How Eutelsat and OneWeb want to form a European giant to compete with SpaceX

Announced a few days ago, the rapprochement between the two actors is as much a matter of financial means as of technological complementarity. The aim is to offer hybrid connections provided by geostationary and low-orbit satellites.

Two important actors to make a giant. EutelSat Communications, cornered in particular by the French state, and OneWeb, saved from shipwreck by a consortium formed around an Indian telecommunications group and the British government, announced their intention to team up to “to create a unique and leading global player”.

the final step

In April 2021, the former had already announced an investment of 550 million dollars in the latter, thus making up 24% of OneWeb’s capital. Eutelsat’s objective was therefore to diversify its activities and establish a position in the constellation of low-orbit satellites.

The agreement reached this week will lead, once the transaction is concluded, Eutelsat to own 100% of OneWeb. In return, OneWeb shareholders will receive 230 million shares of Eutelsat “newly issued”, which will represent 50% of today’s capital. This transaction values ​​OneWeb at $3.4 billion.

As always, the reconciliation will only be effective after some checks and controls. The parties expect the procedure to be completed, after validation by the competent regulatory authorities, by the end of the first half of 2023.


For a hybridization of connections

This merger clearly bears the hallmark of Eutelsat’s dominance. However, the OneWeb brand will be retained and will continue to manage the low-orbit satellite business. Because, behind the financial part, there is also and above all the combination of two complementary activities, two complementary technologies. The new Eutelsat will thus bring together its 36 geostationary satellites (GEO), another five are in preparation, with the OneWeb constellation, which will eventually have 648 low-orbit or LEO satellites, to Low Earth Orbit. 428 are already currently placed around the Earth.

The offer thus placed will offer the high speeds of geostationary satellites with low latency and coverage “ubiquitous” of LEO. Why, “A precise roadmap has been established to gradually develop a fully integrated GEO/LEO service comprising a common platform, hybrid endpoints and a fully shared network”announces the Eutelsat press release.
Within two or three years, new generation networks, tools and antennas will be shared between the two offerings. The next step will be to produce a second generation of low-orbit satellites fully integrated into the geostationary network to provide intelligent routing of connections and data.

A growing market

The complementarity of the two offers merged into one, the performance of the two technologies and the coverage density will be, according to Eutelsat, essential assets in responding to market changes. The latter could weigh around US$16 billion by 2030, with an almost even distribution of the contribution from the LEO and GEO satellites. This obviously represents a significant increase in the weight of low-orbit satellites, around 37%, according to a study cited by Eutelsat. This is clear to cater to companies and individuals. Thus, the satellite internet connection intended for the general public could represent more than a quarter of these 16 billion, with 4.4 billion euros.

SpaceX, OneWeb’s American competitor for low-orbit satellites, is not mentioned, but clearly targeted. To ensure the development of its offer, Eutelsat announces that “The combined entity’s investments will average between €725 million and €875 million per year over the fiscal years 2023-2024 to 2029-2030”. The presentation made to investors at the time of the announcement also indicates that the new entity could benefit from Eutelsat’s institutional and regulatory relationships to advance faster in OneWeb’s market access. The intention is therefore clearly to give birth to a European giant to oppose SpaceX.



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