The French satellite operator Eutelsat announced on Tuesday its merger with the British OneWeb and its constellation. The operation must create a giant in the race for the Internet from space, facing the Starlink mastodon of the American group SpaceX.
After announcing on Monday that it was in “discussions (…) with a view to a possible merger” with OneWeb, of which it is already a 23% shareholder, Eutelsat confirmed the signing of a “memorandum of understanding”. It provides for a 50-50 joint venture whose headquarters will remain in France, and which will continue to be listed in Paris.
In parallel, the merged company will also apply for admission to a segment of the London Stock Exchange. The transaction will be done by exchange of shares and values OneWeb at 3.4 billion dollars implying a value of 12 euros per Eutelsat share, the company said in a press release.
The operation must be finalized ‘at the end of the first half of 2023’. The Eutelsat share, a specialist in geostationary orbit with its fleet of 35 satellites positioned 36,000 kilometers from the Earth for satellite broadcasting and broadband internet services, lost 17.79% to 7.04 euros, in a market down slightly by 0.29%, shortly before 2:00 p.m.
The stock had already fallen nearly 18% on Monday. The deal raises concerns because of the short-term cash flow needs and reliance on government contracts, according to Deutsche Bank analyst Roshan Ranjit.
The group’s chief executive Eva Berneke, however, defended during a conference call on Tuesday her plan to create “a group oriented towards growth”, admitting that it represented “a big change for some shareholders”. The British company OneWeb has already deployed 428 of the 648 satellites in its constellation in low orbit, a few hundred kilometers above sea level in order to provide high-speed, low-latency internet, i.e. fast in data transmission.
In addition to the Indian conglomerate Bharti (30%) and Eutelsat (22.9%), the capital of OneWeb includes the British government (17.6%), the Japanese Softbank (17.6%) and the Korean conglomerate Hanwa (8, 8%). Eutelsat is 20% owned by Bpifrance, the French state’s public investment bank, as well as by the Strategic Participation Fund (FSP) held by seven French insurers, the rest of the capital being floating.
Connect Isolated Regions
The project aims in particular to serve isolated regions without fiber optics. A market estimated at 16 billion dollars by 2030, according to Eutelsat. In this race, American billionaire Elon Musk’s SpaceX has taken a step ahead. More than half of the 4,408 satellites in its Starlink constellation have already been deployed (it wants 42,000 eventually). Jeff Bezos, the founder of Amazon, intends to deploy more than 3,200 satellites for his Kuiper constellation.
The European Union also wants to deploy its own constellation in low orbit of around 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 the dialogue with the Commission,’ said Ms Berneke.
As for China, it has its own constellation project, Guowang, with 13,000 satellites. “Low-orbit constellations are a market that can potentially become strategic for governments,” Romain Pierredon, an analyst at AlphaValue, told AFP on Monday.
The deployment of the OneWeb constellation has been on hold since February and the invasion of Ukraine. The first two-thirds of the constellation had been put into orbit by Russian Soyuz rockets. “It could have set us back for a long time (…) but we have received tremendous support from the United States and the Indian government,” said OneWeb executive chairman Sunil Bharti Mittal on Tuesday, adding that a contract for 3 .5 launches had been concluded with SpaceX and that the Indian government had made available 2 GLSV rockets to complete the deployment of the constellation ‘most certainly by March 2023’.
/ATS