Merger between Eutelsat and OneWeb moves forward to create a satellite internet giant

The Eutelsat KONNECT satellite, photographed on November 19, 2019 in Cannes, France afp_tickers

This content was published on July 26, 2022 – 10:51


French satellite operators Eutelsat and Britain’s OneWeb on Tuesday announced plans to merge and create a giant in the growing broadband internet market to rival US tycoon Elon Musk’s Starlink.

Eutelsat announced in a press release the signing of a “memorandum of understanding” to merge with OneWeb, of which it already owns 23%. Shareholders of both companies will share the future company equally, he said.

The transaction, expected in mid-2023, will be through a share exchange and values ​​OneWeb at $3.4 billion, implying a value of 12 euros (almost the same in dollars) per Eutelsat share, the note adds.

Eutelsat is a specialist in geostationary orbit with a fleet of 35 satellites located 36,000 kilometers above the Earth for satellite broadcasting and broadband Internet services.

Britain’s OneWeb has deployed 428 “low Earth orbit” (LEO) satellites, operating a few hundred kilometers high to provide high-speed internet with low latency, or low data transmission time.

OneWeb’s goal is to deploy 648 satellites for comprehensive coverage, essential to meet growing needs.

Among its shareholders are also the Indian conglomerates Bharti (30%) and Korean Hanwa (8.8%), the British government (17.6%) and the Japanese Softbank (17.6%).

Eutelsat is 20% owned by Bpifrance, the French state’s public investment bank, and by the Strategic Participation Fund, owned by seven French insurers. The rest of the capital is floating.

– Connecting isolated regions –

This merger project aims to position the company in the high-speed space internet sector, in particular to serve isolated regions without fiber optics or to meet the future needs of the connected car, for example.

Eutelsat has estimated this market at around $16 billion by 2030.

The operation would give birth to a new giant in front of Starlink, the constellation of American billionaire Elon Musk (SpaceX), which has already deployed more than half of the 4,408 satellites in its constellation. He predicts a total of 42,000.

Amazon founder Jeff Bezos plans to deploy more than 3,200 satellites for his Kuiper constellation.

The European Union (EU) also wants to deploy its own constellation in low Earth orbit of some 250 satellites from 2024, in the name of sovereignty.

“We don’t know what the future European constellation will look like, but we look forward to starting a dialogue with the Commission,” Eutelsat CEO Eva Berneke said on Tuesday.

China also has its own constellation project, Guowang, with 13,000 satellites.

“Low-orbit constellations are a market that can become strategic for governments,” Romain Pierredon, an analyst at AlphaValue, told AFP.

Pierredon explained that the main issues currently go through sovereignty and gave the example of semiconductors. “The goal is not to depend on anyone, so Europe could be a great OneWeb customer,” he added.

The suspension of Soyuz rocket flights, which Russia decreed in response to Western sanctions imposed for its offensive in Ukraine, crippled the deployment of the OneWeb constellation in February.

Sunir Bharti Mittal, chief executive of OneWeb, said on Tuesday it could be completed “by March 2023” thanks to an agreement with SpaceX and support from the United States and the Indian government.

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