wave of investment and acquisitional activity in recent years as ventures backed by Elon Musk and Amazon have pushed forward in the race to build a constellation of low-orbit satellites.

Richard Feasey, chairman of the independent inquiry group carrying out the CMA’s in-depth investigation, said: “This is an evolving and rapidly expanding sector, in which there have been significant developments even during the course of our four-month investigation.

“We see this continuing as demand for satellite connectivity increases.

“While Viasat and Inmarsat compete closely, the evidence suggests that the merged company will face significant competition in the coming years – from both emerging players like Starlink and from established firms like Intelsat and Panasonic.

“This competition has led us to provisionally conclude that airlines and their UK customers will not be adversely affected by the deal.”

In November 2021, Viasat agreed the takeover of Inmarsat in what it described as a “transformative” deal for the global communications industry.

The deal came under immediate scrutiny due to the satellite operator’s role in the UK’s economy and national security.

Shareholders approved the deal in June 2022 to buy Inmarsat from private equity firm Apax, which had only taken it private in a £2.6 billion takeover two years earlier.

The CMA launched an investigation into whether the new deal would lessen competition, while Elon Musk’s SpaceX reportedly called on US regulators last summer to withhold approval of the takeover by Viasat.

But the CMA said on Wednesday that the satellite sector is growing at pace, with a number of new players entering – or planning to enter – the sector, including Starlink, which is rapidly increasing its presence in the provision of satellite connections to aircraft.

During the investigation, the firm launched a significant number of additional satellites and won its first contract with a European airline, airBaltic, the CMA said.

Established competitors, such as Panasonic and Intelsat, are also investing and entering into new partnerships – and both firms have signed agreements with recent entrant OneWeb to use its satellite fleet to enhance their offerings to airlines, according to the CMA.

The CMA will now take responses to its provisional findings, with a final decision due by March 30.