Viasat offices are shown at the company's headquarters in Carlsbad, California
Viasat offices are shown at the company's headquarters in Carlsbad, California, U.S. March 9, 2022. Picture taken March 9, 2022. Reuters

Britain provisionally cleared satellite company Viasat's buyout of rival Inmarsat on Wednesday, saying the $7.3 billion deal would not substantially reduce competition in the supply of wifi on commercial flights.

The Competition and Markets Authority (CMA) said that while the two companies competed to provide airlines with in-flight broadband, the sector was expanding rapidly with the entry of new players such as Elon Musk's Starlink.

"This competition has led us to provisionally conclude that airlines and their UK customers will not be adversely affected by the deal," said the chair of the CMA inquiry, Richard Feasey.

The U.S. company agreed to buy London-based Inmarsat in November 2021 to create a global high-capacity hybrid space and land-based network to better serve customers in sectors like maritime and aviation as well as governments.

The CMA opened an in-depth investigation into the deal last year, saying it could hamper competition in onboard wifi and leading to airlines paying more to provide the service.

But it said on Wednesday that the market was changing rapidly, shown by established competitors like Panasonic and Intelsat signing deals with new satellite company OneWeb as well as Starlink's expansion.

The British clearance comes just weeks after the European Union opened its own full-scale investigation into the deal on the same grounds. It set a June 29 deadline for its decision.

The two companies welcomed the CMA's announcement.

"We will continue to engage with regulators in Europe and the U.S. on remaining regulatory approvals and will update the market as they progress," they said in a joint statement.