Intelsat buys Gogo's commercial in-flight Wi-Fi business

(Image credit: / TravnikovStudio)

Satellite operator Intelsat has agreed a deal to buy in-flight Wi-Fi provider Gogo’s commercial aviation business for $400 million – despite filing for bankruptcy protection in May.

Both firms have suffered from the effects of the coronavirus pandemic, with Gogo’s revenues affected by reduced air passenger numbers and the decision by some airlines to retire plans that had its Wi-Fi equipment installed.

Gogo embarked on a programme of cost cutting measures that included furloughs and redundancies but ultimately came to the conclusion that its commercial businesses would be better off as part of a competitor or wider ecosystem player.

Gogo Intelsat

Intelsat believes the combination of its satellite infrastructure with Gogo’s 2ku antenna technology, network management software and installed customer base, will allow for superior in-flight connectivity services for both airlines and passengers.

The funds from this deal will be used to strengthen Gogo’s business aviation business and the Air-to-Ground (ATG) 5G network it is building in the US and Canada.

“This transaction creates a stronger and more focused Gogo, with the singular strategic imperative of serving the business aviation market with the best inflight connectivity and entertainment products in the world,” said Gogo CEO Oakleigh Thorne.

“The BA [Business Aviation] market continues its sharp recovery and strong demand growth trajectory, and our BA segment is exceptionally well-positioned to drive long-term value creation in that industry.”

Intelsat filed for Chapter 11 bankruptcy protection in order to restructure its finances and meet US Federal Communications Commission (FCC) deadlines for clearing C-band spectrum for 5G networks. If it meets these deadlines, Intelsat could be eligible for up to $5 billion in relocation payments.

The company has received approval for the transaction from the relevant bankruptcy court and will fund the transaction using existing an existing debtor-in-possession (DIP) financing facility and cash on hand.

The deal is expected to close in 2021 and Intelsat plans to operate the Commercial aviation business as an independent division in Chicago.

“Consumer demand for in-flight connectivity is expected to grow at a double-digit rate over the next decade, notwithstanding the impact of COVID-19. The addition of Gogo’s commercial aviation business provides compelling strategic value for our stakeholders and makes strong commercial sense,” said Intelsat CEO Stephen Spengler.

“Gogo’s business is a perfect fit with Intelsat’s expansive satellite network and infrastructure due to the breadth of Gogo’s technological solutions, global reach and operational excellence.”

Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.