French satellite firm Eutelsat has revealed that it has been holding discussions with UK-based rival OneWeb over the possibility of a potential all-share merger, which would enable both companies to take on sector heavyweights such as Elon Musk's Starlink and Amazon's Project Kuiper.
Launch of EUTELSAT 7C by an Ariane 5 rocket from Kourou, French Guiana on 20 June 2019. Credit: Eutelsat via Flickr
Launch of EUTELSAT 7C by an Ariane 5 rocket from Kourou, French Guiana on 20 June 2019. Credit: Eutelsat via Flickr
The French company made the statement after Reuters reported over the weekend that it was poised to purchase OneWeb, in which it already has a 23% stake. The UK firm was valued at $3.4 billion in its most recent funding round.
"Following recent market rumours, Eutelsat Communications confirms that it has engaged in discussions with its co-shareholders in OneWeb regarding a potential all-share combination to create a global leader in connectivity," Eutelsat said, in the Reuters report.
Read more: EU launches plans for satellite-based high-speed internet
This morning, shares in Eutelsat had fallen by 17% to €8.65.
The talks are aimed at creating a transaction that would see both companies' shareholders each holding 50% of the new, merged entity. Eutelsat that there were no guarantees the talks would result in a final agreement.
While such a deal would strengthen both companies' positions in the race to create a constellation of low-orbit satellites, a merger would be politically sensitive, as it would bring together some uneasy bedfellows such as France, the UK, China and Indian billionaire Sunil Bharti Mittal.
"From an anti-trust point of view, this deal is likely to be scrutinised heavily and will also likely need political consensus from both the UK and EU at a time when the UK is choosing a new Prime Minister," Credit Suisse said in a note.
Eutelsat has estimated the value of the satellite connectivity market to reach around $16 billion by 2030.
It is expected that the demand for satellite launches will accelerate as sanctions have pushed the Russian space launch sector aside. Large satellite constellations could also offer a new way to beam broadband from space.
Eutelsat's biggest shareholder is France's state-owned investment bank Bpifrance, with a 20% stake. Its fourth-largest shareholder is China's sovereign fund China Investment Corp, according to Refinitiv data.
Read more: UK to invest £1.4bn into space defence
OneWeb was rescued from bankruptcy by the British government and India's Bharti Global. A merger would leave the British government with a minority stake in the merged business, one source close to the matter said in a Reuters report.
Another source told Reuters that London intends to retain some special rights over OneWeb including a veto on sales to clients deemed a security risk, as well as a veto on any change to its headquarters location.
These special rights would also entail a veto over business relations that may compromise the so-called "Five Eyes" intelligence alliance, comprising Australia, Canada, New Zealand, Britain and the United States, and a say on the supply chain and launch decisions.
Back to Homepage
Back to Aerospace & Defence