Satellite 2012 Conference Highlights Dynamic SATCOM Market
The Satellite 2012 conference, held in Washington, DC the week of March 12, is one of the hallmark events for one of the most dynamic sectors of the defense industry. Favorable growth trends and an evolving contract environment are spurring an active M&A market in the SATCOM space.
The government / military market for COMSATCOM services is increasing rapidly, with growth expected to more than double from $6 billion in 2010 to over $15 billion by 2016, representing a CAGR of 17%. The proliferation of data-intensive assets, from UAVs to mobile communications systems, has driven a seemingly insatiable appetite among the military for bandwidth. Currently, commercial operators provide 80% to 90% of the bandwidth demanded by military customers.
Looking ahead, demand for bandwidth will continue to grow. The military is deploying more Wideband Global Satcom (“WGS”) satellites provided by prime contractor Boeing, but even as these new satellites come online in the coming years, the new bandwidth deployed will still not be sufficient to address ever-increasing bandwidth needs. Even as the operational tempo in Iraq and Afghanistan eventually draws down, boots on the ground will be replaced by bandwidth-hungry UAVs.
Against this backdrop, the new $5 billion Future Commercial SATCOM Acquisitions (“FCSA”) ID/IQ vehicle is coming online. FCSA is serving as a replacement for the legacy DISN Satellite Transmission Services – Global (“DSTS-G”) contract vehicle. Companies seeking to grab a piece of a growing sector are eyeing these developments with interest, and some are acting to make sure they get a piece of it in the form of strategic acquisitions. As the table below illustrates, there have been a number of transactions involving SATCOM companies in the past couple years, punctuated recently by EADS’ acquisition of Vizada.