SES Plans $3.1B Intelsat Acquisition to Compete with Starlink

SES to Acquire Intelsat in $3.1 Billion Deal, Aims to Counter Starlink

In a strategic move to address the growing competition from satellite broadband networks, SES, a Luxembourg-based company, has unveiled its plans to acquire Intelsat, a US-based firm, for a staggering $3.1 billion. This acquisition will result in the formation of a unified entity equipped with a fleet of approximately 100 multi-ton satellites in geostationary orbit, effectively doubling the size of its closest competitor. However, the demand for communication services via large geostationary satellites is declining as consumers and corporate/government markets increasingly favor the offerings provided by smaller, low-Earth orbit (LEO) satellites. Notably, SpaceX's Starlink network, boasting over 5,800 active satellites and 2.6 million subscribers, serves as a clear demonstration of this shifting trend.

Key Takeaways

• SES, a Luxembourg-based company, plans to buy Intelsat for $3.1 billion.
• The acquisition will create a combined company with over 100 multi-ton satellites in geostationary orbit.
• Demand for communication services through large geostationary satellites is waning.
• Starlink, with 5,800 active satellites, has over 2.6 million subscribers and offers lower latency than geostationary satellites.
• SES's acquisition of Intelsat marks a trend of consolidation among legacy operators in geostationary orbit.

Analysis

The acquisition of Intelsat by SES, a Luxembourg-based company, for $3.1 billion, indicates a strategic response to the escalating competition from Starlink and other emerging satellite broadband networks. This merger will pave the way for a dominant multi-orbit space network, boasting approximately 100 multi-ton satellites in geostationary orbit, effectively surpassing its competitors. However, the dwindling demand for communication services through large geostationary satellites, amidst the burgeoning popularity of smaller low-Earth orbit (LEO) satellites like SpaceX's Starlink network with its 2.6 million subscribers, poses a significant industry challenge.

The consequences of this acquisition could potentially lead to a shift in power dynamics among satellite providers, with far-reaching implications for consumers, corporate entities, and governments reliant on communication services. Furthermore, the acquisition may catalyze further consolidation among legacy operators in geostationary orbit as they strive to maintain their competitiveness against innovative LEO networks. The success of the multi-orbit network will ultimately hinge on the market's reception of this novel communication infrastructure.

Did You Know?

• GEO, MEO, and LEO services: GEO (Geostationary Earth Orbit), MEO (Medium Earth Orbit), and LEO (Low Earth Orbit) represent distinct layers in Earth's orbit where satellites operate. GEO satellites, stationed at approximately 22,236 miles (35,786 km) above Earth's surface, deliver global coverage. MEO satellites, orbiting at lower altitudes of around 8,000-20,000 miles (13,000-32,000 km), cater to navigation and communication services. LEO satellites, closest to the Earth at altitudes below 1,200 miles (1,936 km), offer lower latency and expedited data transfer rates for communication services.
• Geostationary satellites demand decrease: LEO satellites are gradually supplanting traditional GEO satellites for communication services as a result of several factors. These include lower latency due to their proximity to Earth, which is critical for time-sensitive applications such as online gaming and video conferencing. Additionally, the relatively lower costs involved in launching and deploying LEO satellites, compared to GEO satellites, render LEO-based services more cost-effective and accessible to consumers and businesses.
• Starlink network and subscribers: SpaceX's Starlink network, a large-scale satellite broadband initiative comprising thousands of LEO satellites, aims to deliver high-speed internet access to underserved or remote areas with limited connectivity. At the time of writing, Starlink boasted approximately 2.6 million subscribers, showcasing the escalating demand for LEO-based broadband services. With over 5,800 active satellites in orbit, Starlink underscores the potential of satellite constellations to transform the accessibility of the internet for consumers and businesses.