Two giants in the satellite telecom industry join forces to counter Starlink

🌈 Abstract

The article discusses the merger between two major satellite communications companies, SES and Intelsat, in response to the growing competition from emerging satellite broadband networks like Starlink.

🙋 Q&A

[01] Merger between SES and Intelsat

1. What are the key details of the merger between SES and Intelsat?

• SES, based in Luxembourg, will buy Intelsat for $3.1 billion.
• The combined company will have a fleet of around 100 multi-ton satellites in geostationary orbit, more than twice the size of the next-largest commercial geostationary satellite operator.
• The merger is a response to the growing competition from satellite broadband networks like Starlink, which offer lower latency and more cost-effective services compared to traditional geostationary satellites.

2. What are the advantages of the combined SES-Intelsat network?

• The combined network will offer coverage over 99% of the world and provide services through a range of communication bands, including Ka-band, Ku-band, X-band, C-band, UHF, and secure bands tailored for military use.
• The network will span geostationary (GEO), medium-Earth orbit (MEO), and low-Earth orbit (LEO) satellites, providing a range of latency and coverage options.
• The combined company will have 13 new satellites on order, including 6 GEO and 7 broadband MEO satellites.

3. How does the SES-Intelsat merger compare to other consolidation trends in the satellite industry?

• The merger is part of a broader trend of consolidation in the satellite industry, with other major players like Eutelsat and Viasat also making acquisitions to respond to the competition from LEO broadband networks.
• The SES-Intelsat merger stands out due to the size of their combined satellite fleets, which will be more than twice the size of the next-largest commercial geostationary satellite operator.

[02] Challenges facing traditional geostationary satellite operators

1. What are the key challenges facing traditional geostationary satellite operators like SES and Intelsat?

• Declining demand for communication services through large geostationary satellites, as consumers and some corporate/government markets are increasingly turning to the services offered by smaller, lower-latency satellite constellations in LEO.
• The growing dominance of SpaceX's Starlink network, which has over 5,800 active satellites and more than 2.6 million subscribers.
• Advantages of LEO satellite constellations, such as lower latency and the ability to mass-produce satellites at relatively low cost, compared to the high cost of building and launching a single geostationary satellite.

2. How are traditional operators responding to these challenges?

• Consolidation through mergers and acquisitions, as seen with the SES-Intelsat merger and other deals like Eutelsat's merger with OneWeb and Viasat's acquisition of Inmarsat.
• Expanding their offerings to include a mix of GEO, MEO, and LEO satellites to provide a range of services and compete with the capabilities of LEO broadband networks.

[03] Intelsat's history and role in the merger

1. What is Intelsat's history and significance in the satellite industry?

• Intelsat was founded in 1964 as an intergovernmental organization and operated the first commercial communications satellite in geostationary orbit.
• It became a private company in 2001, went public in 2013, and then filed for bankruptcy in 2020 before emerging as a private company again in 2022.
• Intelsat brings a significant fleet of 57 geostationary satellites, primarily for television and video relay services, to the combined SES-Intelsat company.

2. How does Intelsat's recent strategic reset contribute to the merger?

• According to Intelsat's CEO, the company has executed a "remarkable strategic reset" over the past two years, reversing a 10-year negative trend, establishing a new technology roadmap, and focusing on productivity and execution to deliver competitive capabilities.
• This strategic turnaround has made Intelsat an attractive acquisition target for SES, as the combined company can leverage Intelsat's assets and capabilities to better compete in the evolving satellite communications market.