Inmarsat takeover could be blocked as watchdog raises competition fears

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

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

But the Competition and Markets Authority (CMA) said the partnership would “remove a major competitor from the market.”

This could lead to airlines facing higher prices and poorer quality Wi-Fi onboard planes, the watchdog said. That’s because Inmarsat is the largest provider of onboard Wi-Fi, while Viasat is also a leading operator.

The watchdog’s intervention set the stage for a full investigation that could block the deal.

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 effectively against them.

“Ultimately, airlines could face a worse deal because of this merger, which could have a knock-on effect for UK consumers as in-flight connectivity becomes more widespread.”

The CMA gave the firms five days to propose possible solutions to avoid an in-depth “phase 2” investigation.

But Viasat probably won’t come up with a proposal in time and boss Mark Dankberg suggested the investigation go ahead.

Dankberg said he will “work closely” with the watchdog to explain why the acquisition will benefit consumers.

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

But the investigation could lead to the deal being blocked or Inmarsat and Viasat having to divest parts of their business.

It is the latest setback before the controversial takeover, which has been met with opposition from MPs and technology and defense experts. Critics fear the erosion of British industry as overseas predators prey on assets.

In addition to the competition investigation, the deal faced a lengthy investigation for national security reasons.

But Economics Secretary Jacob Rees-Mogg approved the deal under the National Security and Investment Act last month, leaving the CMA approval the last major hurdle to UK regulation.

The deal is also under review by the European Union’s competition watchdog and the authorities where Inmarsat and Viasat operate worldwide.

Inmarsat is the UK’s largest satellite company, the largest provider of in-flight Wi-Fi for airlines and a major player in internet connectivity for ships.

Clients include the military and as a result, the company is considered a “strategic” asset by the government.

Conservative MP and chairman of Parliament’s defense selection committee, Tobias Ellwood, said foreign takeovers of strategic British companies “seem increasingly unwise”.

He said national resilience and supply chains are “increasingly challenged” and warned against allowing foreign takeovers of British defense companies.

Ellwood added that the Viasat Inmarsat acquisition will not pass the government’s “social value” test – a policy that requires it to consider the wider benefits of policies, including tax contributions, national insurance returns and leveling.

Founded in 1979, Inmarsat began life as a UN agency helping distressed seafarers transmit SOS signals. About 1,800 employees work around the world, including 860 in London.

The technology is being used everywhere from tracking climate change to keeping rural livestock farmers connected to the internet.

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