PARIS—Satellite fleet operator SES on May 26 said it would raise new equity to purchase 100 percent of medium-Earth-orbit Internet-delivery constellation O3b Networks, exercising a call option with O3b minority shareholders and eliminating the possibility of an O3b stock offering.

Providing fresh evidence of its belief in O3b, SES said that in addition to paying $20 million to take its ownership from 49.1 percent to 50.5 percent, as previously announced, it would raise another $710 million to bring its ownership to 100 percent.

SES said it would use another $300 million in new capital to pay off O3b’s highest-cost debt. O3b, based in Britain’s Channel Islands, has $1.2 billion in debt carrying an average 9.5 percent interest.

SES further reiterated its forecast that O3b, which is expected to report more than $100 million in revenue in 2016 – nearly double the total for 2015 – would be generating around $680 million in revenue starting in 2023.

As of March 31, O3b had a firm backlog of $350 million.

O3b now has 12 satellites in orbit and has eight more on order. Four are scheduled for launch on Europeanized Russian Soyuz rockets in early 2018. The remaining four are scheduled to launch, also on a Soyuz, in late 2019, bringing the constellation to 20 satellites including the three current satellites used as in-orbit backup.

SES said each O3b satellite, built by Thales Alenia Space of France and Italy, would generate between $32 million and $36 million in annual revenue three years after entering service. Taking the mid-point of that estimate, a 20-satellite fleet would be producing $680 million in revenue starting in 2023.

SES expects the purchase to add to the company’s cash flow and per-share earnings starting in 2018.

SES had said in April that O3b owners had agreed to give SES a call option to take its ownership from 50.5 percent to 100 percent. In the event SES decided against exercising the option, an initial public offering of stock was planned.

The IPO is now off the table given SES’s decision to raise fresh capital in a private placement of 39.85 million fiduciary depositary receipts sold to institutional investors.

Luxembourg-based SES’s bylaws require that Class B shareholders, mainly Luxembourg banks and the Luxembourg government, retain an equity stake in the company of equivalent to 50 percent of the Class A shares. To retain that balance, SES will sell 19.9 million new Class B shares to the existing Class B shareholders.

SES said that as part of the transaction it would recognize a gain of $500 million on its O3b investment.

SES Chief Executive Karim Michel Sabbagh said made increasing bullish remarks about O3b in the two years since he assumed his post, saying the constellation’s 8,000-kilometer, equatorial orbit offers many of the advantages of a low-orbiting constellation – despite not having full, global coverage — while preserving some of the attributes of higher-orbiting satellites.

SES operates a fleet of around 50 satellites in geostationary orbit some 36,000 kilometers over the equator.

One of the advantages of the O3b architecture compared to a low-orbiting global constellation is that it can be expanded incrementally according to market demand. The company has said that the O3b orbit and Ka-band frequencies have room for more than 100 satellites if business prospects justified the expansion.

In a statement, Sabbagh said the two fleets would provide customers with “the optimal combination of technologies and solutions across a global GEO/MEO satellite network…. The transaction will also allow SES and O3b to develop a common technology and innovation roadmap.”

Peter B. de Selding was the Paris bureau chief for SpaceNews.