Consolidation of the satellite sector is more likely than ever to enhance total return on investment, according to the CEO of satellite operator SES. However, the industry’s structure may stymie such agreements. Speaking at the Satellite Innovation conference on October 5, Steve Collar addressed rising notions that the industry is ready for a wave of mergers like telecom magnate Patrick Drahi’s unsolicited offer to buy Eutelsat for $3.2 billion last week. Despite rejecting the agreement, Eutelsat appeared to keep the door open for a new, greater offer.
Collar said he thought some form of industry consolidation was possible, but he didn’t say whether it was that deal or others. He said, “I think it’s more plausible than it’s ever been.” “However, it has been predicted in the past and has not occurred.” He claimed that “structural issues” have previously prevented consolidation and that this may happen again. “Whether it’s driven by their shareholders’ values, other factors, or regulatory,” he added of consolidation but added that “it will occur, more likely than not” now.
SES is in “a terrific place” if a wave of acquisitions occurs, according to Collar, citing the planned O3b mPOWER satellites and close to $4 billion in terms of payments for clearing the C-band spectrum in the U.S. Still, he declined to say if the business would seek to purchase other companies in the sector. Other providers have been more forthcoming regarding the possibility of mergers and acquisitions. Hadi Alhassani, who serves as the chief strategy officer and vice president of Arabsat, stated his company was investigating a couple of prospective acquisitions of the other regional satellite operators at the Satellite 2021 event a month ago. He commented at the time, “To be truthful, this is a terrific time to acquire.” “There are some good buys in GEO.”
A panel also predicted consolidation at the Satellite Innovation. “There are certainly major organizations looking to acquire bright, emerging startups that bring new competencies to the table,” BryceTech CEO Carissa Christensen said. She also stated that companies who “aren’t operating well or can’t reach their targets but have generated intriguing technology” would be acquired. “Over the next few years, the industry will be defined by the confluence of these two types of partnerships,” he says.
Consolidation, according to Collar, might address market inefficiencies. “In this industry, getting a good return on the investment capital is difficult. Suppose you want investors to put money into a particular area. In that case, you must demonstrate that you are responsible with that money, and I believe the fragmentation of the business makes that difficult,” he said.