Inmarsat rejects EchoStar takeover proposal

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WASHINGTON — British satellite operator Inmarsat rejected an acquisition offer from EchoStar Corp. of Englewood, Colorado, curbing hopes that consolidation could reduce an oversupply of satellite capacity.

Inmarsat said June 8 that EchoStar’s offer “very significantly undervalued Inmarsat and its standalone prospects.” The company did not disclose the size of the offer.

EchoStar, through its Hughes division, and Inmarsat both operate high-throughput Ka-band satellites for broadband services.

Flush with cash, EchoStar is viewed as a company with the financial muscle to create consolidation in the satellite communications sector, but whether EchoStar can negotiate agreeable terms is debatable.

“This is the fundamental problem and the reason why EchoStar is sitting on $3.3 billion in cash,” Chris Quilty of Quilty Analytics, told SpaceNews. “Although they are well funded to pursue acquisitions, they historically have been fairly cheap in what they’ve been willing to pay.”

Satellite capacity prices have dropped by 35 to 60 percent over the past two years, according to Northern Sky Research, with high-throughput satellites contributing to the decline.

In November, PJ Beylier, CEO of Speedcast, one of the largest buyers of non-broadcast satellite capacity, said satellite operators could stem oversupply — and by extension price erosion — by consolidating.

“They are all throwing the same [capital expenditure] at the same satellites over the same regions, and that’s driving oversupply more and more,” he said. “I think it’s time for the satellite operators industry to consolidate and I think it’s going to happen. You need one deal among the big seven large operators — Intelsat, SES, Eutelsat, Telesat, Inmarsat, Viasat, EchoStar — you need one deal to happen between two of them and I think things will accelerate quite quickly.”

Of those seven, EchoStar appeared the most likely actor. Intelsat is struggling to pay down $14.5 billion in debt, SES bought O3b Networks in 2016 for $730 million, Eutelsat is in the middle of a three-year reduced capex plan, Telesat is trying to fund a low Earth orbit constellation and Viasat is spending significant resources on its ViaSat-3 geostationary satellites. Inmarsat mulled an acquisition of fellow British operator Avanti last year, but did not make an offer.

Inmarsat said its board of directors “remains highly confident in the independent strategy and prospects of Inmarsat.”

EchoStar did not immediately respond to SpaceNews inquiries by press time.