In May 2023, the approval of Viasat, an American satellite broadband service provider, acquiring the UK-based satellite communications provider Inmarsat, marked the beginning of a new phase in the satellite industry. Furthermore, at the end of September, Eutelsat, a European satellite communications company, successfully merged with OneWeb, leading to the formation of the Eutelsat Group. These developments have set the stage for global satellite operators to embark on a journey of consolidation.
Despite the anticipated reduction in satellite operational costs due to technological advancements and the heightened emphasis on satellite communication, particularly after the Russo-Ukrainian war, many satellite companies are grappling with the challenge of achieving profitability in the short term due to the substantial capital investments required.
According to Rapidtek, a Taiwan-based startup specializing in antenna design and RF testing, the current wave of mergers and alliances is primarily driven by the desire to extend coverage and meet communication demands using multi-orbit satellite connectivity. Crucially, the overarching goal is to compete head-to-head with SpaceX's Starlink. It is foreseen that the trend of mergers and collaborations among satellite operators will persist in the years ahead.
Viasat's announcement of its acquisition of Inmarsat in January 2023 is noteworthy. When examining their satellite portfolios, Viasat and Inmarsat respectively own 4 and 15 geostationary orbit (GEO) satellites. Their core offering revolves around providing in-flight broadband services to European and global airlines. With the amalgamation of their assets, they are capable of providing a high-capacity space-to-ground hybrid network that encompasses multiple frequencies, multi-orbit satellites, and air-to-ground systems that ultimately results in reduced operating costs.
With the merger between Eutelsat and OneWeb, the newly formed entity will become the first satellite operator to possess both geostationary and low Earth orbit (LEO) satellites. This strategic positioning places them in a commanding position within the thriving satellite communication market. The Eutelsat Group, born from this merger, is poised to offer comprehensive coverage via high-capacity geostationary orbits and low-latency LEO satellites, catering to a wide spectrum of communication needs. OneWeb is on track to be operational globally by the end of 2023, providing services such as mobile networks and fixed connectivity, while Eutelsat will continue to focus on its core broadcasting and video services.
Rapidtek emphasizes that the satellite industry is witnessing an escalating demand for high-bandwidth, low-latency networks, presenting abundant opportunities. Beyond satellite communication, auxiliary sectors related to satellites, including debris removal and space junk mitigation, are also reaping the benefits. However, it's important to acknowledge that the satellite industry necessitates substantial capital investments. Even in the competitive LEO satellite market, where prominent operators like OneWeb, Amazon and SpaceX operate, SpaceX maintains a dominant position as a formidable contender due to its rocket technology and extensive deployment of LEO satellites. In light of these circumstances, collaboration and consolidation are emerging as key trends in the satellite industry.
Moreover, while SpaceX and Amazon's Project Kuiper possess significant resources and may not pursue the aforementioned consolidation approach to enhance their competitiveness, other industry players facing fierce competition may have merger plans in their future with the timing contingent on various factors.
