Consolidate this
LEO’s strong pull leads to mergers and acquisitions in the connectivity space, reports Fayaz Hussain
SPECIALIST MERGERS and acquisitions lawyers and investment bankers have had many hours of work thanks to connectivity company deals. Viasat acquired Inmarsat in May 2023 in a $7.3bn transaction. Eutelsat bought low Earth orbit (LEO) satellite company OneWeb in September 2023 for $3.4bn. SES merged with Intelsat for nearly $3bn in 2024. Each of these deals required hundreds of hours of work to close and obtain regulatory clearance.
“The three major announcements from satellite companies are three more than we saw in the previous 10 years,” says Chris Moore, CEO, Gogo. “These are massive moves and it’s one cool thing from the disruption from new LEO entrants. They have accelerated the market because you can no longer have a staid business model where you’re not driving customer innovation. Customers now have got a lot more choice.”
The transactions did not stop there. Gogo bought Satcom Direct in early December 2024 (Moore was CEO at Satcom Direct before the sale). It paid $375m in cash, issued five million shares and could pay another $225m to Satcom Direct’s investors if targets are met. Gogo’s major shareholders are private equity firm GTCR and Thorndale Farm. Satcom Direct’s owner was looking to exit, and the deal has helped Gogo’s transformation into a global aviation connectivity company.
A few weeks later, in January 2025, Israel’s Gilat Networks bought connectivity hardware company Stellar Blu from Fortress Investment Group for about $250m. Stellar Blu’s customers include Intelsat, Panasonic, OneWeb and others. Many of the world’s largest airlines use its open-architecture Sidewinder terminal that allows users to access multiple connectivity networks. It is also popular with Airbus Corporate Jet and Boeing Business Jet owners – including governments.
“For us, the sale was all about synergies and scale. Aerospace OEMs like dealing with larger companies,” says Tracy Trent, CEO, Stellar Blu. “We work with some of the same customers as Gilat and there is the opportunity for us to be part of a bigger and broader platform and manufacturer at a higher rate. They do also have some awesome technology.”
Summer Staninski, research analyst at Valour Consultancy, which tracks marine and aviation connectivity, says Elon Musk’s Starlink has driven many of the mergers. “There will be further consolidation,” says Staninski. “Going forward, GEO-only players will need to at least partner with a non-GEO network operator and be able to offer multi-orbit connectivity. Partnering with existing players to expand their service orbits also makes economic sense because they can offer these capabilities without having to build their constellation from scratch which require massive investments and longer timeline.”
While Starlink has captured much attention – and has now signed 1000 commercial and business aviation aircraft – others are coming, such as Amazon’s Kuiper and Canada’s Telesat. Jeff Bezos, the Amazon founder, is set to begin commercial roll out of his Project Kuiper in 2025 and aims to put nearly 3,200 satellites in low Earth orbit. In September 2024 the governments of Canada and Quebec agreed $2.5bn in funding for Telesat.
This is all good news for customers. “Prices are unlikely to go up from what they are now. I think probably there will be continued downward pressure going forwards, mostly due to how competitively priced the new entrants are in the space,” says Staninski.
It is a mistake to only focus on LEO systems. In the future large cabin business jet owners are likely to have multiple systems. “Customers want an open platform and to have options. At the start of Stellar Blu, airlines told us that one of the key aspects they were looking for was the ability to use multiple networks and adapt to new technologies − that has not changed and VVIP customers are smart enough to ask for the same thing,” says Trent.
Trent says that it is likely that passengers will move between systems without realising it. Gaming on LEO systems (where speed is key) but using GEO for Zoom calls, for example.
Staninski agrees: “In the business segment, there’s obviously room for more premium products. Customers in the larger jet segments will likely utilise a multi-orbit offering and be willing to pay for the best.”
It is worth remembering the capital needed to compete as an aviation broadband company. Launching into the market is not cheap. US air-to-ground provider SmartSky demonstrated this. After launching at the start of 2022, the company announced it would cease operations in August 2024.
In a statement, the company said: “SmartSky was founded with a bold vision: to revolutionise aviation communications. We successfully built and operated a leading, high-performance nationwide air-to-ground network using unlicensed spectrum, made possible by innovative patented technology. Along the way, our team dedicated great energy and expertise, earning several prestigious industry awards. While our products were groundbreaking and we were growing our market share, we ultimately could not secure the necessary financing to continue our mission.”
Staninski also blames the launch of LEO networks. “Much of what plagued SmartSky can be pinned to the delays it faced in launching its services. The company’s initial timeline was to launch its services in 2016,” says Staninski. “But it faced myriad problems including lawsuits, funding crunch and equipment shortages due to Covid-19. So by the time SmartSky was beginning to start being competitive and getting contracts, it was a little too late. And then shortly after SmartSky’s launch, Starlink entered the market, and its solution was being installed on small aircraft such as the King Air.”
Satcom Direct attracted interest from both strategic investors (like Gogo) and pure financial ones but chose Gogo because it saw more synergies. All of these mergers have been complicated with many advisers pushing them through.
Gogo alone had two companies proving legal counsel, two firms of financial advisers and three providing loans. Then there was a whole new suite of advisers each for Satcom Direct, Stellar Blu and Gilat.
That is a lot of people for the closing dinner.
These are the number of jets using each of the top four systems:
• Iridium – about 10,000 jets
• Gogo – 7,031
• Viasat – over 5,000 jets
• Intelsat/SES – FlexExec and LuxStream on over 100 aircraft each so total over 200
“Starlink is also particularly disruptive and committed to over 1,000 aircraft in July 2024, some of which are commercial but some of which are bizjets. Based on publicly announced deals with commercial airlines and their fleet sizes, I would estimate roughly 350-500 are committed bizjet tails that will be equipped over the next several years.” - Valour Consultancy.
These are the number of jets using each of the top four systems:
• Iridium – about 10,000 jets
• Gogo – 7,031
• Viasat – over 5,000 jets
• Intelsat/SES – FlexExec and LuxStream on over 100 aircraft each so total over 200
“Starlink is also particularly disruptive and committed to over 1,000 aircraft in July 2024, some of which are commercial but some of which are bizjets. Based on publicly announced deals with commercial airlines and their fleet sizes, I would estimate roughly 350-500 are committed bizjet tails that will be equipped over the next several years.” - Valour Consultancy.
