Inmarsat takeover could be blocked as watchdog raises competition fears


US rival’s £5.6bn takeover of UK satellite firm Inmarsat hangs in the balance after watchdog raises competition fears

The foreign takeover of one of Britain’s leading satellite firms could be blocked over competition fears.

US giant Viasat was hoping to complete the £5.6billion purchase of London-based rival Inmarsat before the end of the year.

But the Competition and Markets Authority (CMA) said the tie-up would ‘remove a key competitor from the market’. 

Threat: The Competition and Markets Authority said Viasat’s takeover of Inmarsat would ‘remove a key competitor from the market’

This could lead to airlines facing higher prices and worse quality WiFi on board planes, the watchdog said. That is because Inmarsat is the biggest provider of in-flight WiFi, while Viasat is also a leading operator.

The watchdog’s intervention set the scene for a full-blown investigation that could see the deal blocked.

CMA senior director Colin Raftery said: ‘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.

‘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.’ 

The CMA gave the firms five days to offer potential solutions to avoid an in-depth ‘phase 2’ investigation.

But Viasat will likely not come up with a proposal in time and boss Mark Dankberg suggested the investigation will go ahead.

Dankberg said he will ‘work closely’ with the watchdog to spell out why the takeover will benefit consumers. 

He also hopes Viasat will be able to convince the watchdog that its competition concerns are unfounded, pointing to the strength of rivals, including Elon Musk’s Starlink.

But the probe could either lead to the deal being blocked or with Inmarsat and Viasat having to hive off parts of their business.

String of raids in the spotlight 

The prospect of a full-blown probe into Viasat’s £5.6billion takeover of Inmarsat is one of a number of investigations into foreign raids on British firms.

Authorities are weighing up a series of takeovers spanning the technology, telecoms and defence sectors. A key deal on the desk of Business Secretary Jacob Rees-Mogg is Chinese-backed Nexperia’s takeover of semiconductor firm Newport Wafer Fab, which he has been urged to reverse using the National Security and Investment Act.

Rees-Mogg is also examining French conglomerate Schneider Electric’s swoop on Aveva, one of Britain’s leading technology firms. Concerns have been raised over Schneider’s joint venture with Chinese conglomerate Delixi Electric.

The proposed tie up between telecoms operators Vodafone and Three is also likely to come under scrutiny.

Three is owned by Hong Kong conglomerate CK Hutchison.

It is the latest setback for the controversial takeover, which has faced opposition from MPs as well as technology and defence experts. Critics fear the hollowing out of British industry as overseas predators swoop on assets.

As well as the competition probe, the deal faced a lengthy investigation on national security grounds. 

But Business Secretary Jacob Rees-Mogg last month cleared the deal under the National Security and Investment Act, leaving CMA clearance as its last major UK regulatory hurdle.

The deal is also being looked at by the European Union’s competition watchdog and authorities where Inmarsat and Viasat operate globally.

Inmarsat is Britain’s leading satellite company and the largest provider of in-flight WiFi for airlines and a major player in internet connections for ships. 

Customers include the military and, as a result, the company is considered a ‘strategic’ asset by the Government. 

Conservative MP and chairman of Parliament’s defence select committee Tobias Ellwood said foreign takeovers of strategic British firms appear ‘increasingly unwise’.

He said national resilience and supply chains are ‘increasingly challenged’ and warned against allowing overseas takeovers of UK defence firms.

Ellwood added that Viasat’s Inmarsat takeover does not pass the Government’s ‘social value’ test – a policy that it must consider the wider benefits of policies including tax contributions, national insurance returns and levelling up.

Founded in 1979, Inmarsat began life as a UN agency helping distressed sailors send SOS signals. It employs around 1,800 staff across the world, including 860 in London.

Its technology is used in everything from climate change tracking to keeping rural cattle farmers connected to the internet.

In March, Viasat and Inmarsat agreed legally binding commitments with the Government including pledges to increase the number of highly skilled jobs, raise R&D spending and keep key operations in Britain.

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