Eutelsat ploughs more cash into OneWeb

Fresh from rejecting a takeover bid, Eutelsat has ploughed another $165 million into OneWeb, raising its stake in the process.

The French satellite firm revealed it has exercised a call option on a portion of the latest OneWeb funding round to enable it to increase its holding to 22.9% from 17.6% previously. The transaction, which is due to be completed around the end of this year, carries identical financial terms to its initial $550 million investment in OneWeb, Eutelsat said. It announced that investment back in April and completed it last month.

Presuming the deal transaction gets the regulatory nod, Eutelsat will become OneWeb’s second-largest shareholder after India’s Bharti. It is clearly keen to tap into OneWeb’s growth potential. Just a year after it was rescued from bankruptcy, the company has a constellation of 322 LEO satellites in orbit – out of a planned 648 – and says it will reach global coverage by the end of next year.

“We are hugely excited to grasp this opportunity to deepen our commitment to OneWeb,” said Eutelsat chief executive Rodolphe Belmer. “The significant progress it has made in the run-up to its now imminent entry into service, together with the vote of confidence demonstrated by the commitment of both its investors and future customers, makes us even more convinced of OneWeb’s right-to-win in the low earth orbit (LEO) constellation segment.”

It is perhaps a little premature to write off Elon Musk’s Starlink – which already offers commercial services – at this stage, but OneWeb certainly looks to be in a better position than many might have predicted this time last year.

And Belmer’s point about the investors and future customers is valid. Bharti is in the process of investing half a billion dollars into the company, while over the summer South Korean conglomerate Hanwha committed to a $300 million investment in return for an undisclosed stake. Meanwhile, a month ago AT&T brokered a deal use OneWeb to boost connectivity for business and government customers in the US, and to connect up its own mobile towers in hard-to-reach locations. As Eutelsat puts it, OneWeb has “numerous distribution partnerships secured ahead of its partial entry into service, which remains on track for end-2021.”

For its part, Eutelsat insists it had a strong financial year, in terms of cash flow generation and debt reduction, at least, but operationally its business looks a little lacklustre and OneWeb provides a new avenue for growth. Whether that has anything to do with Patrick Drahi’s takeover bid earlier this month is questionable. What we do know though is that Eutelsat flat out rejected the Altice founder’s €12.10 per share offer, presumably because it deemed it too low.

But this story is more about OneWeb than it is Eutelsat. The UK-based satellite outfit is firing on all cylinders, drawing in investors and getting ready to launch. We’ll be hearing more from OneWeb in the very near future.