Eutelsat communicates. : The planned merger of Eutelsat with OneWeb in the space Internet is met with icy cold on the stock market

(BFM Bourse) – The French satellite operator confirmed on Monday that it had entered talks regarding a possible merger with Britain’s OneWeb. This merger would allow the emergence of a new pan-European giant in the face of Starlink, the project of American billionaire Elon Musk. The marriage project is far from unanimous in the stock market, with the stock accelerating its losses, falling more than 17% on Monday.

Following recent market rumours, Eutelsat Communications confirms that it has entered into discussions with its fellow OneWeb shareholders regarding a possible merger of the two companies through a share swap. This merger would be a logical continuation of the partnership between Eutelsat and OneWeb, which began with Eutelsat’s acquisition of a stake in OneWeb in April 2021, followed by the global distribution agreement announced in March 2022. Eutelsat currently owns 23% of OneWeb’s equity alongside a consortium of leading public and private investors.

Eutelsat is a geostationary orbit specialist with its fleet of 35 satellites positioned 36,000 kilometers from Earth for satellite broadcasting and high-speed Internet services.

UK company OneWeb has already deployed 428 of the 648 satellites in its constellation in low orbit, a few hundred kilometers above sea level, to deliver high-speed internet with low latency, or data transfer delay, essential to meeting growing demands.

The emergence of a pan-European leader that challenges Starlink

This fusion project aims to position the whole in the field of fast space internet, in particular to serve isolated regions without fiber optics or to be able to meet the future needs of the connected car, for example.

“The combined company would be the first multi-orbit satellite operator to offer integrated GEO/LEO (geostationary and low orbit) solutions and would be uniquely positioned to address the growing connectivity market, which is valued at $16 billion by 2030 Eutelsat said in a press release on the merger project, presented by Bloomberg agency on Saturday.

This project would make it possible to bring a new giant ahead of Starlink, the constellation of American billionaire Elon Musk, who has already deployed more than half of the 4,408 satellites in his constellation. Jeff Bezos, founder of Amazon, plans to use more than 3,200 satellites for his Kuiper constellation.

The European Union also wants to station its own constellation of around 250 satellites in low orbit from 2024 in the name of sovereignty. According to EU Commissioner Thierry Breton, this constellation will allow ending “white zones” in Europe, offering states with quantum technologies encrypted communications and having redundancy against terrestrial networks that are targets of cyberattacks. China also has its own constellation project, Guowang, with 13,000 satellites.

A transaction by exchanging shares

“Under the terms of the proposed transaction, the shareholders of Eutelsat and OneWeb would each own 50% of the combined group,” Eutelsat said. The transaction will be through an exchange of shares, with the shareholders of each of the two groups owning half of the prospective entity.

Bankrupt during the pandemic, OneWeb was acquired by Indian conglomerate Bharti and the UK government. In addition to Bharti (30%) and Eutelsat (22.9%), OneWeb’s capital includes the British government (17.6%), the Japanese Softbank (17.6%) and the Korean conglomerate Hanwa (8.8%).

Eutelsat is 20% owned by Bpifrance, the French State’s public investment bank, and the Strategic Participation Fund (FSP) held by seven French insurers (7.6%), with the rest of the capital being floating.

“There is no guarantee that these talks will result in an agreement. Eutelsat will update the market on new developments in due course,” adds the French operator. This uncertainty about the outcome of the negotiations caused Eutelsat shares to plummet by 17% to €8.71 on the Paris Stock Exchange, which slipped slightly by 0.09%.

(With AFP)