Eutelsat merges with OneWeb to create an internet giant

French satellite operator Eutelsat on Tuesday announced its merger with British company OneWeb and its constellation. The operation should create a giant in the Internet race from space, facing the Starlink mastodon from the American group SpaceX.

After announcing on Monday that it was in “discussions (…) with a view to a possible merger” with OneWeb, which already owns 23% of its shares, Eutelsat confirmed the signing of a “memorandum of understanding”. It provides for a 50-50 joint venture that will remain headquartered in France, and will remain incorporated in Paris.

In parallel, the combined company will also submit an application for admission to part of the London Stock Exchange. The company said in a press release that the deal will take place through a stock exchange and OneWeb values ​​at $3.4 billion, implying a value of €12 per Eutelsat share.

The process should be terminated “at the end of the first half of 2023”. The share of Eutelsat, which specializes in geostationary orbit with its fleet of 35 satellites within a distance of 36,000 km from Earth for satellite broadcasting and broadband Internet services, lost 17.79% to 7.04 euros, in a market that fell slightly by 0.29%, shortly before the It’s 2:00. evening.

The stock was already down nearly 18% on Monday. The deal raises concerns due to short-term cash flow needs and reliance on government contracts, according to Deutsche Bank analyst Roshan Ranjit.

However, during a conference call on Tuesday, the group’s chief executive, Eva Perink, defended her plan to create a “growth-oriented group,” acknowledging that it represented a “significant change for some shareholders.” The British company OneWeb has already deployed 428 of the 648 satellites in its group in low orbit, a few hundred kilometers above sea level in order to provide high-speed Internet and low latency, that is, fast in transmitting data.

In addition to the Indian conglomerate Bharti (30%) and Eutelsat (22.9%), OneWeb’s capital includes the British government (17.6%), Japan’s SoftBank (17.6%) and the Korean conglomerate Hanwha (8, 8%). Eutelsat is 20% owned by Bpifrance, the French state’s public investment bank, as well as by the Strategic Partnership Fund (FSP) owned by seven French insurance companies, and the rest of the capital is being floated.

Connect isolated areas

The project specifically aims to serve isolated areas that are free of optical fibers. A market estimated at $16 billion by 2030, according to Eutelsat. In this race, American billionaire Elon Musk took SpaceX a step forward. More than half of the 4,408 satellites in the Starlink constellation have already been deployed (you want 42,000 in the end). Amazon founder Jeff Bezos plans to deploy more than 3,200 satellites of the Kuiper constellation.

The European Union also wants to deploy its own constellation into a low orbit of about 250 satellites as of 2024, in the name of Sovereignty. “We don’t know what the future European constellation will look like, but we are looking forward to starting a dialogue with the Commission,” said Ms. Brinkie.

As for China, it has its own constellation project, Guowang, with 13,000 satellites. “Low orbiting towers are a market that could become a strategy for governments,” AlphaValue analyst Romain Peerdon told AFP on Monday.

OneWeb constellation publication has been suspended since February and the invasion of Ukraine. The first two-thirds of the constellation was put into orbit by Russian Soyuz rockets. “This could have set us back a long time (…) but we have received tremendous support from the US and the Indian government,” OneWeb CEO Sunil Bharti Mittal said on Tuesday, adding that a 3.5-percent contract. The launches have been completed with SpaceX and that the Indian government has made available 2 GLSV rockets to complete the constellation deployment ‘certainly by March 2023’.


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