French satellite company Eutelsat is poised to buy British rival OneWeb in a deal that could be announced as early as Monday, two sources close to the negotiations said on Sunday.

The combination of the two companies would strengthen their position in the race to build a constellation of low-orbit satellites, challenging the likes Elon Musk's Starlink.

The proposed takeover will leave the British government with a minority stake in the business it rescued from bankruptcy in partnership with India's Bharti Global in July 2020, one of the sources said.

Eutelsat, OneWeb's second-biggest shareholder behind Bharti with a 23 per cent stake, declined to comment.

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