Paris-based Eutelsat Communications SA agreed to acquire the U.K.’s OneWeb Global Ltd., a deal that would combine the two companies’ separate fleets of internet-delivering satellites and create a bigger competitor to Elon Musk’s Starlink service.
The all-share merger values OneWeb at $3.4 billion, the two companies said. Eutelsat previously had a nearly 24% stake in OneWeb. The U.K. government owns 19%. After the deal completes, the government stake in the combined company will fall to 11%. It will retain a “special share” that provides London certain national security assurances.
The two European satellite companies will combine their fleets. Eutelsat will contribute its 36 so-called geostationary-orbit satellites to OneWeb’s fleet of 428 “low-earth orbit” satellites already in use.
Geostationary satellites orbit further above the Earth’s surface and along the equator. They move at a slower pace than low-earth orbit satellites, but provide more coverage area. Low-earth orbit satellites, meanwhile, circle closer to the surface of the Earth at a faster pace. They cover a smaller area than geostationary satellites and require a constellation of other connected satellites to be used for communication.
In a joint statement, the two companies said combining the fleets will allow the network to benefit from the geostationary fleet’s high capacity and the low-earth orbit satellites’ quick connectivity. Combining the two “creates the optimal solution to address an even wider range of customer needs, thereby expanding the addressable market,” they said in a statement.
A satellite owned by Eutelsat, which will buy OneWeb and combine the two company’s satellite fleets.
Photo:
yann coatsaliou/Agence France-Presse/Getty Images
Mr. Musk’s Starlink, operated by his Space Exploration Technologies Corp., or SpaceX, has a fleet of some 2,900 low-earth orbit satellites. Jeff Bezos has also entered the fray with Amazon.com Inc.’s Project Kuiper.
OneWeb, Project Kuiper and Starlink are among a handful of businesses and government agencies racing to send broadband satellites into orbit, betting that in some cases and in some markets, they can compete with traditional broadband providers. SpaceX’s Starlink has gained attention amid its high-profile role in Ukraine, where government and military officials there have credited it with helping their forces stay connected as they fight the Russian invasion.
SpaceX in March agreed to help launch OneWeb’s satellites after Western tensions with Russia blocked the company from using some Russian launchpads.
As part of the merger deal announced Tuesday, Eutelsat will apply to be listed on the London Stock Exchange while continuing to trade on Euronext Paris.
OneWeb emerged from bankruptcy protection in late 2020 after receiving a $1 billion investment from the British government and India’s Bharti Global Ltd. Bharti Global will retain a 19% state in the combined entity.
Write to Sara Ruberg at [email protected]
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