Eutelsat confirms in talks to acquire OneWeb

Satellite operator Eutelsat has confirmed that it is in talks with its co-shareholders in low-Earth orbit satellite outfit OneWeb to acquire the latter to create a combined geostationary Earth orbit/low Earth orbit player with complementary activities.

Eutelsat, whose confirmation follows press reports that the pair were in talks, said that the combined entity would be the first multi-orbit satellite operator offering integrated GEO and LEO solutions and would be positioned to address a fast-growing satellite connectivity market that is expected to be worth about US$$16 billion by 2030.

OneWeb expects to have its LEO-based service fully deployed in 2023, enabling it to compete with the other most-advanced project in this area – Elon Musk’s Starlink.

The partnership between Eutelsat and OneWeb started with Eutelsat’s equity investment in OneWeb in April 2021 and deepened with a global distribution agreement agreed last year.

Eutelsat currently holds 23% of OneWeb’s share capital, alongside India’s Bharti with 30%, Japan’s Softban, Korea’s Hanwa and the UK government.

Under the terms of the transaction being discussed, Eutelsat and OneWeb shareholders would each hold 50% of the combined group’s shares.

The transaction would be structured as a contribution by OneWeb’s shareholders of their stake in OneWeb to Eutelsat in exchange for newly issued Eutelsat shares. Any combination would be subject to approval by a majority of Eutelsat shareholders and a regulatory green light.

Completion of the deal could be complicated by the companies’ respective ownership structures. The UK government currently has a golden share in OneWeb, in which it is an investor with close to a 20% stake following a bail out initiated by the Johnson government. Eutelsat is 20% owned by the French state and is also part-owned by a Chinese sovereign wealth fund, which holds a stake of around 5%.

The Paris-based operator has also controversially remained active in the Russian market following Russia’s invasion of Ukraine.

Eutelsat’s Russian business could pose a more direct problem. The Russian government in March demanded that the UK government sell its stake in OneWeb, which forced the latter to suspend all launches from the Russian-controlled Baikonur Cosmodrome in Kazakhstan.

Eutelsat’s investors reacted negatively to news of the potential merger, with the company’s shares falling sharply on concerns about OneWeb’s ongoing investment requirements.

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