Viasat acquisition ready for launch as SpaceX challenge fizzles

Viasat will likely be able to move forward with its acquisition of Inmarsat after the Federal Communications Commission (FCC) signed off on the deal this week.

The transaction was first agreed upon by California-based Viasat and London-based Inmarsat more than 18 months ago, but has been deferred by review processes in both the U.S. and U.K.

The FCC’s investigation was notably prompted by Viasat rival SpaceX after the latter was granted $886 million in broadband funding from the government's Rural Digital Opportunity Fund (RDOF). Viasat campaigned against the SpaceX funding with a series of public objections saying the company’s Starlink satellites did not have the capacity and speed to meet FCC requirements.

In a September 2022 filing to the FCC, SpaceX called Viasat's actions a "misguided campaign."

"Viasat is transparently attempting to have the Commission impede competition at all costs to protect its legacy technology," SpaceX wrote, adding that Viasat had violated Commission rules by breaching license terms.

But the FCC issued “unconditional” clearance for Viasat and Inmarsat, and with that blessing the satellite service providers will just have to wait for the European Commission’s (EC) competition review before their union is finalized.

The U.K.’s Competition and Markets Authority already ruled earlier this month that the deal presents no competition concerns, so if the EC’s review is favorable (as Viasat expects it will be) the transaction is anticipated to close later this month.

Viasat’s satellite services provide commercial aircraft with in-flight connectivity for Wi-Fi. The company also serves fixed broadband subscribers in the U.S. and provides capacity for commercial networks and support for government and defense systems.

Viasat has lauded Inmarsat’s strong distribution channels in the mobility, government, IoT and enterprise sectors. Vice Chairman Rick Baldridge said the combined company will set the foundation for significant positive free cash flow and potential upside from revitalizing L-band and IoT service growth.

“Plus, we will have expanded scale and presence in the $1.6 trillion broadband and IoT sectors. I’m excited about the opportunities ahead and looking forward to setting up the combined organization for long-term success,” Baldridge said in 2021.

At the time of the acquisition announcement, Inmarsat had just began working on a communications mesh network that brings together existing geosynchronous (GEO) satellites, low earth orbit (LEO) satellites, and terrestrial 5G. Inmarsat initially anticipated spending $100 million in the next five years to build out the network, dubbed Orchestra.

As part of Orchestra, Inmarsat has already launched its twin I-6 spacecrafts, with the first taking off from Japan in 2021 and the second from Cape Canaveral in February of this year.

However, Larry Paul, Inmarsat VP/corporate business development, at the Smallsat Symposium in February said that original plans for the Orchestra project had to be reined in, Advance Television reported.

“We don’t have the balance sheet to support that kind of investment. So, we are going to partner with an LEO operator, or maybe more than one,” said Paul.

In a later email Inmarsat reassured that it “remains committed to Orchestra, its multi-dimensional network encompassing GEO, HEO, LEO, 4G and 5G mesh,” but that it will continue to “assess the best path forward on the LEO component of Orchestra, and the company will announce further details when appropriate.”