SES agrees to acquire Intelsat

Driven by the arrival of constellations from the likes of Starlink and SpaceX, the satellite communications market is flying high, with data connectivity services showing particularly hot growth, and in a deal described as a significant milestone for the satellite industry, SES has announced an agreement to acquire fellow operator Intelsat.

After Intelsat emerged from bankruptcy in 2022, SES attempted an unsuccessful takeover in 2023. With the successful deal, SES will purchase 100% of the equity of Intelsat Holdings for a cash consideration of $3.1bn and a number of contingent value rights.

Fundamentally, the two companies say the takeover will create a stronger multi-orbit operator that is better able to compete in a fast-moving satellite communications landscape and respond to the evolution of competing communications technologies.

The combined company will have a fleet of more than 100 geostationary Earth orbit (GEO) and 26 medium Earth orbit (MEO) satellites. SES expects to benefit from enhanced coverage, greater network resiliency, complementary spectrum rights (C-, Ku-, Ka-, Military Ka-, X-band, and Ultra High Frequency), and improved service delivery utilising an expanded network of ground segment assets. By the end of 2026, the two firms expect to have launched eight more GEO (including six software-defined) satellites and seven new MEO (O3b mPOWER) satellites, adding further redundancy and growth capacity.

With the creation of a stronger multi-orbit operator, Intelsat and SES insist that their customers across government, mobility, fixed data and media segments will benefit from an expanded set of capabilities and solutions that will enable them to expand their network reach, add further resiliency, improve productivity across their operations and bring world-class experiences to users.

In mobility, customers are said to be better served by bringing together the two companies’ complementary offerings, notably Intelsat’s commercial aviation division, which currently serves nearly 3,000 connected aircraft, and SES’s maritime business, which includes supporting five major cruise line operators via fully managed, multi-orbit connectivity agreements. The combination will also support the evolving needs of channel partners across the segments.

The two firms say the integrated company’s stronger financial profile enhances the ability to better invest in future network infrastructure, customer solutions and future use-cases and/or business diversification opportunities, with a better risk profile than could be done by the two companies on a standalone basis.

Based on financial figures to 31 December 2023, the integrated company has a combined gross backlog of €9bn, underpinning future cash flow visibility, expected adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of €1.8bn, and expected adjusted EBITDA less capital expenditure of €800m, supporting recurring cash-generation fundamentals.

By combining our financial strength and world-class team with that of SES, we create a more competitive, growth-oriented solutions provider in an industry going through disruptive change
David Wajsgras, Intelsat

The transaction has been unanimously approved by the boards of both companies, and Intelsat shareholders holding approximately 73% of the common shares have entered into customary support agreements requiring them to vote in favour of the transaction. Subject to relevant regulatory clearances, it is expected to be completed during the second half of 2025.

“This important, transformational agreement strengthens our business, enhances our ability to deliver world-class customer solutions, and generates significant value for our shareholders in a value accretive acquisition which is underpinned by sizeable and readily executable synergies,” said SES CEO Adel Al-Saleh.

“In a fast-moving and competitive satellite communications industry, this transaction expands our multi-orbit space network, spectrum portfolio, ground infrastructure around the world, go-to-market capabilities, managed service solutions and financial profile,” added Al-Saleh.

Intelsat CEO David Wajsgras said: “Over the past two years, the Intelsat team has executed a remarkable strategic reset. We have reversed a 10-year negative trend to return to growth, established a new and game-changing technology roadmap, and focused on productivity and execution to deliver competitive capabilities.

“This strategic pivot sets the foundation for Intelsat’s next chapter. By combining our financial strength and world-class team with that of SES, we create a more competitive, growth-oriented solutions provider in an industry going through disruptive change. The combined company will be positioned to meet customers’ needs around the world and exceed their expectations,” he added.

News of the deal has already attracted cautious optimism from the analyst community. Christof Kern, business development lead for satellite and space at satellite consultancy TTP, predicted that the combined entity would dominate the market and shape the future of satellite comms. 

Bringing together two legacy giants from Europe and the US, both companies are focused on driving efficiencies and maximising their investments in both GEO and MEO satellites. However, based on the operating efficiencies gained, there’s potential for deploying LEO satellites in the future to meet high-bandwidth and low-latency connectivity demands when required,” he said.

“With confidence in the competitiveness of these satellites, when compared to Starlink’s LEO constellation, the combined entity will be able to offer wider coverage of the Earth’s surface at a more affordable cost, albeit at higher latency,” added Kern. “The combined entity is poised to be the world’s largest satellite company in terms of revenue, and could dominate the market, leveraging its extensive resources and expertise to shape the future of satellite communications and deliver on new use cases.” 

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