European satellite firm SES is to acquire rival satellite operator Intelsat.
The Luxembourg-based company will acquire Virginia-based Intelsat via 100 percent of the equity of Intelsat Holdings S.a.r.l. for a cash consideration of €2.8 billion ($3.1 billion) and certain contingent value rights.
The companies said the partnership will create a “stronger multi-orbit operator” with greater coverage, improved resiliency, and an expanded suite of solutions. The combined company – set to remain based in Luxembourg – will have a joint contract backlog of €9 billion ($9.6bn).
The transaction has been unanimously approved by the board of directors of both companies and Intelsat shareholders and is set to close in the second half of 2025, subject to regulatory clearance.
Adel Al-Saleh, CEO of SES, said: “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. I am excited by the opportunity to bring together our two companies and augment SES’s own knowledge base with the added experience, expertise, and customer focus of the Intelsat colleagues."
David Wajsgras, CEO of Intelsat, added: “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. This strategic pivot sets the foundation for Intelsat’s next chapter.”
The combined company will have a fleet of more than 100 Geostationary Earth Orbit (GEO) and 26 Medium Earth Orbit (MEO) satellites with a further 15 set to launch by 2026; it will operate and own spectrum rights across C-, Ku-, Ka-, Military Ka-, X-band, and Ultra High Frequency.
The transaction will be financed from existing cash and equivalents - which stood at €2.4 billion ($2.6bn) on 31 March 2024 - and the issuance of new debt, including hybrid bonds. Additionally, SES will issue contingent value rights in respect of a portion of any potential future monetization of the combined collective usage rights for up to 100 MHz of C-band spectrum.
The two companies are expected to invest a combined CapEx of approximately €1 billion ($1.1bn) in 2024, with an average of €600-650 million ($642-$696m) per annum for the period 2025-2028.
Intelsat and SES were in merger discussions for several months over 2023, but couldn’t come to an agreement and ended talks in June. Intelsat had reportedly been the one to pull the plug on discussions.
It is the latest in a series of mergers in the satellite space; Eutelsat acquired Low Earth Orbit (LEO) operator OneWeb last year, while Viasat and Inmarsat’s merger also closed in 2023.
Intelsat was founded by the US government in 1961, operating as an intergovernmental consortium until it was privatized in 2001. SES was founded in 1985 by the Luxembourgish government.
Christof Kern, business development lead of Satellite & Space at consultancy firm TTP, said the move brings together "two legacy giants" from Europe and the US.
"Both companies are focused on driving efficiencies and maximizing their investments in both GEO and MEO satellites," he said. "However, based on the operating efficiencies gained, there's potential for deploying LEO satellites in the future to meet high-bandwidth and low-latency connectivity demands when required."
He continued: “The combined entity is poised to be the world’s largest satellite company in terms of revenue, and could dominate the market, leveraging its extensive resources and expertise to shape the future of satellite communications and deliver on new use cases.”
SES results, Intelsat tractor partnership
SES, which recently launched its second generation O3b mPower network, also announced its quarterly results this week.
The company reported revenues of €498 million ($533m), up 2.5 percent Year-on-Year (YoY), and Adjusted EBITDA of €275 million ($294m), up 4.7 percent YoY. An Adjusted Net Profit of €77 million ($82m) was 20 percent higher than Q1 2023.
SES said it is “continuing to engage with insurers” regarding a $472 million claim relating to O3b mPower satellites 1-4.
This week also saw Intelsat partner with agriculture company CNH to provide satellite services to farmers in Brazil. CNH, whose brands include Case IH, New Holland, and Steyr, is to install, connect, and operate ruggedized multi-orbit satellite terminals on CNH farm equipment operating in remote farmland throughout Brazil via Intelsat’s two Latin American satellites. The service is set to launch later this year.
