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Viasat’s $7.35B Acquisition Advances

TECH: UK Regulators Give Provisional OK to Inmarsat Deal

Carlsbad-based Viasat took another key step in its $7.35 billion acquisition of Inmarsat when U.K. regulators gave the deal provisional approval, saying it would not harm competition. Viasat and Inmarsat called the announcement “an important milestone.”

In November 2021, the two companies first announced the deal, with Viasat (NASDAQ: VSAT) agreeing to pay $850 million in cash, $3.1 billion in Viasat stock and assume $3.4 billion of Inmarsat debt.

Inmarsat, which is privately held, has more than a dozen satellites in orbit, including an I-6 satellite that launched from Cape Canaveral on Feb. 18. The London-based company plans to add five spacecraft to its fleet by 2025.

Viasat plans to launch a high-capacity satellite of its own during the week of April 8.

The U.K. Competition and Markets Authority announced on March 1 that Viasat’s acquisition of Inmarsat will not substantially lessen competition. Since July, the government body has been examining competition in the markets for in-flight connectivity in commercial and business aviation. The government concluded there will continue to be significant competition as new rivals such as Starlink (a project of Elon Musk’s SpaceX) enter the picture and the satellite sector continues to expand.

The government set a March 21 deadline for final input from interested parties and said its final report is due for release March 30.

The satellite industry is highly fragmented, with an estimated 55 players.

Regulators in the European Union and United States are still evaluating the transaction.

In a statement, Viasat and Inmarsat reasserted that the acquisition would create new jobs and contribute to the U.K.’s national space strategy. In April, Viasat made several pledges to support the U.K. economy.

Expansion in Mexico Announced

Viasat made a separate step in the international sphere late last month. On Feb. 23, the company said it signed an agreement with the telecom subsidiary of Mexico’s Comisión Federal de Electricidad (Federal Electricity Commission) to provide high-quality satellite connectivity to 850 underserved communities across Mexico. Financial terms of the transaction were not disclosed.

Under the deal, the communities will use Viasat’s Community Internet service to provide free internet access to people in public places, schools and health centers.

Strong Finish Expected

On Feb. 7, Viasat reported results for its third quarter, which ended Jan. 3. The business reported a net loss of $42.2 million, or 55 cents per share, on revenue of $651.4 million.

The Carlsbad business said that earnings for its 2023 fiscal year, which ends this month, will be very strong, dominated by the sale of Viasat’s tactical data link business.

The December quarter saw Viasat conclude its $1.96 billion sale of its tactical data link (Link-16) business to L3Harris Technologies (NYSE: LHX). Net cash proceeds are expected to be approximately $1.8 billion after taxes, fees and other expenses, according to a letter to shareholders. Viasat added that the gain on the sale is expected to be the dominant factor in the profitability of fiscal 2023.

Over the past 52 weeks, shares of Viasat have traded in the range of $25.38 to $52.72. They closed March 6 at $35.89.

2023 is an important year for Viasat. The company plans to increase the reach of its business with the launch of the first satellite in the high-capacity ViaSat-3 constellation. The launch is set for the week of April 8; once in place, the satellite will offer coverage to North and South America.

Launch of the second ViaSat-3 satellite, planned to serve Europe, the Middle East and Africa, is expected during the June or September quarter; the second ViaSat satellite is currently undergoing spacecraft integration at Boeing (NYSE: BA). The third and final satellite in the constellation, planned to cover the Asia-Pacific region, is nearing completion at Viasat’s plant in Tempe, Arizona.

Viasat

FOUNDED: 1986
CEO: Mark Dankberg
HEADQUARTERS: Carlsbad
BUSINESS: Broadband services and technologies company
REVENUE: $2.79 billion in fiscal 2022; $2.26 billion in fiscal 2021 (Viasat’s fiscal year ends on March 31)
STOCK: VSAT on NASDAQ
EMPLOYEES: Approximately 7,000 worldwide
WEBSITE: www.viasat.com
CONTACT: 760-476-2200
SOCIAL IMPACT: Viasat says it is working toward global digital inclusion by, first, building a financially sustainable business that serves populations who have yet to be connected to the internet, and second, offering that service at approachable price points.
NOTABLE: Viasat traces its roots to Linkabit, a tech company with ties to UC San Diego; Viasat co-founder and CEO Mark Dankberg previously worked at Linkabit.

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