27 Apr 21. The FT reported tonight that Eutelsat, the European satellite operator 20 per cent owned by the French state, is paying $550m for a 24 per cent stake in OneWeb, the space-based internet pioneer. It marks a substantial step forward for the group, rescued from bankruptcy by the UK government and India’s Bharti Global last year, in its satellite space race against Elon Musk, chief executive of SpaceX. OneWeb and SpaceX’s Starlink are aiming to launch mega constellations of low-earth orbit (Leo) satellites to deliver high-speed broadband from space.
The deal brings into the fold one of the world’s largest fixed satellite operators, with extensive commercial, government and institutional customers, who could be tapped to buy the low latency satellite services offered by OneWeb’s low-earth orbit fleet, people close to the deal said. OneWeb and Eutelsat would explore combined configurations for future services, they said. OneWeb will now target annual revenues of more than $1bn within five years following the full deployment of the constellation, and it intended to deliver “a profitable wholesale approach”. As a result of the investment, however, the stakes held by the UK government, Bharti and SoftBank, which invested $350m in January, are expected to fall from roughly 30 per cent each to about the same level as Eutelsat’s 24 per cent. The UK will retain its golden share.
Eutelsat’s investment suggests the valuation of the satellite operator has increased roughly 10 per cent since it was rescued. The UK and Bharti paid $500m each for their stakes against Eutelsat’s $550m. Eutelsat will also receive three seats on the board — the same as the UK and Bharti.
OneWeb said its plan to launch 648 first-generation satellites to deliver a global broadband service by next year was now 80 per cent funded, at a total of $1.9bn since emerging from the Chapter 11 bankruptcy process in November. By the end of this year OneWeb intends to offer a more limited internet service to the UK, Alaska, Northern Europe, Greenland, Iceland, the Arctic and Canada. On Monday OneWeb launched a further 36 satellites, bringing its total fleet in orbit to 182. For Eutelsat the investment is a means to catch up in the race to deliver internet access from orbits closer to the earth than the traditional fixed satellite services. These lower-earth orbit services are seen as the answer to providing high-speed internet to the most remote parts of the planet. Eutelsat, which was traditionally dependent on broadcast revenue, has targeted satellite broadband as a core business capable of returning the business to growth. In December Eutelsat launched its Konnect service to target remote areas in Europe and the UK. It also acquired UK-listed satellite broadband reseller Bigblu Broadband last year. Eutelsat has signed deals with telecoms companies Orange and Telecom Italia to resell capacity as satellite has become a legitimate alternative to building expensive fibre networks. Neil Masterson, OneWeb chief executive, said Eutelsat’s global distribution network opened up new opportunities. “We look forward to working together to capitalise on various growth opportunities, as we learn from our new partner’s experiences and technical knowledge.” Rodolphe Belmer, Eutelsat’s chief executive, said low-earth orbit presented a “substantial opportunity . . . within our industry. We are confident in OneWeb’s right-to-win thanks to its earliness to market, priority spectrum rights and evolving, scalable technology”. (Source: FT.com)