Verizon To Buy Gogo? 'Not So Fast,' Analyst Says

Gogo Inc.

is an unlikely acquisition target because of technological, regulatory and practical hurdles, an analyst said Wednesday. Gogo, which provides Wi-Fi to commercial airline passengers, hit a year high earlier this month on speculation it would be taken over by Verizon Inc.

. But Maquarie's Andrew DeGasperi said the likelihood is "tenuous at best." Separately, DeGasperi cut 15 percent from his 2015 estimate for Gogo's earnings before interest, taxes and depreciation, citing a slowing rate of aircraft installations and expectations of continued high engineering and development costs. DeGasperi maintained a Neutral rating and $21 target. As for a buyout, the analyst said Verizon's entry into the market would mean using its cell tower network for air-to-ground service, while most international flights and the industry's future requires satellite-based operations. Apart from providing Wi-Fi access over water, satellites can deliver more than four times the speed of cell-phone towers. Gogo annouced a deal Tuesday to offer satallite-based Wi-Fi on 58 aircraft operated by Grupo Aeromexico

starting next year. Gogo signed a similar deal recently with Japan Airlines

. Moreover, converting Verizon's wireless standard called 4G LTE for air-to-ground service "would be a long and arduous process," DeGasperi said. Gogo speculation was driven by AT&T Inc.'s

recent plan to enter the market. But DeGasperi said AT&T made the move out of desperation. The company found that two blocks of its valuable wireless communications spectrum were interfering with Sirius XM Holdings Inc.

operations and couldn't be used for terrestrial wireless service. Going into Wi-Fi for air travelers "was their only option for using that part of the spectrum," DeGasperi said. In early trading Wednesday, Gogo gained 1 percent to $17.69 a share.