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Rumour has been rife that formerly near-bankrupt global low Earth orbit (LEO) satellite provider OneWeb was looking to join forces with one of its investors. Now, putting the record straight, French satellite operator Eutelsat has revealed that it has engaged in talks about a potential all-share merger with the UK government and Bharti Global-owned OneWeb.
Formed in 2012 with the aim of addressing the connectivity needs of under-served communities, OneWeb has always claimed that its satellite network has a unique capability to provide improved capacity, mobile resilience, backhaul and coverage, including fixed wireless access, in challenging geographic locations.
OneWeb said demand for its broadband connectivity services has continued to grow across telecommunications providers, aviation and maritime markets, and governments worldwide. It expects to attain global coverage with a total fleet of 648 satellites by 2023 as part of its five to 50 mission to cover regions north of 50 degrees latitude, including the UK, Canada, Alaska and the Arctic region.
Eutelsat Communications first announced in April 2021 that it was to make a strategic investment in the UK government and Bharti Global LEO project as it looked for growth beyond traditional broadcast and broadband applications, becoming a shareholder partner.
In September 2021, Eutelsat confirmed the closing of its $550m equity investment in OneWeb and, subject to completion of the subsequently announced investments in OneWeb by Bharti and Hanwha – the latter a US$300m equity investment by the South Korean Fortune 500 global technology and manufacturing company – Eutelsat held a 17.6% stake.
It currently holds 23% of OneWeb’s share capital and deepened its relationship through a global distribution agreement announced in March 2022.
A combined entity would be the first multi-orbit satellite operator offering integrated GEO (geosynchronous equatorial orbit) and LEO solutions and would be uniquely positioned to address a booming satellite connectivity market that is projected to be worth $16bn by 2030. 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, among other conditions, approval by the requisite majority of Eutelsat shareholders and receipt of all relevant antitrust and regulatory (including foreign investment) approvals.
As it was making its statement about the talks, Eutelsat stressed that there could be no assurance that the discussions will result in any agreement.
The announcement comes days after OneWeb signed a memorandum of understanding (MoU) with Korean defence companies Hanwha Systems Corporation and Hanwha Defense Australia to explore the joint provision of connectivity services to the Australian defence market. The MoU will facilitate discussions between the three companies about how they may combine their key capabilities to meet competitive requirements for the Australian Military Satellite Tactical Internet Programme.