Two satellite companies based in Europe are combining to create one company with the same value as SpaceX, Elon Musk’s space launch provider based in the United States. The combined company will be named Arianespace, and will hold up to 50% of the world’s market share in geostationary satellite launches, according to its co-founder, Stéphane Israël. But this market share doesn’t include SpaceX.
OneWeb, a UK satellite operator, intends to join forces with European rival Eutelsat in a partnership which the two companies hope will help them compete with SpaceX, the venture created by Elon Musk.
Eutelsat will issue 230 million new shares and exchange them for all of OneWeb’s remaining shares in the merger, according to a press release Tuesday. OneWeb and Eutelsat shareholders will each own 50% of the merged firm. OneWeb is valued at $3.4 billion through the deal.
When combined, the entity is expected to bring in about $1.2 billion in revenue in the 2022-23 fiscal year, the companies say.
Eutelsat’s Dominique D’Hinnin and Eva Berneke will both remain in their respective roles at the merged company, with OneWeb backer Sunil Bharti Mittal serving as co-chairman.
Alain D’Hinnin, Eutelsat’s chairman, has claimed that the deal will give the companies a chance to seize the significant growth opportunity in connectivity.
This collaboration will hasten the development of OneWeb’s fleet and reinforce the growth of Eutelsat.
OneWeb wants to have six hundred and forty-eight low-earth orbit satellites that would beam broadband to rural areas with limited internet access. It currently has four hundred and twenty-eight satellites in orbit, which will now be combined with Eutelsat’s thirty-six geostationary orbit satellites.
It was always unlikely that OneWeb, a smaller competitor to SpaceX’s massive Starlink satellite internet project and Amazon’s own Project Kuiper, would have succeeded in making a sound economic model a reality.
A U.K. bailout package of $500 million helped the company emerge from bankruptcy in 2020, after it burned through billions of dollars in venture capital.
Additionally, the startup had been negatively impacted by a Russian moratorium on launches following the annexation of Crimea, and thus turned to the launch provider SpaceX for support.
Due to difficult circumstances, OneWeb has had to merge with Eutelsat in order to keep it going. OneWeb CEO Neil Masterson claims that the merger is one of the company’s boldest steps and a pivotal point in the company’s mission.
“This combination accelerates our mission to deliver connectivity that will change lives at scale and create a fast growing, well-funded company which will continue to create significant value for our shareholders,” .
In an effort to rival Elon Musk’s SpaceX, U.K. satellite operator OneWeb is joining forces with European rival Eutelsat.
A press release Tuesday announced that Eutelsat would issue 230 million new shares and exchange them for all OneWeb shares remaining in its hands. The two companies will own 50% of the combined firm. OneWeb is valued at $3.4 billion through the deal.
Once combined, the merged entity is expected to bring in 1.2 billion euros of revenue in the 2022-23 fiscal year, the companies say.
After combining forces, Dominique D’Hinnin will be the chairman and Eva Berneke will remain the CEO, while Sunil Bharti Mittal will become co-chairman.
As it would make them faster than competitors, CEO of Eutelsat, Guy D’Hinnin, said the deal would help the companies capture the significant growth opportunity in connectivity.
This cooperation will allow OneWeb to further develop its fleet of satellites, which will complement Eutelsat’s evolving growth strategies.
They currently have 428 satellites orbiting earth, but now that OneWeb wants to increase its rural broadband internet services, they will have 648 low-earth orbit satellites to get it done. This comes from the plans for their new collaboration with Eutelsat, who currently has 36 satellites orbiting earth.
OneWeb, touted for a long time as a potential rival to SpaceX’s large-scale Starlink satellite internet project and Amazon’s own Project Kuiper, has so far struggled to convert its big dreams into a profitable model.
In 2020, the company emerged from bankruptcy with the help of the U.K. government, which invested $500 million as part of a bailout package.
The startup was negatively impacted by a Russia-launched rocket freeze following Moscow’s invasion of Ukraine, and they had to look to SpaceX for support.
CEO Neil Masterson believes that this acquisition is another bold step in helping OneWeb recover from a series of setbacks.
“This combination accelerates our mission to deliver connectivity that will change lives, and creates a fast-growing, well-funded company that will continue to generate substantial value for our shareholders,” Masterson said.
Shares of Eutelsat traded at their lowest level since late 2020 Tuesday as investors appeared unconvinced by the takeover. Eutelsat said it will temporarily suspend its dividend to deploy OneWeb’s satellite constellation.
There are a number of different requirements to go through before the deal can go through, including a rigorous security clearance process in the U.K. That being said, the deal is expected to go through by the first half of 2023.
It excludes the special share held by the U.K. government that lets it play a part in determining the national security of OneWeb’s network and the location of its headquarters.
The government of London is relinquishing power at a crucial time to do with politics. Government members of the U.K. Conservatives are planning who will be the next Prime Minister of the country.
Conservatives are certain to want a leader who can defend the United Kingdom’s prized assets from takeovers — especially one coming from the European Union — following Brexit.
Foreign takeovers have become particularly sensitive after the failed takeover attempt by Nvidia of U.K. chip designer Arm and the sale of Newport Wafer Fab to a Chinese firm.
The name of OneWeb will remain unchanged, it will maintain its headquarters in the U.K., and its secondary headquarters in Paris plans to list on the London Stock Exchange.
But it should also join the company of shareholders in Eutelsat, among them the Chinese state. The deal will most likely raise a few eyebrows among Britain’s allies, not least the U.S.
Last year, Eutelsat invested in OneWeb as part of a post-bailout financing round. Other OneWeb investors include Indian tycoon Sunil Bharti Mittal and Japanese tech investor SoftBank.