In-flight Wi-Fi provider Gogo announced it will acquire Satcom Direct for $375 million cash plus five million shares of Gogo, Inc. The purchase agreement also provides for up to an additional $225 million if specified performance thresholds are met over the next four years.
“This transaction accelerates our growth strategies of expanding our total addressable market to include the 14,000 business aircraft outside North America,” according to Gogo Chairman and CEO Oakleigh Thorne. “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.”
Inflight internet debuted back in 2004, when Boeing first offered its “Connexion” service on a Munich-Los Angeles Lufthansa flight. Just two years later, however, the service was discontinued due to lack of use. The smart phone revolution and other technological advancements since that time have placed the inflight Wi-Fi in much higher demand today – with robust market growth projected for the coming years. In fact, analysts predict a compound annual growth rate of 10.4% during 2023–2031
Size of Global In-flight Wi-fi Market
In-flight Wi-Fi functions either by air-to-ground (ATG) or satellite-based connections. ATG relies on antennae attached to the plane that connect to cellphone towers on the ground as the flight passes overhead. The signal strength depends upon the number and proximity of cellphone towers below, so the connection is lost over bodies of water and other areas lacking towers. Further, data speed for ATM tops out at 5 megabits per second, which is far below the median download speeds of median global download speeds for mobile and fixed broadband, which are approximately 30 megabits per second and 67 megabits per second, respectively. Further, that 5 megabits per second must be shared by the passengers on the flight.
Due to these drawbacks, many airlines and private jets are increasingly using satellite-based connections. Satellites permit planes to remain connected via the entire flight path and at speeds of up to 100 megabits per second per aircraft. Speed is not everything, however, and ATG has certain advantages, such as reduced costs as well as less lag time since towers are just 120 miles from the plane vs. 22,000 miles with satellites. Most airlines use a combination of ATG and satellite connections, based on which plane and route.
Global In-Flight Wi-Fi Market Share
Gogo and Satcom Direct intend to focus on both ATG and satellite connectivity, touting the combined companies’ mixed product line for business aviation (BA). They companies seek to provide “[u]nmatched offerings for all segments of the BA market” that are “expected to drive revenue growth from North America ATG to meet basic connectivity needs,” as well as offer “integrated multi-orbit LEO-GEO solutions via combination of Gogo Galileo and Satcoms Plane Simple GEO solutions.”
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Gogo is advised by law firms Kirkland & Ellis LLP and Hogan Lovells. Satcom Direct is advised by Haynes and Boone, LLP and GrayRobinson, P.A.
