Satellite heavyweights SES and Intelsat to combine in $3.1B merger

Two of the commercial satellite industry’s biggest players are joining forces to fortify their position against the onslaught of emerging low-Earth orbit broadband constellations led by SpaceX’s Starlink network.

In a $3.1 billion deal announced Tuesday, Luxembourg-based SES will acquire rival operator Intelsat—creating a combined fleet of around 100 satellites in geostationary orbit (GEO).

The new behemoth born from the merger will boast more than twice the number of active GEO satellites as its next largest competitor as traditional satellite operators face intensifying competition from a new breed of low-Earth orbit (LEO) broadband mega-constellations.

While large, long-standing customers like television broadcasters and military remain firmly committed to the stability and global coverage provided by GEO satellite fleets, there is surging demand from consumers and businesses for the low-latency connectivity offered by LEO satellite networks flying just a few hundred miles above Earth.

“In a fast-moving and competitive satellite communication 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,” said SES CEO Adel Al-Saleh.

“Going forward, customers will benefit from a more competitive portfolio of solutions with end-to-end offerings in valuable Government and Mobility segments, combined with value-added, efficient, and reliable offerings for Fixed Data and Media customers.

“This combination is also positive for our supply chain partners and the industry in creating new opportunities as satellite-based solutions become an increasingly integral part of the wider communications ecosystem.”

Starlink juggernaut

Dominating the LEO satellite broadband market is SpaceX’s Starlink network, which has deployed over 5,800 spacecraft to date, with millions more planned. The reusable Starlink satellites are manufactured at a fraction of the cost of traditional larger GEO craft, enabling SpaceX to rapidly build out a globe-spanning constellation.

Starlink’s LEO architecture provides low-latency internet connectivity not possible from the more distant GEO orbit, a key advantage over space-based internet providers relying on handfuls of high-bandwidth GEO satellites like ViaSat and Hughes. Starlink now counts over 2.6 million subscribers, per SpaceX.

Established operators are pursuing mergers and acquisitions to stay competitive amid the LEO broadband revolution. Last year, Eutelsat combined with OneWeb to offer a hybrid GEO-LEO service. ViaSat purchased maritime satellite firm Inmarsat.

But the SES-Intelsat tie-up is the largest such deal to date based on the immense scale of their joint GEO assets. SES currently operates 43 GEO satellites plus 26 broadband craft in medium-Earth orbit. Intelsat adds another 57 active GEO satellites focused on video transmission.

The two companies have 13 more satellites in production lines – six GEO and seven next-gen hybrid broadband platforms for medium-Earth orbit. Intelsat further secured $250 million of capacity on OneWeb’s own LEO broadband constellation earlier this year.

Hedging bets

While pledging continued GEO investment to serve their core markets, the SES-Intelsat merger is widely seen as a move to insulate their businesses against further LEO disruption by diversifying across multiple orbits.

Their sheer size and vertical integration may offer a counterweight to Starlink and others by enabling the legacy firms to rapidly deploy new multi-orbit architectures and managed network services. However, LEO’s technical latency benefits inherently favour the upstart broadband providers.  

“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,” explained David Wajsgras, CEO of Intelsat.

“The team today is providing our customers with network performance at five 9s and is more dedicated than ever to customer engagement and delivering on our commitments. This strategic pivot sets the foundation for Intelsat’s next chapter.”

The SES-Intelsat deal underscores how Starlink’s aggressive LEO constellation build-out has already profoundly reshaped the global satellite services playing field, forcing incumbents to pursue transformational realignments merely to remain viable competitors. 

(Photo by Lance Grandahl)

See also: EU antitrust chief warns against telecoms mergers  

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Tags: acquisition, connectivity, intelsat, merger, Networks, rural, satellites, ses, telecoms