There is no guarantee that a deal will go through, but it would need the Luxembourgian government’s blessing since it is SES’s largest shareholder. Analysts have cited the deal’s financial appeal, but they are dubious of its strategic justification. In particular in the US, antitrust sentiment would need to be overcome for any merger.
Nearly $9 billion in combined proceeds from Intelsat and SES are expected for the C-band spectrum.
For clearing C-band spectrum for terrestrial cellular operators, Intelsat and SES are anticipated to receive nearly $9 billion in total compensation. However, the division of this windfall between the two businesses has been the subject of a protracted legal dispute. The ongoing legal dispute might be resolved if the two satellite operators ever merge.
Consolidation of the satellite industry
In response to shifting market conditions and escalating competition from new entrants like SpaceX’s Starlink broadband constellation, satellite operators have been consolidating. Viasat and Eutelsat both expect to receive regulatory approval this year for their respective purchases of Inmarsat and OneWeb. Concerns have also been raised about a possible merger between SES and Intelsat as a way to increase their rivalry.
Looking more closely at the numbers for SES and Intelsat
An analysis of the potential financial effects of a merger between SES and Intelsat has been conducted by Sami Kassab, an equity analyst at the investment bank BNPP. He mentions the deal’s financial appeal, pointing to Intelsat’s $3.7 billion in pre-tax C-band payments, the estimated $3 billion in tax losses that can be carried forward, and the potential over $200 million in opex and capex savings. Kassab is dubious about the merger’s strategic justification, especially in light of the declining revenues of Intelsat’s non-geostationary networks.
Featured image: NASA, Public domain, via Wikimedia Commons