TAMPA, Fla. — French satellite operator Eutelsat is paying $550 million to buy part of OneWeb, the startup deploying a broadband network in low Earth orbit.

The company is buying a 24% stake to give it similar governance rights to the British government and Indian telecom company Bharti Global, which bought OneWeb out of bankruptcy last year.

Part of the investment will be funded by the $507 million that Eutelsat is getting from clearing C-band spectrum in the U.S. for terrestrial 5G networks.

The Paris-based company operates a fleet of geostationary (GEO) satellites, but has been dipping its toes into LEO with a constellation called Eutelsat ELO, targeting the market for connecting Internet of Things (IoT) devices. 

The first nanosatellite for this network, ELO Alpha, is slated to launch April 20 on a Vega rocket that is delayed following a launch failure in November.

Buying a part of OneWeb’s LEO broadband constellation is a major strategy shift for Eutelsat, which is seeing its satellite TV business slowly decline as Netflix and other streaming services rise in popularity.

“OneWeb will become our main growth engine outside our broadcast and broadband applications, as we continue to maximize cash-flow extraction from our highly profitable heritage business and grow our fixed broadband vertical leveraging our geostationary assets,” Eutelsat CEO Rodolphe Belmer said in a statement.

Arianespace launched the latest batch of 36 OneWeb spacecraft April 25, growing the operator’s satellites to 182 ahead of partial services this year.

OneWeb aims to launch two more batches of 36 satellites by June to expand coverage north of 50 degrees latitude, spanning the United Kingdom, Alaska, Northern Europe, Greenland, Iceland, the Arctic Seas and Canada.

It expects to provide global services with 650 satellites in 2022 to enterprise, government, maritime and aviation customers.

Following the investment from Eutelsat, which will give the French company a board seat, OneWeb’s LEO fleet could potentially find synergies with broadband satellites in GEO.

Canadian GEO satellite operator Telesat, which plans to start launching its LEO broadband constellation Lightspeed next year, was previously the only megaconstellation player exploring this kind of opportunity.

Sunil Bharti Mittal, OneWeb’s executive chair, said: “Together we are stronger, benefiting from the entrepreneurial energy of Bharti, extensive global outreach of UK and long-term expertise of the satellite industry at Eutelsat.”

$1.9 billion in fresh equity

OneWeb emerged from Chapter 11 bankruptcy protection in November with a $1 billion investment from Bharti and the British government — each owning 42.2% at the time.

The startup said Jan. 15 it raised $350 million from SoftBank, which was its largest shareholder before it filed for Chapter 11, and $50 million from Hughes Network Systems.

Comments made earlier by Mittal suggest that, following Eutelsat’s investment, the company now needs to raise about $500 million to complete the constellation.

Eutelsat said April 27 that OneWeb is “well advanced in terms of securing its remaining funding needs this year.”

OneWeb expects to generate around $1 billion in annual revenues in three to five years after deploying its full constellation.

Eutelsat said it is set to close its OneWeb deal in the second half of this year following regulatory approvals. 

Jason Rainbow writes about satellite telecom, space finance and commercial markets for SpaceNews. He has spent more than a decade covering the global space industry as a business journalist. Previously, he was Group Editor-in-Chief for Finance Information...