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Davos 2023: Satellite players face more consolidation as launches multiply

A fragmented satellite industry is facing more consolidation as new, well-funded players such as Elon Musk’s Starlink, as well as Chinese competitors, make plans to saturate space with new satellites, said Rajeev Suri, chief executive of Inmarsat Global Ltd., one of the world’s largest satellite operators.

He said 55 companies have laid out fully funded plans to launch some 100,000 new satellites into orbit by the end of the decade, on top of the 7,000 already there.

“I think it does mean consolidation because you can’t have, in a somewhat low-growth market, 55 players compete, and with deep-pocketed new players coming in that don’t have a desire for near-term profit, i.e. it’s a long-term bet,” he said.

Mr. Suri said there would be overcapacity in the sector “not in the distant future, in the near term, ‘24 or ‘25, you will get overcapacity, so consolidation, in my mind, is inevitable.”

That dynamic drove U.K.-based Inmarsat to seek a partner, leading to an agreement disclosed in November 2021 to merge with U.S. peer Viasat Inc., based in Carlsbad, Calif.

That deal is working its way through regulatory approval around the world. Inmarsat and Viasat rely on what is called a geostationary-orbit network of satellites, which orbit the earth at the same rate as the globe rotates. Such a network requires fewer satellites, at a higher orbit, to provide global coverage.

Space Exploration Technologies Inc.’s Starlink, in contrast, relies on many more, lower-orbiting satellites for its network. These low-earth orbit, or LEO, satellites have some benefits over geostationary ones, including requiring smaller antennas and providing lower latency, allowing for applications such as online video games and video conferencing, Mr. Suri said.

Starlink has started to compete in Inmarsat’s core growth business providing satellite communications for airlines. “Starlink is something that we compete with now,” Mr. Suri said, naming a few airlines Mr. Musk’s company has won as customers.

Mr. Suri said he is worried about the number of new satellites planned for orbit this decade, and Inmarsat has suggested more global oversight. He cited the threat that one player might dominate a region by flooding it with satellite coverage, squeezing out others.

Higher levels of space debris pose a collision threat, he said, adding that the large amount of metal being deposited in space can disrupt astronomical observations and affect the environment. Wall Street Journal

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