Hands Across the Ocean?

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Further to the speculation about Viasat and EUTELSAT, the chatter emerging form Paris is that the deal is no longer “close”, it is “done”.

But why has it taken so long to execute a simple deal on the sharing of a single satellite out of a very large fleet?

The only explanation can be that much broader negotiations have been happening.

Whilst it could be hard to imagine the French government approving the sale of EUTLESAT at a sensitive time, there are good reasons to think the rationale for a full takeover by Viasat of EUTELSAT is seen by some as rational, and not just because EUTELSAT is cheap.

Three big reasons:

a) Viasat is betting the farm on Global Aero connectivity.  Having an almost global multiplex of satellite TV channels broadcast from the Americas through Europe to Asia would be a neat offering to global airline customers and a very efficient way to add TV to Viasat’s broadband offering on planes.  Giving the user the ability to add to his iPad a stream of live TV in dozens of languages is a powerful idea.

b) Viasat wants to be in broadband in EMEA and EUTELSAT can deliver spectrum and market access.  But does EUTELSAT really want to give away those advantages so incredibly cheaply, just by doing a little JV on a single satellite?  It seems odd to surrender the territory when it has recently (i) bought capacity from Yahsat in Africa and (ii) bought the Neosat platform for Africa from Thales.

c) EUTELSAT is a top 4 supplier of bandwidth to the US Department of Defence.  Viasat has a big business supplying hardware to the DoD so there would seem to be big synergy here.

Whether the full blown deal is possible before the French election or not, a deal of this magnitude has merit, and for a CEO under fire, it must seem like an appealing solution.

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