Gogo to acquire Satcom Direct, offer integrated LEO-GEO IFC
- by Runway Girl
- Sep 30, 2024
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It remains to be seen how this tie-up will affect SD’s own ESA hardware partners.
The news comes as incumbent Ku-band LEO satellite operator SpaceX is posing a serious competitive threat to IFC providers across the business and commercial sectors, with thousands of tails now committed to Starlink in civil aviation. Whilst Eutelsat OneWeb’s rival LEO service will start supporting the business aviation community from 1 January 2025, global service will not be available until spring 2025 when buildout of the ground infrastructure is expected to be completed.
Under the terms of today’s agreement, Satcom Direct will receive $375 million in cash and five million shares of Gogo stock at closing, and up to an additional $225 million in payments tied to realizing certain performance thresholds over the next four years. The transaction will be financed with a combination of cash-on-hand and $275 million in committed new debt.
“This transaction accelerates our growth strategies of expanding our total addressable market to include the 14,000 business aircraft outside North America, and delivering solutions that meet the needs of every segment of the BA market,” says Gogo chairman and CEO Oakleigh Thorne in a statement.
“Together, Gogo and Satcom Direct will offer integrated GEO-LEO satellite solutions that provide the highest performance of any satellite solution, along with the world-class customer support that the global heavy jet segment demands.”
He adds:
This transaction also uniquely positions us to sell our Galileo LEO solution integrated into Satcom Direct’s GEO and L-band offerings as part of a multi-band, multi-orbit solution for the fast-growing military/government mobility market. We look forward to welcoming the world-class Satcom Direct team to Gogo.
It is perhaps notable that Gogo’s press release refers to its North American air-to-ground (ATG) offering as meeting “basic connectivity needs”. The company’s nextgen 5G solution is delayed, and financial analysts have pointed to the LEO satcom market as an essential growth opportunity for Gogo. SmartSky Networks, which introduced a competing ATG solution in the United States, ceased operations last month.
For its part, Satcom Direct “is thrilled to be joining forces with Gogo, a company that shares our focus on delivering outstanding service and leading innovation,” says company president Chris Moore. “Our businesses have highly complementary core competencies, and our combined financial strength and expertise unlocks opportunities to invest in new technology and deliver significant long-term value creation.”
The two firms have a combined installed base of 12,000 “unique global customers” including Gogo’s ATG-powered IFC clients in North America, notes Gogo. In 2024, Satcom Direct is expected to generate approximately $485 million in revenue with EBITDA margins of approximately 17% on a pro forma adjusted basis. Satcom Direct generates approximately 80% of its revenue from the BA market, and approximately 20% from the military/government mobility market.
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