UK antitrust watchdog provisionally clears Viasat's $7.3B buy of Inmarsat

Entrance of SpaceX and others into airline Wi-Fi eases worries. Next stop: US and EU regulators

The UK’s Competition and Markets Authority (CMA) has provisionally approved Viasat's planned multibillion-dollar purchase of fellow satellite builder Inmarsat, yet the proposal has other regulatory hurdles to clear.

The proposed agreement, announced in November 2021, sees California-based Viasat pay $850 million in cash, offer more than 46 million common shares valued at $3.1 billion, and assume $3.4 billion in net debt.

The tie-up was expected to be consummated by mid-2022 but was held up when competition authorities in the UK probed the duo as competing market leaders in the supply of onboard Wi-Fi for commercial airliners.

Today, the CMA said that although both organizations are rivals, "the deal does not substantially reduce competition for service provided on flights used by UK customers."

The authority also sought to try to understand how new entrants to the satellite internet industry, namely OneWeb and SpaceX's Starlink, would affect the playing field. During its probe, a number of satellites were launched by Elon Musk's company and it won its first contract with as European airline airBaltic.

Panasonic and Intelsat are likewise showing more interest in the sector, and recently signed a contract with OneWeb to use its satellite fleet to boost their services to airlines.

Richard Feasey, chair of the independent inquiry group that carried out the probe for the CMA, said there were "significant developments" in the market during its four-month investigation.

"While Viasat and Inmarsat compete closely, the evidence suggests that the merged company will face significant competition in the coming years – from both emerging players like Starlink and from established firms like Intelsat and Panasonic.

"This competition has led us to provisionally conclude that airlines and their UK customers will not be adversely affected by the deal," he added.

The CMA will now collate responses from interested parties that will be considered before the final report is issued at the end of March.

The European Commission last month deepened its look at the Viasat purchase, and has 90 days to return with a decision on the merger. US regulators are also taking a keen interest.

In an unsurprising statement, Viasat and Inmarsat said they "welcome" the CMA's decision.

"This is an important milestone in the regulatory process that acknowledges the strong evidence of the highly competitive nature of the global market for satellite communications which includes numerous providers, including well-established companies and well-funded new entrants.

"We will continue to engage with regulators in Europe and the US on remaining regulatory approvals and will update the market as they progress." ®