The proposed merger between US satellite operator Viasat and British satellite telecommunications company Inmarsat, has been approved by the UK competition regulator.

The Competition and Markets Authority (CMA) has announced that it is now allowing the proposed merger of Viasat and Inmarsat to go ahead, following a provisional clearance in March.

Both Viasat and Inmarsat operate their own satellite networks and provide two-way satellite communication globally to commercial customers and governments.

A SpaceX Falcon 9 rocket launches an Inmarsat satellite from Cape Canaveral, Florida. Image credit: SpaceX

Regulatory scrutiny

It was in November 2021 when US-based Viasat first revealed its intent to acquire British satellite telecommunications company Inmarsat for $7.3 billion, in order to “create a leading global communications innovator with enhanced scale and scope to affordably, securely and reliably connect the world.”

The deal however began to attract regulatory scrutiny. In July 2022 the European Commission signalled the deal would need its approval before it could be completed.

In February the EC said it would carry out an indepth investigation.

Meanwhile in the UK, the CMA last August began a phase one investigation of the deal.

A couple of months later in October 2022, the CMA announced that the merger between Viasat and Inmarsat for $7.3 billion had raised competition concerns.

Shortly after that the CMA confirmed it a phase two investigation of the deal.

The regulatory concern was that Viasat’s merger with Inmarsat could lead to airlines facing higher prices for on-board Wi-Fi, and potentially worsen Wi-Fi quality on-board.

The CMA had noted last year that demand for satellite connectivity was increasing rapidly, the deal would bring together two of the strongest suppliers in a market with few other established players, despite plans by other players, such as Starlink, OneWeb, and Telesat, looking to target the aviation sector.

The reality, the CMA said last year, was aviation was one of the most difficult industries for satellite operators to enter, and the CMA’s initial investigation had found that there is significant uncertainty about when – if at all – these suppliers would be in a position to compete effectively with Viasat and Inmarsat.

The CMA’s investigation also found that it could be very difficult for airlines to switch providers once they have installed a connectivity solution.

This led to CMA concern that the merged company could effectively lock in a large part of the customer base before emerging suppliers are able to compete.

CMA approval

But the CMA’s Phase 2 investigation found that – while Viasat and Inmarsat compete closely – the merged company will still be challenged by emerging and established competitors in the coming years.

In order to reach the decision to approve the deal, the independent CMA panel had analysed a wide range of evidence, including a significant number of internal documents – from both the merging companies and their competitors – evidence from airlines; the CMA’s own analysis of sector conditions; and how these could change in the future.

The CMA said the evidence analysed by the panel shows that, while Viasat and Inmarsat compete closely– specifically in the supply of satellite connectivity for wi-fi on flights – the deal does not substantially reduce competition for services provided on flights used by UK customers.

The evidence also shows that the satellite sector is expanding rapidly – and a number of new operators have recently entered, or are planning to enter, such as SpaceX’s Starlink, as well as established players – including Panasonic and Intelsat – both of which are also investing and entering into new sector partnerships with OneWeb for example.

“The satellite communications sector is evolving at rapid pace – new companies are entering the market, more satellites are being launched into space, and firms are exploring and entering into new commercial deals,” noted Richard Feasey, chair of the inquiry group carrying out the Phase 2.

“All the evidence has shown that the sector will continue to grow as the demand for satellite connectivity increases,” said Feasey. “After carefully scrutinising the deal, we are now satisfied that, following the merger, these developments will ensure that both airlines and their UK customers will continue to benefit from strong competition.”

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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