The French satellite operator Eutelsat has signed a memorandum of understanding with the British OneWeb to bring the two companies together and create a leading global player in the field of connectivity. Eutelsat will contribute its fleet of 36 geostationary satellites (GEO) and OneWeb its constellation of 648 satellites in low orbit (LEO), of which 428 have already been launched. The transaction provides that Eutelsat will own 100% of OneWeb and OneWeb shareholders will receive 230 million newly issued Eutelsat shares, representing half of the share capital.
This strategic operation aims to create a European group capable of competing in the race for space connectivity, currently dominated by the sector giant SpaceX and its Starlink constellation. ” This is truly a game-changing operation in our industry,” said Dominique D’Hinnin, Chairman of Eutelsat. It gives a new start to the French operator who had rejected last year a takeover offer of 2.8 billion euros from Patrick Drahi. Although still very profitable, Eutelsat’s GEO satellite activities are losing momentum. By associating them with the LEO activities of OneWeb, the new group hopes to capture the opportunities of a connectivity market which it estimates at 16 billion dollars by 2030.
Despite these opportunities and the promise of significant economies of scale, the announcement received an icy reception on the markets with a 36% drop in Eutelsat shares over the first two sessions of the week. The merger comes at a high price with OneWeb’s valuation at $3.4 billion. However, the British group had come close to bankruptcy in 2020 and had once once more been in difficulty at the start of the year with the suspension of the launches of the Russian Soyuz rocket following the war in Ukraine. The finalization of the deployment of the constellation will require heavy investments and Eutelsat has also announced the suspension of its dividends between 2022 and 2024.
The question of management and political balances will also be delicate because of the shareholding. Eutelsat is 20% owned by Bpifrance and 7.6% by the strategic participation fund (FSP). The main shareholders of OneWeb are the Indian conglomerate Bharti (30%), Eutelsat (22.9%), the British government (17.6%), the Japanese Softbank (17.6%) and the Korean conglomerate Hanwa (8, 8%). But following the merger, due to the dilution, Bpifrance will lose its status as reference shareholder of Eutelsat and many foreign shareholders will enter the capital.
Faced with concerns regarding a loss of sovereignty in the space domain, Bercy tried to reassure by affirming that “the foreign investment control system will ensure “good protection of French interests”. According to The Tribune, “the executive argues that the headquarters of the new operator will remain in France, that the company will always be listed in Paris, that the management of Eutelsat will remain in place, or that eight of the fifteen future directors of the board will come from Eutelsat. »
Eutelsat’s press release confirms this balance within the Board and announces that Dominique D’Hinnin will be proposed as Chairman of the Board of Directors of the combined entity and Sunil Bharti Mittal as Vice-Chairman. Eva Berneke will continue to serve as Chief Executive Officer of the combined entity. Completion of the transaction is expected by the end of the first half of 2023.
