Inside Infrastructure: Satellites, Infrastructure's newest frontier

Inside Infrastructure is back.  We're launching the next series with a look at a sector that is moving increasingly into the mainstream of infrastructure investing: satellites. Whilst satellites have traditionally sat at the edge of infrastructure investment — too capital-intensive and vulnerable to technology risk for most private capital mandates, this is changing fast. Falling costs, growing demand for connectivity and increasing alignment with government priorities, particularly in defence and security, are pushing the sector from a government-led domain into a rapidly commercialising market with growth opportunities for private capital. 

Recent examples showing the rapid growth of the industry include SpaceX's IPO (on which Freshfields acted as lead European counsel), AST SpaceMobile's joint venture with Vodafone (distributing satellite services to European mobile network operators) and its acquisition of long-term access to 45 MHz of lower mid-band spectrum in the US for direct-to-device applications (in each case on which Freshfields advised AST) and EQT’s attempted acquisition of Eutelsat’s ground based antenna business.

1. Satellites as an infrastructure asset

Generally, the infrastructure investment case rests on characteristics such as (i) predictable long-term cash flows, (ii) essential service provision and (iii) resilience across economic cycles. Satellites increasingly support critical services, from broadband connectivity and navigation systems to defence and intelligence and earth observation (including weather forecasting and emissions). While technological complexity and shorter asset replacement cycles distinguish them from traditional core infrastructure, satellites may be approaching the same inflection point that data centres experienced a decade ago, when investors shifted from asking whether to invest to how. Increasingly, they are being viewed as a form of strategic infrastructure supported by strong, long-term demand that calls for institutional capital.

Investment in the sector spans the risk and investment mandate spectrum accordingly with opportunities for private capital existing along the value chain from launch capabilities through to ground systems. Core-plus strategies may target downstream infrastructure, ground station networks or broadband constellations with long-term contracted revenues while expanding operators and earlier-stage ventures are better suited to value-add or opportunistic mandates.

2. The factors driving the transition – and direction of travel

The global satellite market is projected to grow 7x from $15bn in 2025 to $108bn by 2035 (Goldman Sachs). In our view, four key factors are driving that transition.

First, the economics of getting to orbit have transformed. Falling launch and manufacturing costs — driven by reusable rockets (such as SpaceX’s Falcon 9), mass-produced small satellites such as CubeSats and open-source software — have reduced barriers to entry and allowed new players to enter the market. That being said, the overall deployment and operation of global mega-constellations remains capital-intensive, with ongoing challenges across supply chains and continued demand for R&D, specialised components and skilled labour spanning software, launch services, ground stations and cloud infrastructure.

Second, national security has long been a major driver of space investment generally, intensified in the wake of recent geopolitical volatility and the resulting uplift in defence spending. Investment in security-focused space ventures reached an all-time high in 2024, accounting for 40% of the record €1.5bn raised in the space sector (European Space Policy Institute) and the UK’s recently published Defence Investment Plan allocated £3.2 bn to satellite communications and Sovereign space-based Intelligence, Surveillance and Reconnaissance. Satellites play a critical role in defence and modern warfare, supporting intelligence gathering as well as secure communications, cyber defences and navigation systems.

As a result, governments are not only investing directly in sovereign satellite capabilities but are increasingly partnering with commercial operators and private capital to accelerate innovation in support of strategic priorities. The UK, for example, announced £16m of funding for new satellite projects and the EU's IRIS² (Infrastructure for Resilience, Interconnectivity and Security by Satellite), a multi-orbit constellation being developed under a PPP. $55.5bn has been approved for the US Space Force for FY2027, with funding encouraged for small-satellite operators and low earth orbit satellites. Alignment with government priorities is therefore a meaningful tailwind for investors in this space.

Third, demand for satellites is reinforced by the expansion of data-intensive applications, the 5G rollout and the broader need for global connectivity. Satellites occupy a unique position in the telecommunications ecosystem, providing coverage both in locations where terrestrial networks and hardware cannot reach, and the connectivity required to support a diverse range of sectors including medical, banking, maritime, aviation, agriculture, defence, supply chain monitoring and financial services industries.

Fourth, satellites are increasingly valuable not only as communications infrastructure, but as data-gathering and intelligence assets across defence, government and commercial applications. Earth observation satellites can have broad coverage, generating data that can be modelled for and informing the decisions made in a wide array of markets including national security, agriculture, climate and environmental monitoring, insurance risk modelling and supply chain management. In particular, given the role of satellite-enabled monitoring in the energy transition (e.g. to detect greenhouse gas emissions), the ability to collect, process and monetise this data is becoming a major growth vector for the sector, expanding the investment case beyond connectivity and satcoms into analytics, intelligence and mission-critical data services.

Looking ahead, a key direction of travel is the shift towards multi-orbit capability, which has driven significant sector consolidation and capital deployment. To compete effectively, operators need assets spanning geostationary (GEO), low Earth orbit (LEO) and medium Earth orbit (MEO) assets. LEOs are of particular commercial interest: in addition to enabling high-speed, low-latency broadband services, they support high-frequency capture of earth observation data and geospatial intelligence, which are critical across national security, agriculture, climate monitoring, insurance risk modelling and supply chain management markets. Legacy GEO operators are acquiring or merging with LEO players to build the scale and integrate the new capabilities that a multi-orbit strategy requires.

3. Key themes for private capital 

The same characteristics that make satellites an increasingly legible infrastructure asset, coupled with their alignment with governments’ strategic aims, also make them an attractive opportunity for private capital, even as technological uncertainty and regulatory fragmentation introduce additional risks. Some interesting themes to keep an eye on: 

• Ground Station as a Service (GSaaS). The carve-out model applied to data centres and TowerCos can be applied to the satellite sector. Satellite operators (particularly of LEOs and MEOs which require significantly more ground infrastructure and specialised tracking capabilities) can separate passive infrastructure assets, including antennas, land and associated facilities, into an independent GSaaS platform. The original operator typically serves as an anchor tenant, which underpins predictable cash flows while the platform generates additional revenue by lease capacity to third-party operators. The model offers investors exposure to market growth, without undertaking the capital risk of betting on the success of a single, capital-intensive LEO venture and enabling satellite operators to deleverage and focus capital on their core space-based operations.
• Strategic consolidation. As the sector matures, legacy GEO operators are acquiring or merging with LEO players (including the 2023 Eutelsat-One-Web merger) to build scale, extend coverage and integrate new capabilities, to ensure long-term competitiveness against LEO mega-constellations. Private capital investors can support this process through equity, structured capital or acquisition financing, while benefiting from the synergies created by integrating complementary capabilities and assets, the fleets themselves, valuable orbital positions and spectrum usage rights (authorisations required for satellites to transmit and receive radio frequencies).
• Broader ecosystem plays. Beyond the satellites themselves, the sector is generating adjacent infrastructure opportunities: in the broader software ecosystem, data processors and cloud infrastructure, earth observation data and analytics and ground stations, GSaaS and related infrastructure. These assets may offer earlier-stage entry points for investors building sector exposure or opportunities in transactions comparable to traditional real assets transactions for investors unwilling to take technology risk. In other words, investors need not own satellites directly to gain exposure to the sector's growth.
• Regulatory fragmentation and national security scrutiny. As noted above, the national security sensitivity of satellite assets is a key consideration, given their role in secure communications, intelligence gathering and sovereign capability – further complicated by the varied regulations across jurisdictions (although the European Commission’s proposed EU Space Act is intended to create a more unified framework). This has already affected transaction execution in the sector, including EQT’s proposed acquisition of Eutelsat’s ground infrastructure business, which was blocked by the French government (Eutelsat’s biggest shareholder) reportedly for being “too strategic” (FT). While the detail will vary by jurisdiction, the direction of travel is clear: a complex regulatory landscape and government intervention are likely to be central features of satellite infrastructure transactions.
• End-of-life and life-extension considerations. Unlike most infrastructure assets, individual satellites have a finite and relatively short operational life of anywhere between five to fifteen, depending on orbit and technology — driven by fuel reserves and component breakdown and degradation. This raises distinct due diligence and valuation issues for investors: asset value can decline as decommissioning nears, replacement or relaunch capital needs to be planned (and priced) well ahead of time, and de-orbiting and space-debris obligations may become subject to regulatory obligations. At the same time, in-orbit servicing, refuelling and life-extension technologies are rapidly evolving and emerging as both a mitigant to this risk and a new investable sub-sector in their own right.

4. Where does this leave investors?

As an infrastructure asset class, satellites are maturing. Like data centres and telecom towers before them, they are transitioning from specialist assets to investable platforms capable of attracting mainstream institutional capital.

As governments pursue greater strategic autonomy, businesses demand resilient global connectivity and the commercialisation of space continues, satellites are moving from the periphery of infrastructure investing towards a new frontier of strategic infrastructure — one where private capital is likely to play an increasingly important role.

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