Satellite communication provider SES agreed to purchase fellow satellite company Intelsat for £3.1bn last week (30 April). 

The deal looks to create a European-based satellite giant able to compete with Elon Musk’s Starlink, the undisputed pioneering global market leader in satellites. 

In a joint statement, the two companies said the combination would create a stronger multi-orbit operator with greater coverage, improved resiliency and an expanded suite of solutions. 

European satellite companies have been looking to consolidate in order to compete against Musk’s Starlink. 

Although Starlink was originally launched to serve consumers, the satellites have expanded to serve enterprise customers in the aviation and maritime industries.

This puts Starlink in direct competition with SES, which serves defence, aviation and maritime sectors.

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In 2021, US satellite internet company ViaSat announced it would purchase UK-based Inmarsat. In 2022, French satellite company Eutelsat said it would be joining forces with UK-based low-earth orbit company OneWeb

Elon Musk has dominated the space industry with SpaceX, known mostly for its rocket launches. However, the company’s satellite branch, Starlink, has become just as important in the industry as rocket launches. 

Launched in 2019, Starlink has over two million customers and serves all seven continents in over 60 countries.

The company’s low earth orbit (LEO) internet broadband satellite constellation is the largest fleet of satellites in the world, with over 4,000 operating in orbit.

LEO satellites are the most common satellites in space. They are found 500km to 1,200km from the Earth and are used for imaging, communications, and broadband internet.

Will other companies be able to catch up?

The reality of being successful in the space economy is that it is extremely difficult and expensive.

The unforgiving nature of space exploration, along with the harsh financial cost of developing space technologies, has made acquisitions like SES and Intelsat common in the sector.

This means the market has become and will continue to get more saturated with competition, as various start-ups look to develop similar concepts for cost-effective satellites to rival aerospace giants.

In terms of competing with SpaceX’s monopolisation, companies like SES have been having a hard time catching up.

Firstly, SpaceX has a major first-mover advantage and is able to launch its Starlink satellites much faster than its competitors, as it utilises the company’s reusable rockets. 

However, Carolina Pinto, an analyst at research company GlobalData, told Verdict that SES needs fewer satellites than Starlink due to it specialising in geostationary (GEO) satellites, which cover a larger area than LEO satellites.

Despite this, LEO satellites have lower latency due to being closer to the Earth’s surface. Meaning it “is easier to achieve fast and reliable broadband with LEO satellites,” Pinto said.

According to GlobalData’s thematic intelligence report on the space economy, a factor hindering the growth of commercial satellites is the profitability of launching constellations. Starlink has had major success targeting locations in isolated areas with weak fibre networks.

According to data from the European Union, 2.4% of people in Europe cannot afford an internet connection. This figure comes mostly from the lowest-income households in Romania, with a quarter of the least well-off unable to afford internet. 

This data perhaps shows there is less of a market gap for SES and Intelsat to fill in the continent. Starlink also already covers most of the rest of the world. According to data obtained by Celetrak, in 2021, 36% of all active satellites in orbit were owned by Starlink.

The growing popularity of constellation projects for the internet and other communication applications has significantly increased the number of planned satellites.

SpaceX alone intends to expand its Starlink constellation to over 12,000 satellites. The state-owned China Satellite Network Group also has plans to build a 13,000-satellite megaconstellation.

If all proposed constellations go ahead, McKinsey estimates there will be over 65,000 satellites in orbit by 2030.

Market estimates suggest that the space economy will be worth between $760bn and $1trn in 2030, growing at a compound annual growth rate of between 6% and 10% between 2022 and 2030, according to GlobalData.

The research company said the primary driver of this growth will be an increase in the adoption of satellites, applications, and services around data communications and navigation.