American satellite company Intelsat and Luxembourgh-based SES ended several months of negotiations over a potential combination of their business on Wednesday.
In a statement, a spokesperson for SES said the merger talks ended after reaching the conclusion that “there could be no certainty that a transaction would materialize.”
Reports began bubbling up last year that Intelsat and SES were exploring ways to combine their businesses, with the discussions confirmed by SES in March. If a deal had come together, the proposal would have paved the way for one of the largest commercial satellite operations in the world, with a combined market value of over $10 billion.
Both companies were started through government initiatives as a way to provide analog communication services to various parts of the world. Intelsat primarily focused on North America and nearby regions, while SES provided service to Europe.
Over the decades, both were privatized and grew their fleet to over 70 satellites each. From the 1980s to the early 2000s, Intelsat and SES were each heavily invested in the area of video broadcasting, offering enterprise-level solutions to local television stations, national broadcast and cable networks and international media firms alike.
In recent years, the satellite industry has experienced a seismic shift away from video toward broadband delivery. Intelsat and SES both face challenges from upstart services like Starlink and OneWeb that aim to offer low-latency, high-speed Internet service delivered through low-orbit satellites.
But a combination between Intelsat and SES would likely have been tied up in years of regulatory scrutiny in the United States and Europe. In both places, current regulators have expressed skepticism over mega-mergers between large communications firms.
That scrutiny likely would have been higher in Europe, where the Luxembourgh government owns a one-third stake in the company. That stake allows the government to vote as a shareholder on various business-related matters, including a proposed transaction to merge with a rival. (Intelsat is based in Virginia.)
The end of the merger talks between Intelsat and SES now leaves open the possibility that the companies will explore transactions with smaller satellite businesses as it looks for opportunities to scale up.
“We believe that partnerships among satellite communications companies and bringing together complementary capabilities can drive competition and innovation,” David Wajsgras, the CEO of Intelsat, said in a 2022 interview. “This benefits customers and people around the world who rely on seamless connectivity. It is clear that our industry is transforming, with new capabilities and technologies being brought to the market. Intelsat is focused on being a leader in that transformation.”