AT&T (T) has abandoned plans to deploy a high-speed network for Internet access on airplanes, seven months after the company jolted the industry by announcing the service.
The telecom giant cited its plans to purchase Mexican wireless company Grupo Iusacell (CEL*:MM) for $2.5 billion in explaining the decision Monday to “no longer pursue entry into the Inflight Connectivity industry.” AT&T had intended to work with Honeywell (HON) on the inflight network, with a launch projected for late 2015.
Shares of Gogo (GOGO), the largest U.S. player in the inflight Wi-Fi business, surged more than 9 percent on the news. The suburban Chicago company had lost more than a third of its value following AT&T’s announcement in April, and Gogo shares remain 27 percent lower for the year. Another airline Wi-Fi provider, Global Eagle Entertainment (ENT), gained 5 percent.
In May, Gogo’s chief executive, Michael Small, told analysts he was confident his company would not be crushed by AT&T’s venture given Gogo’s large installed base and technological advancements. The company has airline customers around the world, including on Air Canada (AC/A:CN), Delta Air Lines (DAL), and Alaska Airlines (ALK).
“We firmly believe that we are a leader in this space because we specialize in aviation and we’ve built a network to service the global aviation market,” Small said Monday in an e-mail. “We continue to improve our product and services and look forward to competing with existing competitors and anyone else who wants to get into the space.”
The aviation blog Runway Girl Network first reported the AT&T decision.
