Updated 5:30 a.m. Eastern with comments from SES earnings call.
WASHINGTON — SES is acquiring rival satellite operator Intelsat for $3.1 billion, a deal that would bring together two of the major GEO satellite operators in a market facing increased competition from LEO constellations.
The companies announced April 30 that they had agreed on the deal, subject to regulatory approvals. SES will pay $3.1 billion in cash along with certain contingent value rights for 100% of Intelsat. The transaction is not expected to close until the second half of 2025.
SES said it will fund the deal through existing cash on hand, which it estimates to be $2.6 billion at the end of March, along with debt. The combined company would have about $4.1 billion in annual revenues and estimated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.9 billion this year. The combined company will remain headquartered in Luxembourg, where SES is based, but will maintain a “significant presence” at Intelsat’s home in the Washington, D.C., area.
“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,” Adel Al-Saleh, chief executive of SES, said in a statement.
“Over the past two years, the Intelsat team has executed a remarkable strategic reset,” said David Wajsgras, chief executive of Intelsat, in that statement, a reference to the company’s emergence from Chapter 11 bankruptcy reorganization. “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 deal brings together operators of two of the largest operators of commercial GEO communications satellites, a sector that once was the most lucrative part of the space industry but has been under increased pressure because of reduced demand from conventional television services and the rise of LEO constellations, like SpaceX’s Starlink, offering connectivity services. The two companies have more than 100 GEO satellites combined, along with the medium Earth orbit O3b constellation from SES.
The two companies have 13 satellites on order: four GEO satellites by Intelsat and two GEO satellites by SES, as well as seven O3b mPOWER satellites by SES. Al-Saleh said in an April 30 earnings call that the acquisition would result in capital expenditure savings, particularly in any future non-GEO satellite systems. Intelsat had been studying its own MEO constellation.
“It’s about optimizing the future of multi-orbit satellite investments and fleets,” he said. “We just don’t need to spend as much money as we were spending separately. The combination will give us the opportunity to reduce that.”
The deal is part of a wave of consolidation in the satellite communications sector that in recent years has included Viasat’s acquisition of Inmarsat and Eutelsat’s acquisition of OneWeb. There had been rumors in the last two years that SES and Intelsat would combine, and SES confirmed in March 2023 the two companies had been in talks. However, three months later Intelsat walked away from those discussions after the companies couldn’t resolve differences.
Al-Saleh, who started at SES in February, said on the earnings call that negotiations on the Intelsat deal were already underway when he became CEO. “This wasn’t something that I kicked off,” he said, stating that SES was looking at “multiple” merger and acquisition opportunities as well as returns to shareholders from its FCC C-band clearing proceeds. “It was clear to us that this particular transaction, if we’re able to successfully close it with the right type of value, is the most compelling proposition we had on the table.”
The timing for a deal now was better than last year, he said, citing Intelsat’s growth since its emergence from Chapter 11 among other factors. “Both companies have gone through quite a significant evolution in a very short period of time,” he said. “Dave and I saw real value here and worked very hard together to figure out how to make this thing happen.” He added that the structure of the deal — an acquisition of Intelsat by SES, rather than a merger of the two companies — is easier.
“The biggest thing was the desire of both companies to build something unique here,” he concluded. “We both the opportunity to create something valuable to our clients and to the market.”
Al-Saleh said he did not think the acquisition would raise any antitrust concerns, including in the United States given that both companies provide services to the U.S. military. “We wouldn’t be a significant, overarching share of U.S. government spend. It will be spread across several, many players.”
