SES and Intelsat: M&A Deal Means 'Survival'

a paper on LEO disruption. Submitted to DOJ, a redacted version of the paper was posted Thursday in docket 24-267. The two companies are seeking regulatory approval of SES' proposed $3.1 billion purchase of Intelsat (see 240430004). SES and Intelsat said they "face enormous and increasing pressure to adapt, innovate, cut costs, lower prices, and improve services to survive," and without the deal "it is unlikely that either Party acting alone would be able to do that." They said LEO operators enjoy huge cost advantages due to vertical integration. LEOs are the predominant suppliers of satellite capacity, and that capacity influx has commoditized satellite connectivity, "driving down capacity, service, and equipment prices," they said. Traditional GEO customers "increasingly view LEOs as substitute -- and often preferred -- sources of supply," they said. Tens of thousands of LEO satellites are expected to launch in the coming years from SpaceX's Starlink, Eutelsat's OneWeb, Amazon’s Kuiper, Telesat's Lightspeed, three Chinese mega constellations and others, they said. Those LEOs will drive almost all the ten-fold growth in high-throughput satellite capacity expected by 2028, they said. Meanwhile, the average global price of satellite bandwidth for data services has dropped 77% since 2019. SES and Intelsat said combined they account for less than 5% of all HTS capacity, and that is likely to shrink to less than 2% by 2026. They said that, combined, they can invest more resources in ground equipment and platforms. New SES will be better able to develop and fund a next-generation multi-orbit constellation with the throughput, capacity, range and latency characteristics needed "to more vigorously compete, including with well-financed LEO competitors."