Sunday May 28, 2023

Eutelsat and OneWeb Combine Their Satellite Fleet in a $3.4 Billion Deal

Eutelsat and OneWeb Combine Their Satellite Fleet in a $3.4 Billion Deal

French satellite operator Eutelsat has confirmed that it is in merger talks with British rival OneWeb. The idea of these two companies combining is to better compete against bigger players in the space industry such as Elon Musk’s SpaceX.

For Eutelsat this potential merger gives them the opportunity to acquire interesting technology to transform them into a major player in the space industry. For OneWeb, they get a company that is already publicly listed and has profits and the ability to raise capital to gain further investments. According to this deal, Eutelsat would combine 36 of its GEO satellites with One Web’s constellation of 648 low earth orbit satellites out of which 428 are currently orbiting

When this merger deal was announced this week Eutelsat’s share value dropped by 20%. Market experts say that before any deal is done there is going to be complains from shareholders that this deal makes no sense. Eutelsat is currently profitable and pays a dividend and it’s now going to pivot its strategy from low growth stable business into venture style bet in the future. However, this deal is an opportunity to finance OneWeb since the UK government clearly is not willing to finance it any longer and OneWeb has to continue to find outside investors. So for OneWeb this is the best possible deal it can find. For what it means for Eutelsat still remains to be seen.

British government had bailed out OneWeb two years ago with a $500 million dollar investment. UK government officials are happy about this deal and said that it’s a great win for Britain. The UK government will have a 10% stake and a board seat if this deal happens.

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