OneWeb and Eutelsat confirm merger talks

Following circulating rumours that French satellite firm Eutelsat was about to acquire UK satellite firm OneWeb, the former has this morning announced that discussions are happening.

Eutelsat says it is in discissions with OneWeb shareholders regarding a potential all-share combination to create what it says would be  the first multi-orbit satellite operator offering integrated GEO and LEO solutions.

“The transaction would be structured as a contribution by OneWeb’s shareholders of their stake in OneWeb to Eutelsat in exchange for newly issued Eutelsat shares,” reads the announcement. “Any combination would be subject to, among other conditions, approval by the requisite majority of Eutelsat shareholders and receipt of all relevant antitrust and regulatory (including foreign investment) approvals.   There can be no assurance that these discussions will result in any agreement. Eutelsat will inform the market as soon as soon as there are any new developments.”

Eutelsat made an equity investment in OneWeb in April 2021, and a global distribution agreement in March 2022, which was pitched as a move to allow the two firms to develop combined GEO and LEO ‘connectivity solutions.’ In October 2021 Eutelsat 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.

So the two firms are already somewhat intertwined with the former holding 23% of the latter’s share capital, and we’re told that under the terms of the transaction being discussed, Eutelsat and OneWeb shareholders would each hold 50% of the combined group’s shares.

The firm describes a merger as a ‘logical next step in the successful partnership between Eutelsat and OneWeb’, as they look to capitalise on a satellite connectivity sector which it estimates will be worth $16 billion by 2030.

There’s been a fair amount of satellite related moves in the last few weeks. Last week Telefónica began testing out satellite-based 5G NB-IoT technology developed by Sateliot, which launched its first low Earth orbit (LEO) satellite in March 2021. The idea is the satellites will provide connectivity directly to IoT modules, removing the need for local terrestrial networks hooked up to ground stations.

And earlier this month Ericsson partnered with chip maker Qualcomm and defence firm Thales to develop direct-to-satellite 5G connectivity, or 5G non-terrestrial networks (NTNs). The proposition requires no ground stations, satellite phones, or terrestrial network, and would simply connect a base station installed on a LEO satellite.

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