Inflight wifi could be pricier if takeover of UK satellite firm goes ahead, says CMA

Competition and Markets Authority says other operators may not be able to compete after merger of Inmarsat and Viasat

The $7.3bn (£5.4bn) takeover of the British satellite company Inmarsat by its US rival Viasat could result in higher-priced and lower-quality wifi for aeroplane passengers, according to the UK competition watchdog.

The Competition and Markets Authority said its investigation has identified concerns with the merger possibly leading to airlines being offered lower-quality products for onboard wifi and facing higher prices to deliver it.

The CMA’s findings came a few weeks after the UK government cleared the deal, saying the takeover of Inmarsat did not pose a threat to national security.

The watchdog said that while there were new players in the satellite communications market seeking to target the aviation sector – such as Elon Musk’s Starlink, OneWeb and Telesat – it was not certain any of them would be able to effectively compete against Inmarsat and Viasat.

“This is an evolving market, but the merging companies are currently two of the key players, and it remains uncertain whether the next generation of satellite operators will be able to compete against them effectively,” said Colin Raftery, a senior director at the CMA. “Ultimately, airlines could be faced with a worse deal because of this merger, which could have knock-on effects for UK consumers as in-flight connectivity becomes more widespread.”

Inmarsat provides mobile satellite services that underpin email, internet and video conferencing, as well as in-flight wifi and communications services for ships. Its takeover is the California-based Viasat’s largest-ever acquisition.

The two companies disagreed with the CMA’s assessment. Viasat pointed out that there were “extremely well-financed new entrants” to the sector – a nod to Musk, the world’s richest person, with a net worth estimated at $241bn (£214bn).

“There is no lack of competition in satellite connectivity for the aviation sector,” said Rajeev Suri, the chief executive of Inmarsat. “Strong players are already offering in-flight connectivity and the new low-Earth orbit players [such as Starlink] – which already operate over half the satellite broadband capacity available globally – are aggressively and successfully targeting aviation.”

Inflight connectivity would account for just 10% of a combined Inmarsat and Viasat, the companies said.

The CMA has given both five working days to submit proposals to address the competition concerns. The watchdog then has a further five days to consider whether to accept any offer or to refer the deal to a lengthy phase 2 investigation.

Mark Dankberg, the chief executive and chair of Viasat, said he now expect
ed the deal to be scrutinised further. “We intend to work closely with the CMA to show that our transaction will benefit customers by improving efficiencies, lowering costs, and increasing inflight connectivity around the world,” he said. “And to reach a satisfactory conclusion in phase 2.”


Mark Sweney

The GuardianTramp

Related Content

Article image
Morrisons’ takeover of McColl’s ‘will not harm majority’ of rival firms
Competition regulator’s finding paves way for clearance of £190m rescue deal by supermarket group

Mark Sweney

08, Sep, 2022 @10:15 AM

Article image
Competition watchdog intervenes in Viagogo's $4bn takeover of StubHub
Regulator says deal between controversial ticket resale firms would harm consumers

Rob Davies

22, Oct, 2020 @10:29 AM

Article image
UK satellite firm Inmarsat agrees $7.3bn takeover by US rival Viasat
Deal may be reviewed under National Security and Investment Act because nature of business

Mark Sweney

08, Nov, 2021 @3:43 PM

Article image
UK watchdog to investigate Facebook takeover of Giphy
CMA concerned acquisition could lessen competition for creation of gifs popular on social media

Rupert Neate

01, Apr, 2021 @5:41 PM

Article image
Sky News is worth saving – it's why it's central to a deal
Murdoch will see regulator’s qualified ‘no’ as a fudge. If he sells Sky News, a deal is back on

Nils Pratley

23, Jan, 2018 @6:29 PM

Article image
Watchdog raises concerns over Nvidia’s takeover of UK chip designer Arm
CMA investigation comes amid a slew of buyouts seen as a threat to UK’s economy and national security

Mark Sweney

20, Aug, 2021 @4:05 PM

Article image
Price hike fears as Ofcom softens stance on mobile firm mergers
Regulator was previously opposed to there being fewer than four big firms as competition kept prices down

Mark Sweney

09, Feb, 2022 @2:15 PM

Article image
UK regulator warns takeover of Jus-Rol could push up pastry prices
CMA asks dough brand and French buyer Cérélia to also address its concerns about quality

Kalyeena Makortoff

30, May, 2022 @2:11 PM

Article image
Home Retail boss in line for £5m windfall after a Sainsbury's takeover
John Walden to benefit from cash and shares windfall if Argos owner is sold to supermarket chain for £1.4bn

Sarah Butler

31, May, 2016 @6:54 PM

Article image
Morrisons takeover faces competition inquiry over petrol stations
Watchdog to examine concerns about US private equity firm controlling 1,235 of UK’s 8,000 forecourts

Sarah Butler

29, Oct, 2021 @4:37 PM