Eutelsat and OneWeb agree multi-orbit merger plan
TAMPA, Fla. — Eutelsat and OneWeb said July 26 they have agreed a plan to merge their businesses to create a global multi-orbit satellite broadband operator.
The deal would combine France-based Eutelsat’s satellite fleet in geostationary orbit (GEO) with British startup OneWeb’s constellation in low Earth orbit (LEO).
Eutelsat already owns 23% of OneWeb and has been building a position in the startup to strengthen connectivity services amid a gradual decline in its satellite TV business.
The combined company would be “the first multi-orbit satellite operator offering integrated GEO and LEO solutions,” Eutelsat said, targeting a satellite connectivity market projected to be worth $16 billion by 2030.
It comes amid plans for other multi-orbit combinations that seek synergies from integrating satellites operating in GEO and LEO.
A satellite fixed in GEO can provide more capacity to a specific region than non-geostationary satellites in a megaconstellation that has to serve the entire globe. Constellations closer to the Earth, however, promise low-latency solutions that can integrate with terrestrial infrastructure more effectively.
Eutelsat’s European rival SES operates a satellite network in GEO and medium Earth orbit (MEO).
U.S.-based GEO broadband operator Viasat is in the middle of acquiring British satellite fleet operator Inmarsat, which has plans for satellites in LEO and highly elliptical orbit.
Canadian GEO operator Telesat plans to start deploying LEO satellites for its delayed Lightspeed constellation in 2025.
Intelsat had also tried to merge with OneWeb but scrapped the deal in 2017 after failing to win support from debt holders to buy the company.
Indian telecom company Bharti Global is OneWeb’s largest shareholder. Other shareholders include Japanese internet giant SoftBank, South Korean conglomerate Hanwha, U.S.-based Hughes Network Systems and the British government.
French state-owned investment bank Bpifrance is the largest shareholder in publicly listed Eutelsat.
The Chinese government is Eutelsat’s fourth-largest shareholder via sovereign fund China Investment Corp, reported Reuters citing data from financial research firm Refinitiv.
Eutelsat and OneWeb signed a Memorandum of Understanding to combine through an all-share transaction that would result in Eutelsat taking over OneWeb, although the British government would continue to hold a share in the British startup with priority voting rights.
OneWeb’s shareholders would contribute their stake in the startup to Eutelsat in exchange for newly issued shares in the French company, valuing OneWeb at $3.4 billion.
Eutelsat and OneWeb shareholders would each get 50% of the combined company’s shares.
The companies said the transaction has the backing of each of their long-term investors, including Bpifrance and French investment firm Fonds Stratégique de Participations on Eutelsat’s side, and Bharti, SoftBank, Hanwha and the British government for OneWeb.
Eutelsat plans to hold a shareholder meeting in the first half of 2023 to vote on the deal. The transaction also requires regulatory approvals, including permission from foreign investment authorities.
OneWeb would continue to operate the LEO business from its headquarters in the U.K. following the deal, and Eutelsat would remain headquartered in France and listed on the Euronext Paris stock exchange.
The combined group’s board of directors would comprise 15 members: seven proposed by OneWeb and seven by Eutelsat in addition to its CEO Eva Berneke, who would be CEO for the combined group.
Eutelsat’s chair Dominique D’Hinnin is being lined up to take on the same role for the merged company, while Bharti founder Sunil Bharti Mittal would be co-chair.
The companies expect to complete the merger by the end of the first half of 2023.
The proposed transformational deal comes after Eutelsat’s board rejected an unsolicited $3.2 billion takeover attempt in September from Patrick Drahi, the billionaire magnate who founded multinational telecommunications firm Altice.
Former CEO Rodolphe Belmer announced plans a month later to leave Eutelsat after six years with the company.
Berneke, a technology and telecoms veteran who previously led Danish IT and software company KMD, took Eutelsat’s reins as CEO at the start of 2022.
“This ground-breaking combination will create a powerful global player with the financial strength and technical expertise to accelerate both OneWeb’s commercial deployment, and Eutelsat’s pivot to Connectivity,” Berneke said in a statement.
Eutelsat reported 1.15 billion euros ($1.8 billion) in revenues for the year to the end of June, down 6.7% compared with the period the year before. Its broadcast segment, representing 61% of total revenues, fell 6.9% on a like-for-like basis when adjusted for foreign exchange rates.
Revenues from fixed broadband and mobile connectivity services jumped up 36% and 13%, respectively.
Eutelsat and OneWeb expect their combined company would generate 1.2 billion euros for the year to the end of June 2023.
They forecast revenues to grow at a low double-digit compound annual growth rate (CAGR) over the next decade.
Eutelsat operates 36 satellites in GEO. OneWeb currently has 428 satellites in LEO, about 66% of its planned feet, and has lined up missions with SpaceX and India’s space agency to resume launches later this year.
OneWeb has not been able to add satellites to its constellation since Russia’s invasion of Ukraine in February forced the company to halt the use of Soyuz vehicles.
The British company expects to have deployed the remaining satellites by the end of 2023 to provide global connectivity services.
Meanwhile, U.S.-based SpaceX has amassed more than 2,700 satellites in LEO for its Starlink broadband constellation as it expands global coverage, according to astronomer and spaceflight analyst Jonathan McDowell.
The latest batch of 53 Starlink satellites launched July 24 on a Falcon 9 rocket from Launch Complex 39A at the Kennedy Space Center, Florida.
This article was updated July 26 after Eutelsat and OneWeb announced details of a Memorandum of Understanding to pursue a combination of their businesses.