OneWeb Confirms Merger With Eutelsat

OneWeb is to merge with French satellite company Eutelsat to create “a global leader uniquely positioned for capturing the fast-growing connectivity market.”

The merger confirmation from the British satellite internet firm comes after Eutelsat admitted that it was in talks for a possible all-share merger with OneWeb.

The UK government (a OneWeb shareholder) has welcomed the development, but pointed out it “will retain the special share and its exclusive rights over OneWeb.”

OneWeb, Eutelsat merger

Essentially Eutelsat and key OneWeb shareholders have signed a ‘Memorandum of Understanding’ to combine Eutelsat and OneWeb in an all-share transaction.

The deal will see Eutelsat own 100 percent of OneWeb (excluding the ‘Special Share’ of the UK Government).

OneWeb shareholders would receive 230 million newly issued Eutelsat shares representing 50 percent of the enlarged share capital.

The transaction values OneWeb at $3.4bn (£2.8bn) implying a value of €12 per Eutelsat share.

Eutelsat will continue to be listed on Euronext Paris and apply for admission to standard listing on the London Stock Exchange.

Eutelsat will combine its 36-strong fleet of GEO satellites with OneWeb’s constellation of 648 low Earth orbit satellites, of which 428 are currently in orbit.

“I am delighted to announce this new and significant step in the collaboration between Eutelsat and OneWeb, said Dominique D’Hinnin, Eutelsat’s chairman. “Bringing together our two businesses will deliver a global first, combining LEO constellations and GEO assets to seize the significant growth opportunity in connectivity, and deliver to our customers solutions to their needs across an even wider range of applications.”

“This combination will accelerate the commercialisation of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile,” said D’Hinnin.

“The combination of Eutelsat and OneWeb represents a significant development in that direction as well as a unique GEO/LEO combination,” added Sunil Bharti Mittal, OneWeb’s executive chairman. “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.”

Existing shareholder

It should be remembered that Eutelsat has already paid $550m in cash for its stake in OneWeb in April 2021.

Then in October last year, the French satellite operator increased its stake in OneWeb, taking its shareholding from 17.6 percent to 22.9 percent.

The UK firm operates satellites for clients including government and TV broadcasters from a higher geostationary orbit, as distinct from the lower orbit used by firms such as Starlink.

It will compete with rival satellite broadband players such as SpaceX’s Starlink or Amazon.com’s Project Kuiper.

National security

There is no doubt the deal between the two is politically sensitive.

Eutelsat’s biggest shareholder is the French state, which owns 20 percent of the firm through state-owned investment bank Bpifrance.

The UK government meanwhile owns a significant portion of OneWeb, following its $1bn bailout with India’s Bharti Global in 2020 that rescued OneWeb from financial collapse.

The UK government has welcomed the deal, pointing out the combined firm will generate combined revenues of €1.2 billion and address an even wider range of customer requirements.

“The merger is positive news for UK taxpayers: having made a $500 million investment in OneWeb 2 years ago, the UK government will now have a significant stake in what will become a single, powerful, global space company, working on the sound financial footing needed to make the most of the technological advantages it has to compete in the highly-competitive global satellite industry, against companies around the world,” said the British government.

“The UK government will retain the special share and its exclusive rights over OneWeb – securing the company’s future at the centre of the combined group’s global LEO business, national security controls over the network, and first-preference rights over domestic industrial opportunities,” it added.

This means the UK government will retain a “range of national security rights, including over security standards of the OneWeb network and use of the OneWeb network for national security purposes.”

It also pointed out that the UK remaining the preferred location for future OneWeb launches, and and OneWeb’s headquarters will remain in the UK.

The government said the deal will be subject to UK and international regulatory approvals – including through the National Security and Investments Act – and the approval of Eutelsat’s shareholders.

The merger is expected to complete in the first half of 2023.

A potential national security concern may be examined, due to the fact that Eutelsat’s fourth-largest backer is China’s sovereign fund China Investment Corp.