OneWeb, Eutelsat tie-up to take on Elon Musk’s SpaceX Starlink

BL New Delhi Bureau | | Updated on: Jul 26, 2022
OneWeb-Eutelsat combination will accelerate the commercialisation of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile.

OneWeb-Eutelsat combination will accelerate the commercialisation of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile. | Photo Credit: GONZALO FUENTES

OneWeb and Eutelsat sign a MoU, addressing the considerable connectivity market opportunity and take on Musk’s SpaceX

Bharti Group-backed OneWeb and French satellite operator, Eutelsat Communications (ETL) on Tuesday said they have signed a Memorandum of Understanding (MoU), addressing the considerable connectivity market opportunity, fueled by the growing needs of customers in both the business-to-business (B2B) and business-to-consumer (B2C) segments for consistent, reliable connectivity.

These market segments are forecast to grow by three and five times respectively over the next decade, to reach a combined value of $16 billion by 2030.

The objective is to create a leading global player in connectivity through the combination of both companies in an all-share transaction. Eutelsat will combine its 36-strong fleet of GEO satellites with OneWeb’s constellation of 648 Low Earth Orbit (LEO) satellites, of which 428 are currently in orbit, the companies said in a statement.

The two companies combined will take on billionaire, Elon Musk’s SpaceX Starlink and Amazon’s Project Kuiper.

Exchange of shares

“The transaction would be structured as an exchange of OneWeb shares by its shareholders with new shares issued by Eutelsat, such that, at closing, Eutelsat would own 100 per cent of OneWeb (excluding the ‘Special Share’ of the UK government). OneWeb shareholders would receive 230 million newly-issued Eutelsat shares representing 50 per cent of the enlarged share capital,” the official said.

The potential transaction builds on the deepening collaboration between Eutelsat and OneWeb, begun with the equity stake acquired by Eutelsat in OneWeb in April 2021, the global distribution agreement between Eutelsat and OneWeb announced in March this year, and the new exclusive commercial partnership, addressing mainly the European and global cruise markets, they said.

The transaction values of OneWeb at $3.4 billion implying a value of €12 per Eutelsat share (including the dividend, before synergies). Average annual revenue synergies are estimated at €150 million after four years, with hybrid GEO/ LEO offerings providing a premium service to customers and improving the fill rate, the companies said.

More about the tie-up

“The combination of Eutelsat and OneWeb represents a significant development in that direction and a unique GEO/LEO combination. The positive early results of our service together with our strong pipeline represent a very exciting opportunity in the fast-growing satellite connectivity segment, especially for customers requiring a high speed, low latency experience,” Sunil Bharti Mittal, OneWeb’s Executive Chairman said.

“Bharti, as the lead shareholder of OneWeb, along with other key shareholders, is looking forward to playing a meaningful role in providing expanded connectivity through the combination of OneWeb and Eutelsat,” he added.

“This combination will accelerate the commercialisation of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile. The strong support of strategic shareholders of both parties is a testament to the huge opportunity that this combination offers and the value that will be created for all its stakeholders. This is truly a game changer for our industry,” Dominique D’Hinnin, Eutelsat’s Chairman said.

Published on July 26, 2022
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