ALEX BRUMMER: Satellite deal falls to Earth

US satellite champion Viasat may have felt dry when it persuaded the Business Department to sign its £5.6 billion bid for British space pioneer Inmarsat.

But, as that great American sage Yankees manager Yogi Berra once remarked, “the game’s not over until it’s over.”

The UK Competition & Markets Authority (CMA) represents not only the interests of UK consumers, but also global users of onboard internet connections by opposing the deal.

In-flight Internet may only represent 10 percent of the joint venture’s current sales, but it is the major growth market for satellite communications.

Moreover, it was British scientists and engineers from Inmarsat who pioneered this technology and had no choice but to fall under the command and control of their California masters.

What is worrying is that Rick Baldridge, the director of Viasat who parked himself in the UK and conducted most negotiations with authorities, no longer appears to be the person.

Viasat CEO and Executive Chairman Mark Dankberg is leading the response. In its message, the CMA does not take any blows. It states that both companies are in expansion mode, sending more and more satellites into space and competing aggressively for new contracts.

In fact, the two companies are looking for many of the same customers in the still emerging aviation services market. Removing one competitor from the mix would give the combined company more pricing power.

Incidentally, many of the same arguments could be used in Vodafone’s bid to gain control over UK mobile network Three.

The CMA has given Viasat five days to come up with a response before undertaking a full investigation, which could take months.

In the recent past, competitive interventions — such as when US chip designer Nvidia wanted to buy Arm Holdings — effectively nullified the deal. Viasat states that huge investments are being made in satellites.

Monoliths like Elon Musk’s Starlink and currently government-backed OneWeb are launching large networks of low-Earth orbit satellites that could become competitors.

What is unknown is whether these newer lower-orbit satellites will be as capable as Viasat and Inmarsat at developing the onboard aerospace technology.

Nevertheless, one should never lose sight of Musk’s ability to disrupt, as he has done so effectively in the auto industry and currently plans to do on social media with the Twitter acquisition.

The concerns in this document about the Viasat/Inmarsat acquisition were much broader. For too long, British governments, in their determination to maintain one of the most open economies in the world, have offered a welcome mat to overseas takeovers.

Britain’s control of technology developed in our universities and backed by British venture capital is on the horizon.

Among the victims are Arm, space pioneers Cobham and Meggitt, submarine sonar developer Ultra Electronics and many more.

Not only has this hampered the UK’s ability to develop its own thriving domestic technology sector, it has reduced the role of UK headquarters and seen patents and valuable R&D fall into foreign hands.

Kwasi Kwarteng and the Treasury must also bear in mind that all too often we trade a one-off flow of global capital for a permanent burden on the corporate tax base, as profits are funneled into lower tax regimes.

That’s one of the reasons why reversing the proposed 25% corporate tax cut and keeping it at 19 percent was so important.

But this is an argument that has not been heard at all by the blob who chose to demonize lower taxes.

Not only Inmarsat and competition are threatened by an overseas takeover. OneWeb and French rival Eutelsat have also signed a merger agreement. It could be a very sensible deal given the strength of rivals in satellite orbit.

However, it goes without saying that this too must be carefully examined by the Business Department under Jacob Rees-Mogg and the CMA.

If Viasat and Inmarsat want to quickly satisfy the CMA, they may be able to voluntarily sell one of the airline Internet franchises on board.

Such a solution is not envisaged. That’s not surprising. Inmarsat technology is the crown jewel of the industry and now that its California rival has come this far, it is not ready to make any further concessions.