- The U.K. competition regulator found the California-based satellite operator ViaSat, Inc's VSAT $7.3 billion takeover of Britain's Inmarsat could lead to airlines facing more expensive and worse quality onboard WiFi.
- The Competition and Markets Authority will refer the deal for an in-depth investigation if ViaSat and Inmarsat fail to address the competition concerns.
- The CMA found that although new entrants like Starlink, OneWeb, and Telesat Corp TSAT were trying to target the aviation sector, it was one of the most challenging industries for satellite groups to enter. Starlink is a satellite internet constellation operated by Elon Musk's SpaceX.
- ViaSat and Inmarsat compete closely in the aviation sector and particularly in the growing area of supplying onboard WiFi for passenger use.
- CMA's initial investigation has found significant uncertainty about when other new suppliers would be in a position to compete effectively with ViaSat and Inmarsat.
- Also Read: Viasat to Sell Its Link 16 Tactical Data Links Business to L3Harris Technologies for $1.96 Billion
- In addition, the CMA's investigation found that it can be challenging for airlines to switch providers once they have installed a connectivity solution. This results in CMA's concern that the merged company could effectively lock in large part of the customer base before emerging suppliers can compete.
- The airlines could have to cough up more for WiFi and get lower-quality connectivity solutions, ultimately affecting the cost, quality, and availability of services for airline passengers, CMA found.
- ViaSat said CMA's decision to proceed to a Phase 2 review is not unexpected.
- "There is no lack of competition in satellite connectivity for the aviation sector," said Rajeev Suri, Inmarsat CEO.
- Price Action: VSAT shares traded lower by 1.42% at $39.67 on the last check Friday.
- Photo Via Company
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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