Satellite operator Intelsat has agreed to merge with affordable internet provider OneWeb, in a deal backed by a large investment from Japan’s SoftBank Group.
Intelsat and OneWeb will merge in a share-for-share transaction, with Intelsat also agreeing a share-purchase agreement with OneWeb investor SoftBank.
SoftBank will invest US$1.7 billion in newly issued common and preferred shares of the combined company – a move designed to help reduce Intelsat’s debt by approximately $3.6 billion. This will result in SoftBank taking an approximate 39.9% voting stake in the combined business.
The investment comes after SoftBank committed to invest US$1 billion in OneWeb in December, to help support OneWeb’s vision of delivering affordable, high-speed, low-latency internet to rural and remote communities around the world.
“We believe that combining Intelsat with OneWeb will create an industry leader unique in its ability to provide affordable broadband anywhere in the world,” said Intelsat CEO Stephen Spengler.
“As an early equity investor in OneWeb, we recognised a network that was a complement to our next-generation Intelsat EpicNG fleet and a fit with our long-term strategy. By merging OneWeb’s LEO satellite constellation and innovative technology with our global scale, terrestrial infrastructure and GEO satellite network, we will create advanced solutions that address the need for ubiquitous broadband.”
Spengler said that the deal will “significantly strengthen” Intelsat’s capital structure and help it to accelerate into new areas, such as providing connectivity for connected vehicles.
OneWeb founder and CEO, Greg Wyler, said: “With SoftBank’s support we will build the world’s first truly global broadband company, accelerating our mission of bridging the digital divide by connecting the four billion people without access today. While there are numerous growth paths available to OneWeb, we are very excited at the prospect of working with Intelsat on this shared objective.”
SoftBank chairman and CEO Masayoshi Son added: “This combination is consistent with SoftBank’s strategy of investing in disruptive, foundational technologies that are building the infrastructure for tomorrow, and this proposal offers a win-win opportunity to accelerate OneWeb’s mission while enhancing the Intelsat balance sheet.”
The deal is expected to close late in the third quarter of 2017.