TAMPA, Fla. — Viasat’s plan to buy Inmarsat faces more delays after Europe launched an in-depth probe Feb. 13 into whether it would reduce competition for providing Wi-Fi on planes.
Europe’s investigation aims to ensure the deal “does not lead to higher prices and lesser quality” inflight connectivity (IFC) services on flights in Europe, said Margrethe Vestager, the European Commission executive vice president in charge of competition policy.
IFC is a “nascent and growing market in Europe,” Vestager said, and the two geostationary satellite operators currently “compete head to head to serve European airlines.”
U.S.-based Viasat announced plans in November 2021 to use a mix of cash and shares to buy British rival Inmarsat. The deal was worth around $7 billion before a decline Viasat’s share price wiped off more than a billion dollars.
The European Commission expects to decide on the transaction by June 29.
Europe’s concerns echo those raised by the U.K.’s competition watchdog, which launched a separate investigation Oct. 14 with a March 30 deadline.
Raymond James analyst Ric Prentiss said it “now feels even more likely” that the deal would close beyond the company’s original May 8 projection for completing the transaction — if it is successful.
Assessing a fledgling market
The Europe Commission said European airlines have few alternatives to Inmarsat and Viasat for IFC services, a market with high regulatory and technological barriers to entry.
However, the European Commission also acknowledged the industry “is undergoing a transition” as Starlink, OneWeb, and other operators in non-geostationary orbit (NGSO) enter or plan to launch services in the IFC market.
“The Commission plans to further investigate whether those new players are likely to exert sufficient competitive pressure on the merged entity in the near future,” the European Commission said in a Feb. 13 news release.
Viasat and Inmarsat say NGSO services are set to transform the state of play in the IFC market. They also point to strong existing competition in geostationary orbit from Intelsat and Panasonic in the long-haul IFC market.
In a short statement Feb. 13, Inmarsat said it remains confident combining with Viasat “will strengthen competition in the growing satellite communications market.”
Shares of Viasat stock closed slighty higher Feb. 13 at $31.38 despite the Europe Commission opening the in-depth probe. However, Viasat shares are down more than 50% from a $67 close prior to the acquisition’s Nov. 8, 2021, announcement.
