‘We saved time’: CFO of satellite communications company Gilat discusses Stellar Blu acquisition, crisis lessons
On January 6, 2025, Israel’s Gilat Satellite Networks, which develops, manufactures, and markets ground-based satellite systems for in-flight connectivity, completed its acquisition of U.S.-based Stellar Blu, a provider of avionics solutions and satellite communications terminals. In an exclusive interview with Kursiv.Investments, Gilat CFO Gil Benyamini explained the significance of the deal and the company’s future plans.
When the deal closes, Gilat will pay $98 million to Stellar Blu’s previous owners, with an additional $147 million contingent on achieving certain milestones, according to the Israeli company.
“Demand for in-flight connectivity services is growing, creating opportunities for Gilat. That’s why we’re actively exploring additional avenues in this sector,” says Benyamini.
Why Gilat acquired Stellar Blu
Currently, Gilat is developing in-flight connectivity (IFC) antennas that operate exclusively with low Earth orbit (LEO) satellites for businesses. Stellar Blu’s antennas, meanwhile, support both LEO and geostationary satellites. While the former orbit quickly and provide lower (signal) latency, they require large constellations for global coverage; the latter satellites, “hanging” 35,786 km above the equator, offer broader coverage with fewer satellites but higher latency.
The Stellar Blu antenna is multi-orbit and can switch between satellite service providers. “This feature is one of the reasons airlines favor it,” Benyamini explains.
Another advantage is the absence of a radome — a housing for radar on an aircraft. Repairing an antenna inside a radome requires cranes and involves removing the entire structure, sometimes with new holes drilled into the fuselage. Stellar Blu’s antenna eliminates these issues, reducing maintenance costs. According to Stellar Blu, its product is 50% cheaper to develop and 90% cheaper to service than comparable systems. The equipment is certified for Airbus and Boeing and is already used by Panasonic and Intelsat.
“It’s compact and lightweight — a crucial advantage for airlines. Larger antennas increase drag and, consequently, fuel consumption,” Benyamini notes.
With the Stellar Blu acquisition, Gilat will expand its footprint in commercial aviation. Meanwhile, Stellar Blu stands to gain defense contracts and enter the land-based mobility market (e.g., trains, trucks, and cars), where Gilat is already active, Benyamini said. Gilat holds approximately 20% of the market for modems enabling in-flight connectivity. With Stellar Blu, it aims to grow its market share to about 30%. The Gilat press release says the deal will position the company as the market leader for both commercial and business aviation.
“Strategically, being the leader in in-flight connectivity is very important for us,” he emphasizes.
Gilat has previously claimed that its solutions are installed on about 7,000 aircraft across 25 airlines globally. With Stellar Blu, it anticipates installing 500-800 systems annually, translating to an additional $120-150 million in yearly revenue starting in 2025.
According to ResearchAndMarkets.com, the global IFC market was worth $4.7 billion in 2023 and is projected to reach $10.5 billion by 2030, growing at an average annual rate of 12.3%. A 2023 Viasat study revealed that 83% of travelers are willing to rebook with another airline if it offers better onboard connectivity.
As a result, more carriers are providing free or partially free Wi-Fi during flights.
“The more services airlines offer during flights, the more capacity and equipment they need, which drives our revenue. Additionally, airlines replace modems with faster models every 2-4 years,” says Benyamini.
The company plans to supply antennas to aircraft manufacturers during the assembly stage, ensuring that planes are delivered with preinstalled antennas. When a modem, antenna, and/or cables come preinstalled, replacing them with competitors’ products is significantly less likely, he explains.
‘We saved time‘
When asked why Gilat chose not to develop its own commercial aviation antenna, Benyamini responds: “We saved time to market.”
That would have taken several years. Additionally, the acquisition reduces regulatory risks, as a new antenna would require certification in different countries.
Typically, products like this are tied to specific clients who fund their development. The cost to develop an antenna can run into the “tens of millions of dollars.” “This minimizes our risks,” Benyamini concludes.
In 2023, for example, Gilat signed an agreement with business aviation solutions provider Satcom Direct to develop ultra-low profile electronically steered antennas (ESAs), which can electronically adjust their beam pattern without moving physical parts.
Strategic priorities
Founded in 1987 by former Israeli Intelligence Corps personnel, Gilat is now a veteran in the IFC market. Its first product was a very-small-aperture terminal (VSAT), a two-way satellite ground station with a small antenna less than two meters in diameter — significantly smaller than the nine-meter antennas common at the time. The compact VSAT could be deployed anywhere in the world, for which reason it quickly became popular with militaries and for maritime navigation.
Gilat initially grew through private funding rounds before going public and listing on the Nasdaq. In the late 1990s, the company was shifting focus: At that time, it accounted for 40% share of the VSAT market but decided to expand into high-speed satellite communications hardware. To do this, it acquired GE Spacenet for $225 million and partnered with Microsoft to introduce satellite broadband service for consumers in the U.S. However, the early 2000s dot-com crash devastated Gilat, whose market capitalization plummeted from a peak of $4 billion in February 2000. The company had $500 million in debt and only $90 million in cash at that time, according to Israel’s Globes daily
“Gilat ventured into the U.S. B2C market 25 years ago and nearly went bankrupt. Now, we focus on areas where we have a clear advantage,” Benyamini reflects on the lessons learned.
Today, Gilat prioritizes in-flight connectivity and defense. Another growth driver, according to Benyamini, is so-called non-geostationary satellite orbits (NGSO), i.e., satellites in low and medium Earth orbits that move with the Earth’s rotation.
“Many commercial and government satellite constellations are either operational or will launch soon. Gilat holds a clear advantage in multi-orbit systems,” Benyamini claims.
Gilat also focuses on very high-throughput satellites (VHTSs), particularly software-defined satellites that can modify beams, capacity, and power distribution dynamically. For this segment, Gilat has developed SkyEdge IV.
In the last month alone, Gilat announced new orders worth $27 million: In late December 2024, more than $18 million in contracts for IFC solutions were reported, mainly for SkyEdge and related services, followed by additional orders worth $9 million from several satellite operators in early January 2025.
“We’re not afraid of risk, but we ensure we have enough resilience to overcome surprises,” says Benyamini. “We take calculated risks.”
Stock performance
The year 2024 was bumpy for Gilat, with its share price hitting a low on August 5, off 34% for the year up to that date. However, it turned things around somewhat, and over the last six months, the stock has risen more than 40%. Over the last 12 months, it is now up nearly 7%. In November, Freedom Broker raised its target price for Gilat by more than 5% to $7.70 per share while maintaining a “buy” recommendation.
Analysts revised their valuations after Gilat’s third-quarter 2024 earnings, which showed a 17% year-over-year increase in revenue to $74.6 million. Net income for the same period amounted to $8.1 million, up from $4.6 million a year earlier (non-GAAP). While the third-quarter top line fell short of Freedom Broker’s $76.6 million forecast, earnings per share delivered a beat and a “significant surprise.” The latter were up 75% year over year at $0.14 per share, versus Freedom Broker’s projection of a 40% increase.
Freedom Broker is upbeat on Gilat’s potential in the defense sector and the IFC market. It believes that “a turnaround in the stock is likely to occur after the first revenue recognition from Stellar Blu.”
Its target price, however, is the lowest among three analysts covering Gilat, according to MarketWatch. The average is $8.10 per share, indicating over 28% upside from the Wednesday, January 8 closing price.
