SES and Intelsat plan to complete their merger in the second half of 2025, subject to regulatory approvals. With unanimous boards of directors, both companies anticipate a smooth transition. This decision comes as demand for satellite communications, particularly from the American government, is constantly increasing. The transaction aims to capitalize on this growth and exploit the opportunities offered by the auction of C-band satellite spectrum. With confident support from Intelsat CEO Al-Saleh, the companies see a promising future in a sector expanding. Facing competition from Starlink and other emerging broadband satellite networks, the two companies that own most of the traditional commercial communications satellites in geostationary orbit have announced plans to join forces.
The agreement for the acquisition of Intelsat by SES through the purchase of 100% of the shares of Intelsat Holdings for a cash consideration of 2.8 billion euros and certain contingent value rights. The combination will create a stronger multi-orbit operator with greater coverage, improved resiliency, an expanded suite of solutions, increased resources to profitably invest in innovation, and will benefit from the collective talent, expertise and backgrounds of both companies.
The transaction, which is subject to relevant regulatory approvals and customary arrangements regarding cooperation and measures to obtain such regulatory approvals, which is expected to be received during the second half of 2025, fully supports SES’s financial policy and is based on Total expected synergies equivalent to 85% of the total equity value of the transaction. The transaction was unanimously approved by the boards of directors of both companies and Intelsat shareholders owning approximately 73% of the common stock entered into customary support agreements obligating them to vote in favor of the transaction.
Transaction highlights
- 2.4 billion euros (NPV) of synergies (85% of the consideration in shares), of which 70% will be realized within three years following the closing of the transaction;
- Extension of multi-orbit satellite capacities, frequency portfolio and global terrestrial network to serve customers;
- Increased revenue in high-demand and growing network segments, representing ~60% of the broader revenue base;
- Combines complementary investments in space, land and network innovation to unlock future value and opportunities;
- Brings together a wealth of collective talent, expertise, engineering knowledge and commercialization capabilities;
- The company will benefit from a gross order book of 9 billion euros, a turnover of 3.8 billion euros and an adjusted EBITDA of 1.8 billion euros;
- Medium-term adjusted EBITDA growth is driving the free cash flow (FCF) generation outlook;
- Commitment to respect investment standards with a net leverage of less than 3 times within 12 to 18 months following the closing of the transaction;
- Commitment to pay an annual dividend of 0.50 per A share, with a broad FCF base supporting the potential for future increases.
Adel Al-Saleh, CEO of SES, highlighted the importance and transformational impact of the ongoing agreement. This merger strengthens their business, improves their ability to provide cutting-edge solutions to their customers, and generates significant value for their shareholders through a high value-added acquisition. This approach capitalizes on significant and easily achievable synergies in a constantly evolving and competitive satellite communications sector.
The transaction expands their footprint with a multi-orbit space network, an expanded spectrum portfolio, global ground infrastructure, enhanced marketing capabilities, enhanced managed services solutions, and a stronger financial foundation. Al-Saleh is excited about the merger of the two companies and the potential enrichment of SES’s knowledge base through Intelsat’s expertise and customer focus.
In the future, customers will benefit from a more competitive solutions portfolio, offering end-to-end solutions in key segments such as government and mobility, as well as value-added, reliable and efficient offerings for security services. fixed data and media. This combination also benefits supply chain partners and the industry as a whole, creating new opportunities as satellite-based solutions become increasingly integrated into the communications ecosystem.
This business expansion will result in sustained EBITDA growth and strengthened cash generation, enabling increased profitable investments in capabilities and solutions to meet growing and evolving customer demand, while ensuring sustained returns. for shareholders.
David Wajsgras, CEO of Intelsat, also expressed his enthusiasm for the progress the company has made over the past two years. Through a strategic reset strategy, Intelsat successfully reversed a 10-year negative trend and returned to growth. They also developed a new technology roadmap, improved productivity and execution, providing increased competitive capabilities. This strategic shift sets the stage for Intelsat’s next chapter.
By uniting their strong financial strengths and best-in-class teams with those of SES, Intelsat aims to create a more competitive and growth-oriented solutions provider in an ever-changing industry. The merger will enable the combined company to meet customer needs globally and exceed their expectations.
A very profitable acquisition
The transaction will be accretive to SES’s free cash flow from year 1. It brings together two trusted operators with a combined gross order book of €9 billion, growth-oriented portfolios and focused on network segments with expanding demand, a common vision of delivering end-to-end customer solutions and complementary investments in innovation, while also sharing strong balance sheet metrics and long-term cash generation fundamentals term.
By integrating the two companies, SES expects to realize synergies with a total net present value (NPV) of €2.4 billion (after approximately €155 million of estimated realization costs), representing a annual execution rate of 370 million euros, approximately 70% of which is expected to be realized within 3 years following the closing of the transaction. The net present value of the synergies is equivalent to 85% of the total equity value of the transaction, while opportunities to realize further synergies will be explored before and after closing of the transaction.
Most synergies are expected to be realized through the combination of savings in SG&A, as well as optimization of third-party capacity costs and future efficiency gains in manufacturing. supply. The remaining synergies will come from the optimization of the combined satellite fleets and ground infrastructure, with the process expected to begin shortly after the transaction closes.
The combination of these two companies, with associated synergies, will create a stronger multi-orbit operator, better able to compete in a rapidly changing satellite communications landscape and respond to evolving competing communications technologies.
With a combined fleet of more than 100 satellites in geostationary orbit (GEO) and 26 satellites in medium Earth orbit (MEO), the new SES entity will benefit from better coverage, greater network resilience, additional rights to spectrum (C-, Ku-, Ka-, Military Ka-, X-band, and Ultra High Frequency), and better service delivery thanks to a broader network of ground equipment. By the end of 2026, 8 new GEO satellites (including 6 software defined) and 7 new MEO satellites (O3b mPOWER) are expected to be launched, adding additional redundancy and additional growth capacity.
The decision to merge SES and Intelsat appears to be a sound strategic response to the rapid evolution of the satellite communications sector. By capitalizing on growing demand, particularly from the US government, and exploiting the opportunities offered by the auction of C-band satellite spectrum, both companies seek to consolidate their position in the market.
Compared to Starlink and other emerging broadband satellite networks, the merger of SES and Intelsat appears to be a more traditional strategy, focused on leveraging their existing experience and assets. These companies already own most of the traditional commercial communications satellites in geostationary orbit, giving them a strong foothold in the industry.
However, it is important to note that Starlink has disrupted the market with its innovative technology and aggressive approach. With a focus on the low-orbit satellite constellation, Starlink offers higher data rates and lower latency than traditional geostationary satellites, giving it a significant competitive advantage, especially in underserved areas.
The merger of SES and Intelsat may strengthen their position in certain market segments, but it may not be enough to effectively compete with Starlink’s capabilities in terms of coverage and performance. These companies may need to explore partnerships or additional investments in innovative technologies to remain competitive in the long term.
Source: SES
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